FALLING PRICES RAISE RETAIL EXPECTATIONS

JOEL ELSON

Supermarkets are anticipating that more children's sell-through titles will hit the magic $10-or-below price point this year, resulting in greater sales.

Retailers surveyed by SN said that with a variety of children's video at lower prices, they can better compete with the deep discounters.

"We can't make much on Disney videos because of the discounters. But on less-known children's sell-through titles we can mark them up to a decent margin of around 20%. We'll look for these kinds of opportunities from smaller studios," said Renee Clay Thomas, video supervisor at Clay Stores, Hardy, Ark.,

"For supermarkets, it's been tough with Wal-Mart and Kmart. They seem to always whip us on price," said Brent Bailey, video manager at Darrow's Country Market, Baraboo, Wis.

"I have difficulty bringing in as many shippers of children's sell-through as I'd like because we can't get [prices] under [Wal-Mart]."

To fight back against the deep discounters, Bailey promotes sell-through purchases with a free one-night rental (worth $2.59). "It helps defray the bottom-line cost since we own all our videos. It also puts us in the same league in terms of pricing and roughly at the same retail" as the discounters, he added.

According to Bailey, kid's sell-through videos are being retailed at Wal-Mart and Kmart at prices below Darrow's cost for the merchandise.

Some retailers voiced concern over what the trend to lower-priced goods, both at wholesale and retail, might do to video margins.

"Retail pricing is getting to the $10 range, a few dollars lower than last year's sell-through prices," said Marilyn Aldridge, video buyer at Dahl's Food Markets, Des Moines, Iowa.

"With the competition [discounters] dropping their pricing, I hope they don't get even lower, as margins are already low," she added.

However, Cliff Feiock, video coordinator at Nash Finch Co., Minneapolis, looks forward to lower-priced products coming into the marketplace.

"I'm hopeful product pricing will come down. We're seeing a mix of titles that should help build video's appeal," he said.

Yet, Feiock hasn't seen much of a price reduction in the hot sell-through children's titles, and most, he said, still fall between the $16 to $20 retail range.

"In children's, you have to be under $10, and if we can get lower than that, [sales] will go even better," he said.

Said Steve Gretzinger, video coordinator at Angeli Foods, Menominee, Mich., "We'll see a lot more stuff brought in at lower retail price points. You'll see a lot of those $6.95 to $7.95 bins moving to cheaper stuff and selling at $2 or lower retail per tape. I think retailers will be making a little less" on these products.

But as studios get product into the distribution system at lower price points, this will "definitely stimulate more and faster shelf turns," he said.

Sack & Save in Houston is looking forward to a wider assortment of lower-priced children's videos this year, said Bill Liesenfeld, video coordinator. "This would speed up sales and motivate people to pick up more sell-through," he said

"Manufacturers are discovering they can sell more copies at a cheaper price. At the lower prices, studios can sell more video instead of people renting them.,"

Besides lower pricing as a factor in moving children's video, the public's concern over the lack of quality programming available on television for children also is creating more demand for children's sell-through.

Liesenfeld said he sees an increase in the level of violence in movies and television turning consumers toward children's sell-through.

"Because of so much violence in the news everyday, people are afraid to turn on their TVs. This is affecting [children's] sell-through. People are definitely looking to buy videos they can show their kids," he said.

With the public pressure the studios and television networks are under, Charles DeFiglio Jr., chief executive officer at C&A Enterprises, Toms River, N.J., said, "The pendulum is now swinging in the other direction as far as violence. This is evident in children's sell-through."

He pointed to the Barney tapes, which promotes the message that kids should be good to their friends, as the type of values being exemplified in children's videos. Parents "figure their kids will watch TV anyway, so there might as well be something constructive in what they are watching," he said.

Disney also has been successful in creating consumer demand for its children's products by placing moratoriums on certain titles, making them collector's items.

Bailey of Darrow's Country Market said, "People are catching on that's it's vital they pick [Disney] up when it's still available."

"With 'The Little Mermaid' alone I could now sell 100 copies if I could get my hands on them. Now, it's in moratorium," he said.

"I could easily sell a ton of 'Cinderella,' 'Peter Pan,' 'Bambi,' 'Lady and the Tramp,' if they were available at a reasonable price."

Thomas at Clay Stores said, "The public knows the studio [Disney] places moratoriums on certain titles, so they are buying these up faster when they are available. Adults are building their own children's library for the future." Retailers also are expecting children's sell-through to get a boost from cross-promotional tie-ins, which will stimulate sales and help drive retail prices down.

Margaret O'Neil, corporate secretary at O'Neil's Markets, Tacoma, Wash., said food companies such as Nabisco are getting more involved in cross-promotions, and rebates help stimulate sell-through volume.

"People recognize the brand names and tie-in items like cookies, snacks or beverages, which really help boost sales," she said..

"More studios will be into cross-promotion alliances with food manufacturers to promote children's sell-through videos. Consumers will benefit from either a rebate, a discount off the sale price or a coupon for a free video rental."

Aldridge of Dahl's Food Markets sees more special holiday promotions planned for children's sell-through. "Last year there were special programs for Valentine's Day, Easter, Halloween and Christmas. I see these coming this year, too."

Said Gretzinger of Angeli Foods, "I'm looking forward to more aggressive studio promotions to drive down children's video retails this year. This would enable us to move larger quantities of products.