RETAILERS READY DVD FOR HOLIDAY RUSH

DAN ALAIMO / Additional reporting: Stephanie Loughran

CLEVELAND -- With the arrival of Black Friday, new-release DVDs were moving fast in terms of sales and the rate at which they were transferred from display shippers to inline racks.

SN surveyed supermarkets and other retailers on the Wednesday before Thanksgiving, and found most displaying and promoting the two major titles streeting that week: "X2: X-Men United" and "Bruce Almighty." However, in many of these stores, titles that had been out for little more than two weeks were relatively hard to find.

Although leaders in the video sales category, like Giant Eagle and general merchandise stores like Wal-Mart, Meijer, Target and Best Buy, were ready for the holiday rush, other supermarkets like Kroger and Tops did not seem as prepared. SN visited northern Ohio stores in the suburbs of Toledo and Cleveland, assessing inventory levels, pricing and merchandising.

Among SN's observations:

DVD has taken over. Even in stores that continued to stock VHS tapes, DVD was moving much faster from the displays.

A number of retailers, notably Giant Eagle and Blockbuster, had planned special promotions to help blunt the impact of loss-leader pricing by the mass merchants.

Wal-Mart was out front in all respects -- pricing, selection of recent titles, and having sufficient inventory to get through the weekend.

Electronics retailer Best Buy, more than other chains, focused on exclusives and merchandised other recent titles on end-caps, such as "The Matrix Reloaded" and "The Adventures of Indiana Jones" collection.

In the supermarket field, aside from Giant Eagle, stores of traditional grocers like Tops and Kroger seemed to concede the business, and sell on a convenience basis.

"We are pleased with the performance of our promotions," Chuck Porter, director, Iggle entertainment and video, Giant Eagle, Pittsburgh, told SN following Thanksgiving weekend. "Our results this year surpassed last year's numbers" when the animated title "Ice Age" was released Thanksgiving week, he noted.

The big push into the holiday shopping season following Black Friday "looks great," said video analyst Bob Alexander, president, Alexander & Associates, New York. "Following the release of 'Finding Nemo,' the overall market looks really strong this fall," he said.

"With strong blockbuster titles, high consumer interest and more DVD players on the market, it looks like it will be an up quarter," he noted.

DVD player penetration was helped along by price points under $30, and Best Buy advertised a player for $19.99 on the morning of Black Friday. Meanwhile, interest in recordable DVD players is rising as prices decline, and the use of mobile DVD players, especially in cars, is increasing rapidly, according to industry reports.

Giant Eagle ran two promotions that week geared to counter loss-leader pricing of mass merchants. In one that began on the Nov. 25 street date of "Bruce Almighty" and "X2," the retailer offered loyalty card holders an instant $3 savings on the purchase of one, or $10 off the purchase of both. The regular price for a DVD of either title was $19.95. The promotion ran through Nov. 29.

In addition, a three-day promotion beginning Friday, Nov. 27, was advertised heavily in newspaper and in-store materials, and offered select titles for $2, $5 and $7 off the regular prices.

Giant Eagle merchandised the movies prominently in-store. For example, a store in Westlake, Ohio, had several large shippers of the current titles lined up outside the video department to capture sales from passing traffic. When SN visited the store late Wednesday afternoon, the shippers appeared full, but were being constantly replenished by video department personnel. The store also had other displays positioned throughout the front end.

A Blockbuster store adjacent to the Westlake Giant Eagle devoted one endcap to new-release sell-through DVDs, all priced between $21.99 and $23.99, but offered customers the option of buying many of the new titles for $12.99 with the trade-in of an old DVD.

Meijer, Grand Rapids, Mich., which operates large-scale stores similar to Wal-Mart supercenters, merchandised video at the checkouts and in a dedicated area in the front of its Oregon, Ohio, store. Meijer had a comprehensive video offering, including shippers of the current hits in DVD and VHS with the mix skewing heavily to DVD, as well as catalog titles in locked cases in the department. Front-end displays contained seasonal and impulse product.

SN visited two Kroger stores in the Toledo suburb of Oregon, and found one on Navarre Avenue with most of its recent video product behind a service counter -- the store had heavy quantities of the recent "Lion King" re-release. Recently released titles were scarce. There were three DVD copies of "The Santa Clause 2" and six of "Sinbad: The Legend of the Seven Seas." Neither "Bruce" nor "X2" were evident.

However, a Kroger on Woodville Road was missing "Bruce," but had most of the other recent titles, including a shipper of "X2." This store also had a lockable rack of catalog sell-through product positioned between the self-scanning units at the front end and Christmas shippers in the seasonal aisle.

SN observed a similar dichotomy at two Tops Friendly Markets stores in the Cleveland suburbs. A Tops in North Olmsted, Ohio, had almost no video, while a store a few miles away in Fairview Park, Ohio, had a 16-foot inline video section, as well as several racks in the vicinity of the self-scanning lanes. Some releases from earlier in November, like "Lara Croft Tomb Raider: The Cradle of Life" and "The Santa Clause 2," were in short supply, but the store had the more current titles. A shipper of "Bruce" was next to the inline section. The mix at this store tended to favor VHS over DVD, with even more VHS for children's titles.

A Sam's Club in Sheffield Lake, Ohio, and a Costco in Avon, Ohio, featured "X2" and "Bruce" prominently, and had nearly all the other November titles in stock.

A Wal-Mart in Oregon, Ohio, had all the key titles for the period displayed throughout the store, while a nearby Kmart featured only "X2" in a main aisle, with all the recent titles displayed on an inline rack. A Target in Avon, Ohio, had all the titles, with the more recent ones and certain key children's releases featured on endcaps.