HARDING'S MARKET PUTS IN FIRST LIVE VIDEO DEPARTMENT

DAN ALAIMO

PLAINWELL, Mich. -- Harding's Friendly Markets will open its first live-inventory video-rental department in December, said Mike Kirby, director of operations.

The new department will be in the retailer's Otsego, Mich., store, which is north of Kalamazoo and is currently being remodeled. "We are going to upgrade the video department to a store within a store in our supermarket," said Kirby, who is in charge of six stores, five of which offer video rental. Harding's has 34 stores overall owned by 10 owners. There are only three or four other stores outside of Kirby's group -- the Harding & Hill Group, based in Plainwell -- that have video, he said.

Harding's existing departments carry between 1,000 and 1,500 tapes, but this one will have more than 3,000, he said.

"What we are doing in Otsego is a test to determine what we may want to do in the other stores," he said. "What we've done for the last 10 years has worked well, but we've seen some drop-off in the last year in our video rentals . So if we are going to continue with it, it's time to re-energize the departments."

The retailer might consider closing departments, if necessary. The downturn is partially attributable to increased video specialty store competition and direct satellite service in some rural areas, but also to a run of exceptionally good weather, said Kirby.

"We may have some hard decisions to make. We may have to close up the video departments in a couple of stores, but we are going to try and re-energize the ones that we think still have a viable future," he said.

In the new department, "we are going heavily into the new game formats, like Nintendo 64 and Sony PlayStation, which we've been slow to get into. We are going to put in interactive kiosks, which we have never done before. We want to experiment with renting the DVD format on a small scale to start with and see what the demand is for that in our area. And we are going to go deeper on new releases," said Kirby.

"We are going to set up the department as you would a traditional video store, but within our supermarket," he said.

Kirby was headed for the East Coast Video Show in early October in Atlantic City to look for fixtures and other merchandising ideas. "I will probably make the determination on DVD after I get back from the show. At this point, it looks like we have to look at renting the hardware because I don't think the penetration is there. It may be a good way for people in our area to try DVD out and see what they think of it," he said."