DIERBERGS MARKETS HOPES SALES ZOOM WITH VIDEO REFOCUS

DAN ALAIMO

CHESTERFIELD, Mo. -- In a major remodeling, Dierbergs Markets has downsized its largest video-rental department, but improved its location and merchandising, said Jamie Molitor, director of video operations.

The old department was in an odd-shaped 4,250-square-foot space connected to, but separate from, the main store on Olive Boulevard in Creve Coeur, Mo., SN found when it visited there last year. The department is now about 3,000 square feet with the same 9,000 units of rental inventory, said Molitor. While the expansion and remodeling of the main store is still in progress, the new video department opened the day after Easter.

The remodeled department has a separate entrance to the parking lot and a connecting entrance to the main store. It is in the main traffic pattern near bakery and floral, Molitor said. Many of Dierbergs other departments are located in front of the checkouts.

While losing some floor space, the department "is part of the shopping pattern, so we will increase the customer perception that it is a stand-alone destination department. I am excited about seeing how it will perform. I hope it will do very well," she said.

"We were able to maintain the inventory size by changing our merchandising, such as the way we present the movies," said Molitor. In the old store, all tapes were stocked on the racks behind the empty original sleeve, which would stay on the shelf after the tape was rented.

Dierbergs saved space in the remodeled department by merchandising the catalog inventory in plastic cases containing both the tape and the original sleeve, she said. New releases continue to be displayed the old way so consumers will see the department's depth of copy even when the tapes are out.

The retailer also bought a different type of plastic tape case for this store. "They are less expensive, so when they start to wear, it will be more cost-effective to replace them. I don't like it when the cases start to look faded. I want them to look new and clean," said Molitor. The fixtures are wood cabinetry custom-made for Dierbergs, she noted.

New releases are the focus of the merchandising on all perimeter walls, she said. "We have increased our new release space in all our stores because that is what the consumers are demanding," she said.

This store has a children's new release section located near the children's catalog tapes, the video games and the children's sell-through, Molitor noted.

Participating in the shared-transaction-fee program of SuperComm, Dallas, Dierbergs runs guaranteed availability promotions on two titles a month, she said. With the shared-fee programs, retailers pay a fee of $10 or less to acquire a tape, and then share the revenues about 50-50 with the supplier. SuperComm is a Disney subsidiary. In guaranteed availability promotions, customers are offered a free rental if the featured title is not in stock. Retailers also include titles released direct to the sell-through market in these promotions.

To accommodate these titles, which are stocked in great depth, the remodeled department starts its new release presentation with large spaces dedicated to the promoted titles. "We start with the guaranteed new releases and then they go around the perimeter of the department alphabetically," Molitor said.

The retailer is still testing this aspect of its merchandising. In some other stores, the guaranteed titles are displayed in their regular alphabetized sections. "That makes a nice presentation too. I'm not sure which is the best way to do it so we are trying a little of both," said Molitor.

The SuperComm program is doing well for Dierbergs, she said. "I'm very pleased with it," she said. The main benefit is primarily promotional, because profits on the titles are less than they would be if they were bought through traditional distribution channels, she said. "Because I am buying deeper, my margins are lower on these titles. But I knew that going in. If you are sharing revenue, your margins will never be the same as they would be if you owned those tapes," said Molitor.

Another big benefit of the SuperComm program is its SuperLink inventory control and analysis program, she said. "It has helped me to understand my business better." SuperLink tracks all titles, not just SuperComm's, she noted.

For example, by using SuperLink, Molitor was able to determine that foreign and classic films deserved more space in the remodeled department. "The SuperLink program has given me knowledge of which sections do better at individual stores," she said.

Audio books have been added to the department with the remodeling, Molitor said.

"This is something new that we have put into a couple of locations since last summer and it has been very successful. I see a real need for it. People just don't read books like they did in the past. They don't have time," she said.

Dierbergs also is looking into testing music audio products, she said. "It would be a mixture of the new hits and some older music." The retailer tried music a long time ago and it didn't work out.

"But the music business is changing. I see little spinners of music in convenience stores and other locations, so there is a demand for it. I'm not sure if the time is right for us to get back into it, but it is worth a try," said Molitor.

Many consumers, like herself, are replacing their libraries of albums with compact discs, she said. Also while they don't go into music specialty stores regularly, they are often in supermarkets. "So I think there is an opportunity there," she said.