SPECIALTY CHAIN EXITS SUPERMARKET SCENE

DAN ALAIMO

GREENVILLE, S.C. -- Moovies, a fast-growing video specialty chain based here, has sold its supermarket rack-jobbing division to video distributor Major Video Concepts, Indianapolis.

"We sold it to focus on our core business," said John Taylor, chairman and chief executive officer of Moovies.

"While we were making money on the grocery piece of the business, it is simply not our business," he added.

Moovies is primarily a video rental retailer, now with 158 stores, he said. The company was formed as 16 separate retail entities were merged and acquired, mostly last year. One of these companies was First Row Video, Warren, Ohio, which had a supermarket division, said Taylor. Rokki Rogan, the former president of First Row, is now vice president of acquisitions at Moovies. "More grocery stores are gaining market share in the video rental business. But to us, that is irrelevant. We want to be very focused on one business. We think it takes us down to focus on two businesses. It's a diversion for management, it's a diversion of our cash and it is a diversion of our focus," said Taylor. Moovies' supermarket division serves 81 stores in Ohio, Pennsylvania, New York and Indiana, said Brian Corns, who was operations manager for the division and is still employed by Moovies. The departments range in size from 600 to 2,700 tapes, and average 1,100 tapes, he said. Many of the stores racked by the operation are supplied by the Supervalu division in Fort Wayne, Ind., Corns noted. About 70% were independents, he said. Among the other supermarket banners served are County Markets, Shop-N-Save and Market Basket. "Ninety-nine percent of the time, we could outbid and outsell [Supervalu's in-house] Studio 100 program," said Corns. Major Video Concepts has apparently -- and quietly -- been putting together a sizable supermarket racking division. Corns estimated that the distributor has as many as 700 locations. Executives at Major Video Concepts would not comment on the distributor's supermarket operation, citing contractual stipulations against public statements. In July 1994, Major bought a rental racking operation that served 50 Winn-Dixie stores from Blockbuster Entertainment, Fort Lauderdale, Fla. The stores were in the Jacksonville, Fla.-based chain's Fort Worth, New Orleans and Tampa divisions. Blockbuster had picked up the racking operation when it acquired a video specialty retailer, but divested the supermarket business, SN reported. At the time, Walt Wiseman, Major's president, said the company racked a total of 85 supermarket departments. Corns said the Moovies division was in "an expansion mode," with plans for adding 100 more departments. But the company decided to channel its resources into the development of more specialty stores, he said. Moovies may add 20 to 40 more stores by the end of the year, said Taylor, through a combination of acquisitions and new store openings. Asked whether the company has any future in supermarket video, Taylor answered, "No. Never." The supermarket division it got in its merger with First Row had many satisfied customers, Corns said. "Our turnover was very low. We had kept a lot of the accounts for six to seven years," he said. Video rental in supermarkets will outlast other retail outlets, Corns noted.

"It is the part of the video industry that will be around the longest. Even if retail is taken over by direct satellite or other communications systems, video programs will still be around in supermarkets," he said.