HOUSTON -- The competition is tougher, but Randalls' video program keeps getting better. Randalls Food Markets here was one of the first chains to rent videos, starting as early as 1980. Today, it remains the standard against which many measure supermarket video programs. Meanwhile, rental competition in its home Houston market is intensifying as Albertson's and video specialist Hollywood Video expand into the market, as Kroger puts well-appointed 3,500-tape live departments into its newer stores and as Blockbuster Video remains as formidable as ever.
Randalls' video program has grown dramatically of late because of the company's acquisition of the Tom Thumb chain in Dallas two years ago from Cullum Cos. It now has video rental in 95 of 122 stores in the Houston, Dallas and Austin markets.
To meet the competition -- and its customers' needs -- the company is enhancing its new-release presentation with revenue-sharing buying systems, intensifying its promotional efforts, enhancing its sell-through merchandising and bringing new services into its service center, said Dorothy J. Jones, category manager.
For example, the retailer added Ticketmaster to its Houston stores last year and started testing dry cleaning in two stores last month.
This adds to the excitement and level of activity in the video departments, which are a part of the service centers, Jones noted. "We have a lot of services that draw people into our video department," she said.
Other elements in the area include one-hour and regular photo processing, package shipping services, a videocassette-based driving course, key-making, and products such as tobacco, baseball cards and candy.
Recent midweek store visits conducted by SN found a thriving video program with strong customer traffic. Even in the afternoon it was clear that the tapes were moving off the shelves. The design of the departments was light and open with ample use of movie posters and neon.
"We want to give the customers a feeling of excitement, a different ambience.," Jones said. Suppliers confirmed that Randalls has long been among the industry's leaders in video. "Going way back, Texas was the mother of supermarket video, and I think it was because of Randalls, plain and simple," said a distribution executive who asked not to be identified.
One behind-the-scenes reason for Randalls' development in video, and for the prominence of supermarket video in Houston, is distributor ETD Entertainment Merchandising, which is based in that city.
Randalls' rental departments range in size from 1,000 to 9,000 tapes and are a part of all new stores and remodels. Only one store does not have live inventory, and that is because the space configuration will not allow it, Jones said.
The company opened a video department in a new Tom Thumb store in February and plans four more new departments by the end of the year, Jones said. There will be new stores in Houston, Dallas and Austin, with one video department added to an existing store in Austin, she said.
All new Tom Thumb stores in the Dallas area get video departments that conform to Randalls' model. The point-of-sale systems in Tom Thumb stores are being updated as well. At Randalls, the video POS system is tied in with the entire store.
The POS system is the key to many changes yet to come for the Tom Thumb stores, Jones said. For example, it will enable the chain to use Rentrak in the stores.
The system also will mean more and better data for buying decisions, Jones said.
Tom Thumb merchandising programs were changed over to Randalls' system last summer, Jones said. This primarily involved restructuring the rental rates and enhancing the presentation of new releases.
For example, while Randalls had separate rate structures for "new releases" and "current hits," which are older new releases, Tom Thumb only had one rate for new releases. The rate was increased from $1.99 a night to $2.50, with customers
involved restructuring the rental rates and enhancing the presentation of new releases. For example, while Randalls had separate rate structures for "new releases" and "current hits," which are older new releases, Tom Thumb only had one rate for new releases. The rate was increased from $1.99 a night to $2.50, with customers getting one overnight with the "new releases" and two overnights with the "current hits," Jones said. Older "everyday favorites" are under $1 for two overnights. A major change in Randalls' video buying in the last two years is its embrace of shared transaction fee programs from Supercomm, Dallas, and Rentrak Corp., Portland, Ore. Unlike other chains that have picked one or the other, Randalls has been using both successfully, Jones said. These programs allow retailers to buy deeper on the hits and broader on B titles. The shared transaction fee programs have also given Randalls a new promotional tactic: "guaranteed to be here" promotions. If the advertised title is not in, the customer gets a free rental.
Randalls' video program has always focused heavily on promotions. Large creative displays on behalf of the big sell-through event titles also have been a hallmark of Randalls' video program. Some of the bigger Randalls stores now have a permanent endcap in the front of the store dedicated to sell-through video.
The retailer also has a rack of sell-through titles that is planogrammed by video distributor ETD. "We put in fresh product about every six weeks," Jones said.