LOOKING FOR A FEW GOOD MEMBERS

DAN ALAIMO

LOS ANGELES -- As the Video Software Dealers Association here meets next week for its annual convention, the trade group is readying plans to expand its supermarket membership, said Jeffrey P. Eves, president. VSDA has traditionally been oriented to video specialty retailers, a group that makes up the vast majority of its membership base. However, as supermarkets grow in importance to the video trade, and because the VSDA show is the only venue where supermarket video executives can meet a broad cross-section of video suppliers, increasing supermarket participation in the association is becoming more of a priority, said Eves.

In a wide-ranging preshow interview with SN, Eves discussed future supermarket participation in VSDA, how supermarkets can benefit from membership and what they can look forward to at this year's show. The VSDA convention takes place May 21 to 24 in Dallas.

"Given the growth of the industry, it makes even more sense to begin to do some specific focusing on the supermarket sector. That's something that we would expect to begin to address in the second half of the year," said Eves.

Formation of an ad hoc committee to find out what supermarket retailers need from VSDA and then involving supermarkets in the association's new VidTrac research program will be two steps toward increased participation, he said. Also, as of the first of the year, VSDA's dues structure was changed to make it more attractive to supermarkets and other nonspecialty retailers, he noted.

But while it plans to reach out to more supermarkets, VSDA needs to see more concrete expressions of interest from supermarkets, Eves noted. "This is a two-way street. Just as there are those in the supermarket business who would like to see VSDA reach out more proactively to them, if there is interest in a high level of participation from the supermarket trade, we would like to see some indication of that," he said.

"Our door is wide open on this. We would welcome their involvement and participation. But it requires two to tango," Eves said.

Here's how SN's conversation with Eves went:

SN: What is the status of supermarket membership in VSDA?

EVES: To this point in time, there has not been a particularly focused effort to attract one segment of the industry over another. As important as it is, we look at the supermarket segment as a part of the overall video industry. However, I believe that is going to be an area of focus going forward.

Given the growth of the industry, it makes even more sense to begin to do some specific focusing on the supermarket sector. That's something that we would expect to begin to address in the second half of the year.

SN: Have you done anything lately to make VSDA more appealing to supermarkets?

EVES: Yes. For example, there was some concern on the part of supermarkets when we changed the dues structure last year. They said it wasn't appropriate to base supermarket dues on the number of stores because those outlets tended to be on average smaller in volume than a typical video retailer. To address that, we revised our dues structure for nonspecialty merchants, such as supermarkets, to base their dues on their dollar volume of video business.

The number of outlets they have or the number of pounds of potatoes they sell is not relevant to the video business, so we restructured our dues to make it more attractive from a financial perspective for supermarkets to come in and participate more actively. This became effective as of the first of the year.

SN: How will you go about attracting more supermarkets?

EVES: The best plans result when you have an interactive dialogue with the people who are most affected. Something we expect to talk to our board about is the creation of an ad hoc advisory group from the supermarket trade. The idea will be to sit down with a group of representatives from the supermarket business and talk with them very specifically about their needs and how their needs are the same as, and different from, those of the video specialist store. Once we have that kind of feedback from the supermarket business, then we will be in a better position to work with them to design the kinds of programs that will be most valuable to the supermarket business.

SN: What do you see for supermarket representation on the VSDA board of directors?

EVES: There has been some discussion in the past as to whether supermarkets are fairly represented on the VSDA board. The answer to that question depends on how you look at the business. If you look at the business from the perspective of the overall percentage that supermarkets contribute to the total video business, then it would be very easy to conclude that they are under-represented on the board. If, on the other hand, you look at it is as the percentage of supermarket members in the VSDA membership, then I don't believe that there is an under-representation.

All of that is a way of saying that the most appropriate way to increase the representation both numerically and as a percentage of the VSDA board is to attract more supermarket members to VSDA. Right now we have one direct board member who is purely in the supermarket business, and we have other members on the board who are in the distribution business and do business with supermarkets. But if we are going to increase that, then we need to expand the general membership.

SN: What portion of VSDA membership are supermarkets now?

EVES: Because of the way we collect information, we can't break that number out now. But it is fair to say, in a general sense, that the number of supermarket members of VSDA represents a smaller percentage than the presence of supermarkets in the overall industry.

On a gross volume basis, depending on whose numbers you look at, we've seen estimates ranging from 15% to 20% in terms of the volume of business done by supermarkets. It's probably fair to say that the supermarket membership in VSDA is probably not more than half that percentage.

But this is a two-way street. Just as there are those in the supermarket business who would like to see VSDA reach out more proactively to them, if there is interest in a high level of participation from the supermarket trade, we would like to see some indication of that. Our door is wide open on this. We would welcome their involvement and participation. But it requires two to tango.

SN: What does VSDA offer to supermarkets?

EVES: Pending our further conversations about a supermarket task force, VSDA has been approaching this from a more common-denominator approach. So I would have to answer the question: What does VSDA offer any retailer?

The fundamental purpose of VSDA is to do everything that we possibly can to assist manufacturers and retailers to grow the video business. That means to provide members, particularly retailers, all the tools they need to be successful merchants of video products.

We have been looking at several things. One is the area of education and training. VSDA can do a much better job of providing educational and training opportunities for our members so that they become better business people and more effective competitors in the marketplace. To that end we have announced the launch of a series of two-day interactive seminars designed specifically for store managers and store owners about how they can increase their business, covering a broad range of topics.

A second area, equally applicable to supermarkets and video specialists, is to focus on maximizing the value for the membership dues dollar by expanding member benefit programs. For example, an important new program -- one that has been sought for more than 10 years -- is the VSDA screeners program. Through this, any member can receive screeners from every studio. This is going to provide retailers with hundreds of screeners every year and it is a benefit with a value generally far in excess of the cost of membership.

Additionally, we have taken the initiative in terms of dealing with street date issues, and have been very proactive in dealing with the rentability of the new digital video disc product when it hits the market. On the rental of DVD, we have been quite successful in identifying a real problem and making a contribution to solving it.

We have doubled the amount of money that VSDA is committing to our government relations and our grass roots program to help build the collective influence and clout of the video industry. These kinds of programs offer important benefits to supermarket members, but I'd be quick to point out that they are a benefit as well to regular membership.

Finally, we announced our VidTrac research program in 1995. This will be valuable to supermarkets because it will give them an opportunity to benchmark their performance against other supermarkets and other retailers.

SN: Why is it necessary for VSDA to get involved in market research?

EVES: One of the unusual characteristics of the video industry is, there are few business segments as big as it is that do not have reliable statistical and marketing information on which to base the hundreds of millions of dollars of decisions that are made. That's particularly true on the rental side of the business.

VSDA's VidTrac program will be the first program to develop rental statistical information based on point-of-rental data. This will be important, not only to the studios, but to the supermarkets, to the video specialist stores, to everyone who is engaged in the retail end of this business.

This program will do two things. One, it is going to provide some of the best statistical and marketing information we've ever had. Two, it also is going to give us a wealth of information that can be used for promotional purposes.

SN: What is your timetable for this project?

EVES: We are developing the software right now. We will be talking about the VidTrac program at our convention this year. After the convention we will begin signing up customers for the program. We expect to have our first information available by sometime late in the fourth quarter of this year.

SN: How can supermarkets be involved?

EVES: Supermarkets are going to be an important part of this and we would very much welcome any inquiries from them. Supermarkets are ideal participants in the program because they already have systems in place in their stores for tracking inventory and recording sales. It is going to be a simple matter to hook them up to the program.