The squeeze is on.
Retailers are looking forward to a banner fourth quarter for sell-through video, with the flow of products having already begun in August, and the biggest title, "Titanic," streeting tomorrow. The only problem for most will be how to fit the unprecedented number of high-profile movies into their stores.
"Bring it on," said Matt Dillon, video director at the Concordia, Kan.-based Boogaart Retail division of Fleming Cos. "I look for a great fourth quarter on both rental and sell-through because of all the strong titles."
Laura Greenlee, video coordinator, is counting on the sheer volume of titles to spur what has been a soft year for video at Martin's Super Markets, South Bend, Ind. "We've got everything coming out for the fourth quarter. Our stores are going to be overflowing with movies. For Christmas, that is good, but it would've been nice if they were spread around a little bit throughout the year," she said.
The "title wave" of fourth-quarter videos has already begun to build.
August's titles included the two re-released "American Tail" videos, "The Borrowers," "Batman & Superman," and "Pocahontas: Journey to a New World." Although their release dates are not in the fourth quarter, many retailers expect top August and September titles to continue to sell into October, November and December.
"Titanic," the biggest movie of all time, will release Sept. 1, the same date as several children's titles, "Barney's Great Adventure," "Kiki's Delivery Service," and two direct-to-video "Teletubbies" tapes, which are expected to sell extremely well. Other September titles are "Lady and the Tramp," "Rusty," "Jungle Book: Mowgli's Story" and "Pauli."
In October, retailers can look forward to "Hope Floats," "Lost in Space," "Quest for Camelot," "Lion King 2: Simba's Pride" and the first ever sell-through release of "Gone With the Wind." Top titles in November are expected to be "Godzilla," "X Files," "The Rescuers," "Richie Rich's Christmas Wish," "Small Soldiers" and "Armageddon."
Studios' December plans are still being formulated, but movies anticipated for video release include "Madeline," "Dr. Dolittle," "The Parent Trap," "Land Before Time 6," "Air Bud 2" and "American Tail 3." Meanwhile, other summer theatrical hits might get fourth-quarter sell-through consideration as studios fine-tune their video-release schedules. Among these are "Saving Private Ryan," "There's Something About Mary," "Mask of Zorro," "Ever After," "The Truman Show," "The Horse Whisperer" and "Lethal Weapon 4."
"The number of titles is just tremendous," said Bill Bryant, vice president of sales, grocery and drug, at Ingram Entertainment, La Vergne, Tenn. "It's unprecedented that there is this much product being released. There are a lot of opportunities and challenges as well," he said.
"It's creating a bit of a bottleneck of product that will hit all at the same time in the fourth quarter. Supermarkets are going to have to make decisions on which titles they are going to bring in. There will be some supermarkets that will have to pass on some titles because they just won't have floor space," he said.
But overall it will be a strong video sales period for supermarkets, Bryant said. "Profits will be up because there are wider margins between cost and minimum advertised prices," he said.
"There's a good mix of product, with a little bit of everything. We are going to appeal to everybody," said Dillon of Boogaart's. However, he too is concerned over the volume of titles this year.
"You get to the point where it's too much. I liked in the past where we used to have key titles. But now, with everything coming out at sell-through, it's good -- you get some sales out of it -- but it might be a little bit overdone," he said.
"It's certainly one of the strongest lineups we've seen," said Clifford Feiock, video coordinator at Nash Finch Co., Minneapolis. It might be unprecedented in the total amount of box-office dollars represented by fourth-quarter sell-through releases, he said. "There's a pretty broad assortment of both children's product and feature films. Both areas look very good."
Retailers and wholesalers told SN they plan to manage the barrage of products in various ways, including rotating sold-down inventory on displays with fresh products and targeting specific titles with depth of copy.
Nash Finch will try to bring in as many as possible, but it will be a challenge, Feiock noted. "We may buy some smaller quantities than we typically have ordered and we may not keep excess product on the floor as long. For example, we may be forced to only keep them out there three or four weeks rather than five or six weeks. That's an adjustment we will have to make," he said.
Some stores have permanent displays where they can keep 10 copies of each title through the end of the year. "That's what we are suggesting that they do. Once the display sells down, they can put the excess on the freestanding fixture and then keep filling it every week," said Feiock. And many of the titles will continue to sell throughout the holiday season, he added.
Martin's will have to make choices about what to highlight, noted Greenlee. "We won't carry as many of certain titles, like 'Lost in Space.' Our focus will probably be on the 'Lion King 2,' because we did so well with the first one. There are other titles coming out at the same time, but we have to pick one title to do a big ad on, and the other ones won't get anything," she said.
The retailer will carry other titles, like "Gone With the Wind," "but we won't have a big advertisement for it. Around that time of the year, we try to stick with the children's titles because that is what really moves," said Greenlee.
Because of a recent management decision to allow sell-through titles on the main selling floor of the supermarket, space for them is less of an issue for Seaway Food Town, Maumee, Ohio, said Darlene Kiefer, services coordinator. Since putting the titles right outside the video departments, "we saw the movement triple."
Seaway Food Town displays the sell-through products in shippers and condenses them when they sell down, she said. The retailer tested permanent sections, "but we opted not to stay with that," she added. "We like the versatility of shippers."
The video business has been "pretty flat" for C&K Market, Brookings, Ore., said Larry Hage, division supervisor/video buyer. With all the big titles coming in the fourth quarter, "we're ready for it," he said.
"We are in the supply-and-demand business and the theatrical success creates the demand. With the fourth-quarter titles, the box office is going to be there, so the demand will be there as well. I do my buying based on the box office. I am not trying to be an arts center. Our goal is to give the people what did well in the theaters," he said.
Like other supermarkets with strong video programs, Hage sees the fourth-quarter titles as a golden opportunity for rental as much as for sell-through. "We'll be deep for rental and we'll be selling them off the shippers as well," he said. "What rents well, sells well." When the titles stop renting, the retailer will sell off the excess rental copies, he added.
"We love sell-through because we can take so many copies out for rental and make so much money," said Kiefer.
The flood of sell-through products in the fourth quarter is perfectly timed for some retailers contacted by SN who previously used the shared-revenue program offered by SuperComm, Dallas. They said they were very unhappy with the new distributor versions of it because of less favorable terms. Because of various changes to the program, they are looking for new ways of providing copy depth for their customers.
"We'll be able to put extra copies into our rental departments on a fairly economical basis and hopefully that will help us get through this interval. Without a revenue-share program, this will be a natural way for us to try and bridge that gap," said Feiock of Nash Finch.
"We are struggling to find a format like we've had with SuperComm because we really loved what it did for our sales," noted Kiefer of Seaway Food Town, which will also bring in sell-through-priced titles in depth for rental.
"On the sell-through titles, we try to stock them deep for rental and sale," said David Stewart, president of Ring Leader Video, Columbus, Ohio, which operates five leased-space departments in units of Big Bear Stores. "It looks like a good slate of titles coming out. We're optimistic and we'll see if we can increase rentals a little bit," he said.
Because Stewart has to share revenues on the low-margin hit sell-through titles with the host retailer, he offers those titles primarily as a convenience to customers and as a draw. "I have trouble getting excited about sell-through because we sell them all at [minimum advertised price] and by the time I give Big Bear their cut, I end up losing money. So I put them out to sell and take my licks, but I don't go out of my way to really make big displays. If people want to buy them, fine, and if they don't, that's OK with me too," said Stewart.
Of the titles coming out, retailers agreed that the two big ones for supermarkets will be "Titanic," which they expect to sell strongly through Christmas, and "Lion King 2: Simba's Pride."
"Everybody is looking forward to 'Titanic,' " said Boogaart's Dillon. "It is going to save September for us. The sell-through on it is going to be strong. You will probably have a holiday push on it too. It's going to be a good gift item. It's going to hang in there," he said.
Retailers were less convinced about "Gone With the Wind's" potential.
"Certainly everyone should offer 'Gone With the Wind,' but I don't think it is going to do anywhere near the numbers of the more current hits," said Feiock of Nash Finch.
