RETAILERS VIEW MCDONALD'S VIDEO PROMO WITH A CAUTIOUS EYE

DAN ALAIMO

The recently concluded MCA-McDonald's video promotion was a big improvement over past ones run by the fast-food giant -- and may have even contributed to sales during the holiday selling season, said retailers polled by SN. Yet the majority of retailers remain opposed to the low-pricing and exclusivity typically awarded the restaurant company by the studios. From Nov. 18 to mid-December, for instance, consumers could buy one of four titles from MCA/Universal Home Video, Universal City, Calif., for $5.99 with the purchase of a large McDonald's sandwich or special meal. The titles involved were "Field of Dreams," "Back to the Future," "The Land Before Time" and "An American Tail: Fievel Goes West." The promotion also featured a $2.50 mail-in rebate on "Jurassic Park" and coupons good on other MCA/Universal titles purchased from retailers. "I think it was definitely a better program than the one that Paramount ran the previous Christmas," said an executive with a major midwestern chain. "But I still think these promotions confuse the customer on what the price of a video is and should be." Past McDonald's promotions -- including one two years ago selling Orion's "Dances With Wolves," which had never been released on video before, and the one last year pushing Paramount's "Addams Family" and "Wayne's World," which were comparatively recent titles at the time -- were severely criticized by retailers in all classes of trade, as well as by supermarkets and the Video Software Dealers Association, Los Angeles. Some retailers even took products of the participating studios off the shelves in protest during the promotion period. Retailers said the key differences between this program and past McDonald's promotions were:

· Signs in McDonald's and other program materials prominently referred consumers to retailers to buy "Jurassic Park" and the other videos.

· The videos sold at McDonald's were older titles that had long ago stopped selling or renting in a significant way.

· The promotion may have helped sales of "Jurassic Park" and "Land Before Time II: The Great Valley Adventure," which was released the day after Christmas. Both were cross-promoted in the McDonald's event. "I wasn't upset about the MCA promotion because they really were trying to get people to come into our stores to buy more videos," said Greg Davies, director, video operations, Dierbergs Markets, Chesterfield, Mo. Davies also did not object to McDonald's selling the older titles. "I did have a problem with 'Dances With Wolves.' We never had a shot at that. I don't like to see a McDonald's or other company like that get the first shot. That's not fair to us," he said. "I think it is a positive that McDonald's is putting out these previously offered videos at a good price," said Rick Ang, director, video operations, Bel Air Markets, Sacramento, Calif. "I used to think those promotions would hinder our sales, but now I think that they are actually stimulating the market," he said. The low-price offering gets people into the habit of collecting videos, said Ang. "They are starting to see that they could have had a title like 'An American Tail: Fievel Goes West' a long time ago. Now they are going to be more aware of when videos are coming out and they are going to pick them up then," he said. The McDonald's promotion did a good job of triggering people's interest in buying videos, said Clifford Feiock, video coordinator, Nash Finch Co., Minneapolis. Nash Finch stores might have seen a slight increase in sales because of it, he said. It was too early for hard numbers to be in, but "our sales have been very brisk on 'Land Before Time II,' " said Carl Johnson, video specialist, Harp's Food Stores, Springdale, Ark. "People went out and purchased the first 'Land Before Time' at McDonald's, and now they are coming to our stores to pick up the sequel." Johnson saw no significant bump in "Jurassic Park" sales when the McDonald's promotion launched almost two weeks after the official street date. "We were already toward the end of what we had left in stock," he noted. "I don't think it really added to sales," said John McCawley, buyer and merchandiser, Baker's Supermarkets, Omaha. "That was such a huge time of year for video, especially with the quality of the titles that were out there for sale in the fourth quarter, like 'Jurassic Park' and 'Snow White.' Video was on people's minds as a strong gift-giving idea," he said.

"I had stores that needed to purchase a copy of the original to compliment 'Land Before Time II" and were told that it was on moratorium during the promotion," said Teri Severinsen, manager, video services, Roundy's, Milwaukee. Smart retailers review their inventory for older titles when a related new release is coming up, she noted. "The studios should not cut off distribution, which forces the retailers to go to McDonald's to buy product for their stores." At Jitney Jungle, Jackson, Miss., Cindy Seale, general manager, video operations, saw no impact from the McDonald's promotion. "I don't see where it either helped us or hurt us," she said. McDonald's referring consumers back to retailers to buy the other videos was "the least they could do," said Shirley Decker, video buyer, Goff Food Stores, Haslett, Mich. "They are getting their stuff at rock-bottom prices and we can't compete with them. Nobody else gets that offering of price. So the least they can do is send some of that business back to retailers where it belongs," she said. The rebate coupons offered with the McDonald's tapes had no effect on sales, said Goff.