In addition to A-title rentals and high-profile sell-through products, many supermarket video departments are expanding another product category: previously viewed tapes.
For example, used tapes offered for sale are among the biggest profit makers for Marbles Entertainment, Los Angeles, said Matt Feinstein, vice president. Marbles operates 22 leased-space video departments in Lucky and Vons supermarkets.
In chains with larger video departments that generate much of their own used-tape inventory, the appeal is obvious. They can sell off extra copies of rental movies in as little as two to three weeks after the title's street date. Others pick up extra copies of previously viewed movies from outside sources.
At Springdale, Ark.-based Harps Food Stores, nine- and 10-month-old rental tapes are put up for sale, said Randy Weddington, video specialist. He noted that Harps' purchasing budget is slim and, consequently, he has few extra copies. Weddington occasionally purchases used products at auction, paying between $2 and $4 per tape.
"Sometimes we'll take [tapes purchased at auction] and rotate out older catalog, and put those movies up for sale," he said. Weddington prefers auctions to used-tape distributors. Harps guarantees that the used tapes it sells will be functional.
Ryndie Liess, video manager for Country Mart in Hollister, Mo., said her video-rental department generates the used tapes it sells. Country Mart begins selling off new titles "two at a time in three or four weeks [after street date]." Liess said that as soon as initial demand dies down, she places even very popular titles on the previously viewed rack and that "all of the used titles are sold for $9.99 except for children's titles, which have a $5.95 price point."
Country Mart does not guarantee the used tapes and does not offer refunds for defective used tapes, Liess said. Nevertheless, consumer interest in the used tapes is high. "People are using [used tapes] as gifts all through the year, not just at Christmas," she said.
Because retailers supplement their own aging inventory by purchasing used tapes, the layer of distribution that deals in used tapes is expanding.
The used-tape business of Movie Exchange, Oaks, Pa., has increased significantly in the past two years, said Shellie England Tibbitts, president. She declined to give sales numbers. Movie Exchange has been supplying more than 500 supermarket store fronts with used tapes for eight years, Tibbitts said.
Movie Exchange takes overstock from the rental departments that it operates in supermarkets on a racked- and leased-space basis and provides stores with a wide selection of five- or six-month-old used A-titles. The company shrink-wraps the tapes, affixes "previously viewed" stickers on them, and supplies racks and signage.
Account supervisors visit each rental location every month "to add new titles and subtract the stales," said Tibbitts. Used A-titles generally wholesale for between $8 and $10 and retail for between $10 and $12.95, with children's titles carrying lower price points.
Marbles is in the process of launching a similar program, said Feinstein. Marbles has been actively soliciting supermarket chains with video departments to take control of their used tape racks, he said. He believes that it's a no-lose proposition for supermarkets. "We service the [used-tape] area. Supermarkets will purchase the movies from us and we'll maintain the section, changing themes and inventory, and creating promotions," said Feinstein. "We're able to keep the area exciting. For instance, we know when to pull a group of movies." Feinstein said he will provide used tape from his own stores, as well as purchasing from used-tape distributors.
The company's used-tape merchandising efforts include decorations and coupons, said Feinstein. Marbles has this program in one supermarket chain, although he declined to name it, and is in talks with a number of other retailers.
Traditional used-tape brokers are noticing an increase in supermarket business, as well. "We find that on the sell-through side, the used-tape business is very strong in supermarkets," noted Jeff Levy, president of Funatics, Farmingdale, N.Y., which distributes both used tapes and used games. "We run into periods of the year where there's not enough product to meet the demand."
