DIERBERGS BUILDS UP DVD IN RENTAL, SELL-THROUGH

DAN ALAIMO

CHESTERFIELD, Mo. -- Dierbergs Markets here is placing a greater focus on DVD for both sell-through and rental, said Brad Migneron, director of video operations.

In August, the retailer started resetting all 15 of its video-rental departments so that DVDs are merchandised next to their VHS counterparts, he said. Dierbergs has a total of 19 stores. Migneron expects the project to be done by November.

This results in more rentals, he said. "If there is a customer who is specifically a DVD or a VHS renter, and if they are able to play both formats, if they come in and we don't have it in their preferred format, they will see right away that we have it in the other," he said.

Currently, DVD is 50% of new-release product mix, but Migneron estimated that it will grow to well over 60% by year's end. "DVD is the format of the future," he said. Increasingly, the DVD copies of particular titles are the first to be picked up, he said.

Action-oriented genres continue to sell best on DVD, with children's titles lagging. "We thought we'd see more of that happen when 'Shrek' came out, and then Disney followed with several new DVDs, but we haven't seen the sell-through on DVD that we want," he said.

That could be changing with the recent release of "Monsters, Inc." To combat theft on the DVD version while boosting margins, Dierbergs put together a special package selling for $22.95 -- the minimum advertised price is $19.95, Migneron said.

The retailer attached the DVD to a 2-liter bottle of Coca-Cola products, put it in a basket together with popcorn, free movie-rental coupons and coloring books, and then shrink-wrapped it, decorating the top with a ribbon. "It makes it very difficult for somebody to pick up more than one of them without being noticed. As a result, we've been able to leave the DVD package on the main sales floor with no problems," he said.

The "Monsters, Inc." release came at a time when Dierbergs was holding a "lobby" sale, so the packages were located in the entry lobby to the stores with no theft problems, he said. They were also merchandised in the secured environment of the video-rental departments, Migneron said. The retailer promoted the package with its circular and in-store signage.

Sales for the first two days were very strong, with 189 units of the DVD package moving through the front point-of-sale system, he said. But VHS, which was at the MAP of $15.95, did even better with 515 units selling through the front end. Migneron did not have figures that included sales in the video departments.

Because the title is in the children's genre, because kids have greater access to the family VHS players than to the DVD players, and because VHS tapes are more durable than DVDs, "VHS is still the format of choice for kids' titles," he said.

"Judging by the early movement on this, it is pretty positive. So I will probably do more creative packaging like this with DVD," he said. Migneron noted that Dr Pepper is a merchandising partner for the upcoming release of "Spider-man" and he is looking into doing a similar kind of package.