EAST BRIDGEWATER, Mass. -- Shaw's Supermarkets here has shifted its video rental department from self-ownership to a revenue-sharing plan with Maine's largest video retailer, Home-Vision Video.
Shaw's move goes against a current trend in which supermarkets are moving away from revenue-sharing partnerships and setting up their own video departments, noted industry observers. Revenue-sharing programs in supermarkets had been prevalent in the 1980s, they said.
Although some retailers have adopted leased-space arrangements in the last few years, Shaw's is believed to be the first major retailer to embrace revenue-sharing after owning its own program, observers said.
Shaw's declined to comment on its new deal with Home-Vision, which is based in Portland, Maine.
Jim Howard, co-owner and vice president of sales and marketing for Home-Vision Video, confirmed that the companies had entered an agreement after prolonged negotiations. He said Home-Vision will be responsible for all of Shaw's 87 New England stores. Home-Vision will buy the video products for the departments, merchandise the outlets and handle all video operations, said Howard.
Home-Vision began operating Shaw's video departments about two months ago.
Howard said Home-Vision also will place its audio books, called Verbal Volumes, on Shaw's video department shelves.
Although the exact terms of the agreement were not disclosed, it was reported that Shaw's and Home-Vision expect to share an estimated $10.5 million in annual revenue.
Howard said Home-Vision, which operates 22 video specialty stores in Maine, is the country's 28th largest rental chain. He added its rank may improve soon through planned acquisitions, but would not elaborate. Home-Vision was being pursued by Blockbuster Entertainment, but Howard and his partners -- Martin and William Allen -- have apparently decided not to sell, and instead are embarking on their own expansion plan, according to reports in the March 30 issue of the Portland [Maine] Press Herald.
