Just when retailers thought they had a fix on the future of DVD, a shadow has crossed the format's sell-through growth path.
Late last month, Warren Lieberfarb, who for 20 years was president of Warner Home Video, Burbank, Calif., resigned or was fired, depending on which account you read. It apparently resulted from a corporate power struggle. But all accounts agree that Lieberfarb was the one Hollywood executive most responsible for the innovation, development and phenomenal growth of DVD. It's no exaggeration to refer to him as the "father" of DVD.
His push for ever-lower prices on DVD software is driving the current resurgence of video sell-through in supermarkets. There is some question of whether Lieberfarb's departure might result in a change of pricing strategy, but most industry executives don't believe this to be likely. Some say that if there is a change, it will not be significant.
In short, this shadow will pass for supermarkets, the industry and for the talented and accomplished Lieberfarb. He will probably land elsewhere shortly, and a successor is expected to be picked from among his top lieutenants.
Meanwhile, Lieberfarb's DVD legacy continues to build in supermarkets as they adopt DVD sell-through in increasing numbers and with greater creativity. Giant Eagle, Pittsburgh, is readying a chainwide push on sell-through on its main sales floors, and Stop & Shop Supermarket Co., Quincy, Mass., is rolling out a comprehensive entertainment center concept with DVD as a centerpiece product.
Harp's Food Stores, Springdale, Ark., is merchandising videos in racks above magazines at the front end. Big Y Foods, Springfield, Mass., has taken a similar tack, putting videos above the candy at the checkouts. This kind of approach enhances visibility of this high-profile product, solves the shrink problem that bedevils many retailers, and with the low prices, increases impulse sales and basket size.
All this also was part of Warren Lieberfarb's vision, sources told SN. In recent years, Warner has been one of the most ardent supporters of supermarket video efforts.
It's too early to know how holiday sales went, but it's a good bet that price-conscious shoppers gravitated toward the low-priced DVD players -- many under $100; some under $50 -- offered by the mass merchants, electronics stores and even some supermarkets. New DVD-owning households are famously voracious consumers of DVD software. Traffic and demographics put supermarkets in an ideal position to capitalize on this, and not only for children's/family titles, but also for mainstream Hollywood movies.
The only downside is that so many consumers are now buying DVDs, as well as the even lower priced VHS tapes, rentals have slowed. Blockbuster, Dallas, even issued a profit warning for the fourth quarter and 2003 because of this trend.
Some supermarkets with rental departments are feeling this pressure as well, and the savvy ones, like Giant Eagle, are hedging their bets with sell-through. But once the novelty wears off, some industry watchers expect consumers to stop buying as many DVD movies and return to their rental habits, at least in part.
Looking ahead, 2003 appears to be a very promising year for DVD in supermarkets, and Warren Lieberfarb deserves much of the credit.