EXECS FORECAST FOURTH QUARTER SALES SUCCESS

DAN ALAIMO / Additional reporting: ED LIEBER

LAS VEGAS -- Catalog products, aggressive price points and sophisticated cross merchandising will be the keys to fourth-quarter success in video sell-through for supermarkets, according to suppliers polled at the Video Software Dealers Association convention here earlier this month.

The quarter will be heavy with releases of major direct-to- sell-through hits, new direct-to-video movies, repricings of movies originally released to the rental market, re-releases of classic titles and many other themed programs. Meanwhile, there will be an abundance of family movies, children's products and programming that originated on television.

"This is the first year that, across the board, people are going to realize that the sell-through business is flat," said Eric Parkinson, chief executive officer of Plaza Entertainment, Los Angeles. "It's still an enormous business and it's a tremendous revenue generator for grocery and other retail categories. But it will be the first year that we do not experience growth, let alone double-digit growth."

With many other classes of trade focusing on the big hits at aggressive prices, supermarkets need to carry other products with a higher margin as well, he said. "Carrying a broader selection is going to enable the grocery category to continue to grow in its dominance of the sell-through business," said Parkinson.

"Supermarkets will realize a tremendous lift in video in the fourth quarter," said Mark Horak, vice president of marketing at Warner Home Video, Burbank, Calif. "The strength of sell-through titles will create consumer excitement about the category. It will build traffic that can be used to stimulate broader sales of catalog titles," he said.

"We are finding huge success with catalog," said Ray Gagnon, senior vice president of sales, national accounts at Twentieth Century Fox Home Entertainment, Beverly Hills, Calif. "People are not buying less, they are buying more, but it is across a greater breadth of product. There is a lot more available. As a result, our catalog business is flying," he said.

One area of the market is companion products, such as documentaries and other programming related to hit movies, said Tom Heymann, vice president of enterprises at A&E Television Networks, New York. "A lot of this product is not as widely available as the hit movie releases, so it is an opportunity to present something to customers that might not be generally accessible in all channels of distribution.

Retailers are starting to seek out this product, he said. "We are finding that the buyers whom we had to pursue are now pursuing us. There is an understanding that documentary product can work, can sell, can become a profitable class of products at retail," said Heymann.

The many family-oriented movies coming out on video this fourth quarter were noted by some executives as one reason for sell-through optimism in supermarkets.

"There is an abundance of broad-appeal products that the whole family can watch together," said Paul Culberg, executive vice president of Columbia TriStar Home Video, Culver City, Calif. "It's not just focused on boys, not just focused on girls, not just targeting the moms, but it gets back to the family being able to spend some quality time during the holidays together," he said

"When I look at the lineup that is in the theaters this summer, there are a lot of good family titles that have done well at the box office," said Ken Graffeo, senior vice president of marketing at PolyGram Video, New York. "Going into the fourth quarter of this year, they will find their way into the supermarkets, and the supermarkets will capitalize on them," he said.

"A good buying staff is more important than ever before," said Eric Doctorow, president of Paramount Home Video, Hollywood. "Having a comprehensive, well-thought-out program also is important," he said.

"There will be some great catalog available, but supermarkets must be smart about the product mix, bringing in recognizable titles," said Charlie Katz, senior vice president of marketing at Universal Studios Home Video, Universal City, Calif. "They can't just jam every video in. They have to look at what's worked in the past. Customized prepacks are important," he said.

Others stressed that price points are the key to video sales in supermarkets. "This year will provide the most crowded fourth quarter in memory," said Robert Wittenberg, senior vice president of sales at MGM Home Entertainment, Santa Monica, Calif. "The supermarkets will need to focus on price statements. This will allow them to take full advantage of their heavy footfall and the impulse nature that correctly priced video brings," he said.

"Impulse is the key to selling in a supermarket," noted Robin Montgomery, executive vice president of Bonneville Worldwide Entertainment, Salt Lake City, and price points under $10 are the key to attracting impulse shoppers.

When it comes to secondary titles, selectivity is another key. "If I were a supermarket, I would choose my secondary titles wisely, because you don't have enough shelf space for everything. You have to put displays out, you've got to end-aisle your product," said Montgomery.

"Buyers will have to be much more savvy," said Wendy Moss, senior vice president of marketing at Sony Wonder and Sony Music Video, New York. "Every fourth quarter there is a tremendous spate of titles. Supermarkets have limited space, so they have to scrutinize product to see what will work for them. They have to merchandise so customers can see the focus of their video product and find what they are looking for," she said.

High-profile movie tie-ins and brand names also help move sell-through products in supermarkets, said A&E's Heymann. "The combination of great consumer awareness along with price point works for the supermarket channel," he said.