ATLANTIC CITY, N.J. -- The rapid consumer acceptance of DVD should cause an increase in the supermarket channel's focus on the format, said David Benish, vice president, Gerke & Associates, Columbia, Mo. Benish spoke to SN after a presentation he gave on the results of a new benchmarking study released at the recent East Coast Video Show. The report, which the management consulting firm prepared for the Video Software Dealers Association, Encino, Calif., revealed that the revenue breakdown of tape rentals and DVD rentals totaled 52% to 11%, respectively, in 2001, in comparison to a 65.2% to 4.4% split in 2000.
"DVD offers more inventory in less space, and getting the most out of space is the name of the game in supermarkets," Benish said. The survey results also give grocery stores the opportunity to see where they stack up against traditional video retailers in competitive pricing structures and inventory turnover rates, he noted.
"Supermarkets must make the most out of their space available, build the right product mix tailored to their geographic region and markets, and create visibility within the department through signage," said Benish.
Supermarkets have the ability to build traffic by tying video promotions with other store purchases, such as cross merchandising video with popcorn, or offering a free rental with a purchase at grocery fuel centers to get customers into the store, Benish said. Tapping into loyalty card data is also "something that [grocery] has a greater ability to do than the typical video retailer," Benish noted.
The benchmarking study uncovered best practices to generate higher profitability, including ways to control fixed costs, build up the customer base and increase revenue per transaction, Benish said.
The study was conducted in the spring and summer of 2002 and the results represented 68 companies and 120 stores. The results were from fiscal-year 2001. Results of the benchmarking study are available to members on the VSDA Web site, www.vsda.org.