COLUMBUS, Ohio -- Five leased-space departments in supermarkets of Big Bear Stores Co. here have closed.
The lessee, Ring Leader Video, also based here, declined to renew its contract, citing a lack of traffic in the stores. "In terms of the business climate inside Big Bear, it seems like every quarter they announce that their sales are down over the previous year," said David Stewart, president of Ring Leader.
"The times when I should be having my peak periods, such as Friday and Saturday nights, some of the stores are just morgues," he said. "We were rarely out of anything." After a month of considering whether it wanted to continue with video in those stores, the retailer decided against it and Stewart is now trying to sell the inventory and fixtures, he said.
Mark Janpole, a Pittsburgh-based spokesperson for Big Bear's parent, the Penn Traffic Co., Syracuse, N.Y., confirmed that Big Bear is looking for other uses of the space and is putting a liquor department in one store. "We all know that video sales are off in supermarkets and we think we can make better use of the space," Janpole said. The video departments were shuttered Sept. 19.
A distribution source said Stewart was doing everything he could to make the leased departments work in an adverse situation. "He had nice departments in low-volume stores, and that just doesn't work. He's an absolute professional video operator with good knowledge of the business, a good marketing mind and a good attitude toward customer service." Overall, the source said, "He was the right operator in the wrong place."
Ring Leader opened its first department in Big Bear in September 1977, taking over three store-within-a-store sections from Blockbuster franchisee Buckeye Entertainment Corp., Dublin, Ohio. At the time, Tom Carton, president and chief executive officer of Buckeye, said a cannibalization of sales where departments were located too close to his specialty stores, a high-rent structure in the Big Bear agreement and an uncertain franchise fee policy on store-within-a-store departments from Blockbuster Entertainment, Dallas, contributed to the decision.
"There were so many issues that pointed toward ending this particular opportunity that it was almost a no-brainer," Carton was quoted as saying.
The Ring Leader departments originally were opened under Stewart's management by Star Time Video here, a specialty store retailer. Earlier this year, Stewart spun off Ring Leader as a separate company dedicated to operating store-within-a-store departments, and continued to open video shops in Big Bear supermarkets. His fifth opened in June.
"At the time, I had a pretty strong suspicion that I was going to have to turn around and close it right down or sell it, which was my first preference. But I was contractually obligated to open it," said Stewart.
The departments ranged in size from 1,500 to 2,400 square feet with about 3,500 rental units in a typical store, he said.
"I bet a lot of money that it would work out, and I guess I was wrong. I was convinced that even though there wasn't the traffic inside the stores that we would need, I could generate traffic through marketing and advertising," he said.
Stewart marketed the program aggressively and persistently, said distribution sources, often using guaranteed availability promotions backed by Rentrak Corp., Portland.
"But I never had such bad experiences doing coupon drops," said Stewart. For example, he would put 40,000 coupons into a neighborhood and get only two-tenths of a percent back instead of the 2% to 5% he expected. "And that happened time after time," he said.
Stewart still believes video rental can work inside the Big Bear supermarkets, but the departments need more traffic to be viable. "The Kroger stores all have video and Kroger does well with video." Kroger departments in this area he has visited on Friday nights were very crowded, he noted. "People like that price point. They like the convenience," said Stewart.