DUBLIN, Calif. -- Lucky Stores here has opened four leased-space video rental departments operated by audio-video specialty retailer Wherehouse Entertainment.
Judy Decker, a spokeswoman for Lucky, could confirm only that the chain had signed an agreement for the Torrance, Calif.-based company to open units in the four stores bought from Smith's Food & Drug, Salt Lake City, in January. "The stores had existing video departments when we acquired them, so we signed an agreement with Wherehouse to operate those departments," Decker said. She could not provide any further details. Jerry Goldress, chairman and chief executive officer of Wherehouse, said the four departments opened last month.
"We are doing a pilot test with Lucky. They are primarily rental stores within a store," he said. Wherehouse has 284 stores in eight Western states and is now in Chapter 11 bankruptcy protection, he noted.
The four Lucky stores are in El Cajon, Hemet, Lancaster and Oxnard, Calif. "We are experimenting to see whether a video rental store within a Lucky supermarket makes sense," he said. Wherehouse has one-year leases for the shops, he noted. All the southern California stores Smith's sold to other retailers in January have continued to offer video rental.
All but one -- now an Albertson's store in Fullerton, Calif. -- filled the existing 1,200- to 2,500-square-foot store-within-a-store departments with comparably merchandised leased-space operations.
The eight stores bought by Ralphs Grocery Co., Compton, Calif., have departments run by Blowout Entertainment, a subsidiary of Rentrak Corp., based in Portland, Ore. The four stores bought by Vons Cos., Arcadia, Calif., have departments operated by Marbles Entertainment, Los Angeles. The one store bought by Albertson's now has a smaller 2,500-tape rental selection, according to store personnel. Video Two, Salt Lake City, racks the Albertson's stores in southern California. While Wherehouse started out as a music chain, eventually diversifying into video, the four Lucky departments are now video only, said Goldress. "We may put some music in, but it depends on how much space is available," he said. As for Wherehouse's Chapter 11 status, Goldress expects Wherehouse to reorganize later this year. The company recently received a 60-day extension of the time allowed to formulate a reorganization plan. "That takes us out to the end of April," he said.
