TAMPA, Fla. -- Kash n' Karry is getting out of the video rental business, said Bob Highsmith, vice president of sales and marketing. "We are planning to discontinue video rental in our stores," he said. "The simple reason is, we don't believe we get a payback for the space we tie up." Kash n' Karry has rental sections in 60 of its 100 stores. All the sections use nonlive merchandising, in which empty boxes are displayed on the shelves and the actual tapes are kept behind a service counter. They have an average of 2,000 tapes per store, Highsmith said.
The retailer will take the sections out by the end of October, which is also the end of its first fiscal quarter, he said. "I know some others have been more successful than we were, but we tie up 48 to 60 feet in-line for rentals. We just think we can get a bigger payback by putting other general merchandise categories in that space, or expanding on current categories," Highsmith said. For example, stationery or pet supplies might be expanded, or the space might be used as a promotional area for general merchandise, he said. Kash n' Karry is staying in the sell-through business, though. "We will continue to carry all the major movies on an in-and-out basis. We just put in the shippers and sell them out," Highsmith said. The retailer buys its videos from Ingram Entertainment, La Vergne, Tenn. "We are sorry to see them exit the rental business because we feel that it is a viable business for all supermarket chains," said Bill Bryant, Ingram's assistant vice president of major accounts and special markets. "However, we are very eager to work with them as they continue their focus on sell-through." Concern about competition from new in-home technologies, like direct satellite systems, was a factor in Kash n' Karry's decision, said Highsmith. "I'm sure that had something to do with it, but we are strictly basing it on our experience," he said. "We see a general decline in video rental in supermarkets to start with," he added. The resources required to meet increasing competition from big specialty video chains in Kash n' Karry's marketing area was another factor. "We don't think it is worth the amount of investment it would take to remodel the stores and make video a totally separate store-within-a-store," Highsmith said. Retailers that have been successful with video are those that have made the space and financial commitment to create large in-store video shops, he said. "For years, we have had video rentals in-line and not as a separate store-within-a-store, and I don't know what difference that would make," he said.
