SALLISAW, Okla. -- Marvin's Food Stores opened its first live-inventory video rental department last month, said Lee Ewing, health and beauty care, general merchandise and video director.
The new 900-square-foot department, in a store here, has about 4,000 rental units, a game demonstration unit and special roomlike sections for children's videos and video games, along with a section selling compact disc and cassette music products.
Marvin's offers rentals in eight of its 20 stores, said Ewing. Two more video departments are in the planning stages with no specific timetable, he said.
"This is our first live installation and our largest department," he said. The other seven departments have 2,500 to 3,000 tapes, with the inventory stored behind the counter. With live inventory, the actual tapes are displayed on the racks protected by a security system.
The retailer also will soon begin testing the shared transaction fee program of Rentrak Corp., Portland, Ore., he said. No start-up date has been set for the test, said Ewing.
Marvin's will test Rentrak in four of its rental departments. Once started, the test will probably go on for a year, he said.
"Rentrak will give us the chance to really go in top-heavy on certain new release titles," said Ewing.
With shared transaction fee programs, retailers pay an $8 to $10 fee to acquire titles and then share revenues with the supplier. Transactions are tracked electronically. Another shared transaction fee company is SuperComm, Dallas, which is a Disney subsidiary.
Using Rentrak will enable Marvin's to greatly increase its depth of copy on top movies and its breadth on B-titles. "Rather than buying six copies per store of the top hits, we will buy 12 to 17 copies with Rentrak," said Ewing. While the number of new releases in the new department is growing -- and will grow faster with Rentrak -- they now comprise less than 10% of the total rental inventory, he said.
Marvin's decided to put in a live department because of the space required to store tapes with the other approach, he said. "We are growing every day and the storage became a problem," he said.
The retailer used the modular grid racking system from JD Store Equipment, Manhattan Beach, Calif., to define separate areas for children's videos and video games. In the children's section, there is a TV monitor and a Lego play table.
There is a demonstration unit in the game section, noted Ewing. In it the retailer rotates the three game formats it carries -- Sony PlayStation, Sega Genesis and Super Nintendo -- on a weekly basis.
Demand for Sony PlayStation is picking up, he said. "We're getting a lot of calls for the Sony PlayStation now," he said. Meanwhile, with few new games coming out for the older formats, rentals of those have slowed down. On other new formats, like Sega Saturn and Nintendo 64, Ewing said, "Time will tell. We just have to wait and see."
This is the second Marvin's store to try music sales, he noted. Music does well in the other store where it is merchandised near a service counter, he said. The security system in the new department helps address concerns about pilferage, he said.
The retailer offers popular titles as well as nature sound CDs and cassettes. Pricing on music is competitive with the mass merchants, as is Marvin's sell-through pricing, said Ewing.
"We just try to be in line with them. We don't meet their price, but we are competitive enough that the consumer does not need to go elsewhere," he said.
The retailer also has a Fuji film lab in the new video department. "That has worked out exceptionally well," said Ewing.
The music and one-hour processing help make the most efficient use of the labor costs for the department, he said. The film processing is especially complementary, because film and video traffic tends to peak at different times of the day, he said.
