SPACE RACE LIMITS NON-HIT VIDEO PRODUCT

Dan Alaimo

The demand for floor space, exacerbated these days by the transition from the VHS to DVD formats, is making it difficult for supermarkets to carry non-hit video product, such as television programming, independent films and direct-to-video titles.

TV product in particular is making waves in the sell-through business, with DVD box sets of series like "The Sopranos," "Sex in the City" and "The Osbournes" garnering lots of attention and are successful in other trade channels. But the high price points on these sets tend to put them out of reach for supermarkets. However, lower-priced product, especially children's programs, can do well, retailers told SN.

Meanwhile, independent films are considered on a case-by-case basis by retailers with large rental programs, and direct-to-video programming for children is hit or miss, with the high-profile titles getting prominent sell-through treatment and the lesser-known titles not receiving as much consideration.

"We have limited room," said Larry Hage, general manager, C&K Markets, Brookings, Ore. "We've got to make decisions on what we are going to carry, and when you start bringing in these types of titles, it is going to be at the expense of something else," he said.

The high-priced sets of TV product, like "The Sopranos" at around $100, are out of the question, but Day's Market Place, Heber City, Utah, has had success with lower-priced VHS versions of classic television shows. "We've brought those in, and they do fairly well. We merchandise them with our other videos," said Carl Day, owner.

About the highest the independent can go with a set of DVDs is the $49 price point, he said. Some priced in the $30 to $40 range have done "okay," he said.

But Bashas', Chandler, Ariz., doesn't carry TV product at all, whether high or low priced, for rental or for sale, said Bill Glaseman, video specialist.

"I love the product, but I think it's hard for supermarkets to retail that kind of item in their price range," said Bob Alexander, president of Alexander & Associates, the research firm based in New York.

Supermarkets that have established themselves as an entertainment destination can sell and rent TV series, noted Bill Bryant, vice president of sales for Ingram Entertainment, La Vergne, Tenn. "A dedicated area is needed to properly merchandise this type of product," he said.

But the growth in consumer appetites for DVD products will drive sales of TV programming in supermarkets, said George Fiscus, former vice president of general merchandise at Bashas', and now director of grocery and drug sales for Delta Entertainment, Los Angeles. For example, classic TV shows packaged three episodes per DVD by Delta have strong potential. "Aggressive supermarkets can retail this product at a very profitable 2 for $10 with 11 different collections in one display. This retail encourages multiple sales and collectability for the consumer," he said.

Independent and foreign films also have potential, depending on space. "We put them out when they appear to be appropriate," said Glaseman.

"If something is really obscure, we just don't carry it, mainly because we don't have room. We are struggling for space now because we have the combination of VHS and DVD," he said.

Heber City, Utah, hosts some events of the Sundance Film Festival, held annually in nearby Park City, said Day. As a result, he sees potential for sales of independent and foreign films that he is not carrying now.

On the other hand, C&K Markets serves few artistic communities, so "we don't have the demand for the arty titles," Hage said.

Family and children's direct-to-video can do well in supermarkets, depending on the title, retailers agreed. "We will put out the direct-to-video titles that make sense," Glaseman said.

"We look at them one by one," Hage said. "Some have a pretty good track record for us and there are others we just pass on, even if they are cheap."

Overall, hit titles outsell non-hit titles 10 to 1 for Day, "but we make no profit on them. We sell them through below cost. We make more money on the titles that are a little more obscure, and we sell an ample amount of them," he said.