HARPS FINDS STRONG RURAL ROLE IN DVD-RENTAL SCENARIO

DAN ALAIMO

SPRINGDALE, Ark. -- Citing strong interest, including in rural supermarkets, Harps Food Stores here is gradually rolling out a DVD-rental program, said Craig Hill, video specialist. The retailer now offers DVDs in nine of its 20 video departments, and has plans to put DVD into three more stores soon, he said.

The chain started testing DVD in three stores right before Thanksgiving, Hill said. Since then, three more stores are selling the discs. "We've been gradually putting them in since right before Christmas. We are planning on putting it in three more stores as the budget opens up," he said. Rental revenues are strong right now, so he hopes to do this by mid-April. The latest Harps store got DVD late last month.

"We were surprised by the response, especially in some of the rural stores," Hill said. For example, in Poteau, Okla., which is mostly a rural farming community, "We are seeing a real great response to DVD." He attributes this to today's fast-changing communications technologies. "With the advent of the Internet and satellite systems, people are becoming more knowledgeable about electronics," he said.

In the larger stores, Harps stocks about 50 DVD titles, one or two deep. Smaller stores get 20 to 25 titles, Hill said. DVD sell-through comprising 60 to 80 units of 20 titles also is offered in larger stores. In most cases, DVD is merchandised in its own 4-foot section, he said. "We try to keep it in a specialized location where the people know to go for DVD." Rental rates for DVD are the same as new releases, $2.88 for one night in most stores, he said.

Harps has already seen a return on investment for some stronger DVD titles, like "Armageddon." "With the low unit cost on DVD, it only takes 10 or 12 rentals to make our money back," Hill said.

Certain stores are doing especially well, he said. "In our Mountain Home [Ark.] store, every DVD unit is rented out on the weekend." Using promotional materials from distributor WaxWorks Video Works, Owensboro, Ky., Harps uses in-store banners, posters and window clings, with some advertising in college newspapers. The retailer puts stickers on corresponding VHS titles that say, "Also available on DVD." "But so far, it's grown by word of mouth. People are telling other people that have DVD," he said.

DVD will really take off when the cost of the players comes down, Hill said. "It's tough to come up with $399, but $250 would be a great price. Then you would see a lot more expansion of the DVD market."