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IT'S THAT TIME OF YEAR

It's time to get excited about fourth-quarter video sell-through, if you haven't done so already. Several world-class performers, including Cinderella, Casper and Goofy, are waiting in the wings. Look for Batman, Willy and the Mighty Morphin Power Rangers to join the cast. Collectively, they will bring a rousing finale to the year.SN has planned this special supplement as a preview to the fourth quarter.

It's time to get excited about fourth-quarter video sell-through, if you haven't done so already. Several world-class performers, including Cinderella, Casper and Goofy, are waiting in the wings. Look for Batman, Willy and the Mighty Morphin Power Rangers to join the cast. Collectively, they will bring a rousing finale to the year.

SN has planned this special supplement as a preview to the fourth quarter. At first glance, the forecast seems quite familiar. A bunch of can't-miss sell-through titles plus a receptive public equals big sales. There are some changes this year, however, that are worthy of your attention.

First of all, video sell-through during the holiday season has almost always focused on children and family titles. That might be changing. "Forrest Gump," "The Mask" and "Speed" are some of the recent sell-through titles not aimed at children that did very well in supermarkets. Some titles similar to those hits would do well in the fourth quarter. They can't have bad language or erotic scenes, although a little violence seems to be gaining acceptance. So sell-through titles in the fourth quarter are becoming more mainstream, appealing to the tastes of adults as well as children. This wide variety will lead to more purchases for gifts during the holidays. If this trends continues, more sell-through space would be needed. A quarter of the grocers around the country are expanding the floor space devoted to sell-through. Almost half are expanding their inventories. This is resulting in more permanent sell-through sections in supermarkets. It's enough space to handle the fourth-quarter overload and can be used throughout the year. Permanent sell-through sections "are important to us because when customers see them, they're more apt to buy a movie from us, rather than a mass merchandiser down the street," said Carl Johnson of Harp's Food Stores (See story on Page 26A).

Yes, the mass merchandisers will be selling sell-through titles this holiday season at prices that could delicately be called "competitive." Grocers are sensitive to how this affects their programs, prices and profits. "We've had a good three or four years of solid increases. Now we just have to figure out how to get the profits up. It doesn't do anybody any good just to sell something slightly above cost, at cost or below cost," said Dan Black of Raley's Supermarkets, West Sacramento, Calif. (See story on Page 4A.)

The way some retailers are dealing with this issue has evolved over time. They first tried to match prices with, say, Wal-Mart and sold a lot of tapes while margins suffered. Then, they offered prices above Wal-Mart, sold fewer copies, but margins improved. Other retailers are turning to account-specific cross-promotions to spark sell-through sales. This could be with national or regional brand marketers, or in-store with departments such as deli and bakery. These promotions will help retailers turn video into a destination department. This would result in more shoppers, more in-store excitement, and more sales and profits. The biggest change this year in fourth-quarter sell-through will be the absence of a video promotion with McDonald's. For the last three years, the ubiquitous fast-food operator has offered popular titles for about $5 with a meal purchase. Many of these titles probably became holiday gifts that would have otherwise been purchased at traditional retail outlets. As of mid-August, there was no McVideo promotion in sight.

Happy holidays!

TAGS: Walmart