GROCERS TAKE LOCK & KEY APPROACH TO DVD SHRINK

STEPHANIE LOUGHRAN

CHANDLER, Ariz. -- Supermarket retailers are bullish on shrinking the DVD shrink rate, even if it means keeping the products behind the service counter.

As the popularity of the DVD movie format soars to unprecedented levels, retailers are finding that customers don't always want to pay for their favorite hit movies. Many supermarkets take such a closely guarded approach that they do not display the sleek, portable products on the floor at all.

"We get a real beating in [DVD] sell-through -- if it's a hot title, it's going to be stolen," said Ray Wolsieffer, assistant to the video buyer at Bashas' Markets here.

Several months ago, the retailer pulled its sell-through titles off the shelves and displayed them on the service counter, where there is more visibility and activity. "It's safer at the counter because they're too flat and too easy to slip into a shirt," Wolsieffer said.

Bashas' 32 stores that have video sections keep DVD rentals behind the counter and display the studio box. Some unknowing customers have even stolen the box, thinking that the disc was still inside because of the heavy inserts.

Chuck Lindner, video buyer, Doug's Supermarket, Warroad, Minn., agreed that DVDs should be kept off the floor. "I can't imagine DVDs not behind the counter," he said. "They're such an easily concealed item." The single-store independent has kept its DVDs behind the counter since it started carrying them for rent about six months ago.

According to Lindner, the retailer has also cracked down on theft of VHS tapes.

"We physically unscrew every VHS case and put a security label inside the [clear window] itself," he said. "Customers would need a screwdriver and a lot of time" to remove the label, he said. He pointed out that this tactic has "eliminated shrink."

A director of loss prevention at one food retailer said the stores have recently cut back on DVD sell-through titles and limited the stores that carry them due to high theft.

"[DVDs] are something that kids don't want to spend their money on," he said.

And unlike discount clubs and mass merchandisers that sell large quantities of DVDs, grocers generally don't sell enough to make up for theft. "Volume takes care of a lot of the evils of shrink," he said.

Starting around the beginning of this year, the retailer withdrew full-view DVD displays and locked the products in swiveled cases in the video center or at the service desk, according to the source. Previously, the DVD shrink rate ranged from 20% to 25%. Now, occasional employee theft is the larger factor. The stores keep employee pilfering in check by conducting bag checks, reviewing tapes of closed-circuit television recordings, placing source tags on products and auditing registers.

Jan Schreier, video manager, Prescott's Pic 'N' Save, West Bend, Wis., said, DVD sell-through theft has been such a problem that they also resorted to putting out photo copies of the covers in empty cases in place of the real product. "Selling is not so hot because theft is so high, it's so easy to just stuff in your pants," she said. Now, customers must bring up the empty boxes to the counter and exchange them for the real movie.

According to Pic 'N' Save cashier Lucas Koenings, the retailer began the new strategy with its 40 sell-through titles about six months ago. "It's a big problem now because [DVDs] are new," he said.

Grocers may be hurting their sales by taking this strategy, however. Bill Bryant, vice president of sales, grocery and drug, Ingram Entertainment, La Vergne, Tenn., said placing DVDs behind the counter makes it more difficult for consumers to shop.

"This dramatically decreases sales and sends a message that the retailer is not committed to becoming a destination for DVD," he said. "With mass merchants openly displaying product that consumers can shop and purchase, all other retailers must merchandise in this manner in order to produce significant sales."

Larry Miller, president of Trax Software and Consulting, Scottsdale, Ariz., and director of the National Supermarket Research Group, also based in Scottsdale, which produces an annual shrink rate survey on retail categories, said the most effective way to deter shoplifting is to have an employee presence in the video area.

"The real crux of prevention should be centered in a positive, proactive customer service program -- greeting and using eye contact with the customer is a great deterrent to theft," Miller said.