MOVIE EXCHANGE IS WRAPPING NEW LIVE-INVENTORY SECTION

DAN ALAIMO

OAKS, Pa. -- One of the country's largest rackers of supermarket rental sections has opened its fifth leased space, a live-inventory department.

The Movie Exchange, which provides about 200 supermarkets with shared-revenue rental programs and 1,000 with sell-through product, opened the 1,000-square-foot department last month in the new Jefferson, Ohio, store of Thorne's Bi-Lo Supermarkets, Salem, Ohio, said Ed Sam, national sales director for the video company. Thorne's is supplied by Penn Traffic's Riverside division, Du Bois, Pa.

The new department has a rental inventory of 4,000 video and video game units, with about 30% dedicated to new releases, said Sam. The department has a separate entrance and operates on a leased-space arrangement, paying rent based on a percentage of revenue, he said.

Among the Movie Exchange's other customers are Acme Markets, Malvern, Pa.; Penn Traffic, Syracuse, N.Y.; A&P, Montvale, N.J.; Super Fresh, Florence, N.J.; Waldbaum's, Central Islip, N.Y.; Stop & Shop Supermarkets, Quincy, Mass. (in two former Edwards Foods stores); Giant Foods, Carlisle, Pa.; Weis Markets, Sunbury, Pa.; some ShopRite stores supplied by Wakefern Food Corp., Elizabeth, N.J.; some independent Giant Eagle stores, and some Shop 'n Save stores in the Pittsburgh area supplied by Supervalu's Northeast Region, New Stanton, Pa.

Thorne's Jefferson store is a new replacement unit. The company's other store, in Warren, Pa., has a similar Movie Exchange live-inventory department, but without a separate entrance.

"Based on the amount of people renting the videos, it is an extremely good draw for the supermarket," said Bill Thorne, co-owner. Both departments are doing "extremely well," he said. "It has been a good match. Both companies have benefited from what each other has done." Thorne has no plans to add more stores in the year ahead.

As to why he elected to go with a leased space rather than an in-house program, Thorne said: "I'm a grocer. I'm not a video man, so I leave that to the experts."

Thorne is not sure what the long-term future will bring for video, "but short-term, it is still an extremely good category to be in."

Movie Exchange made two changes in the new department, noted Sam. Design-wise, the customer-service desk was moved from the entry area to a wall. "We feel that allows us to check customers out faster," he said.

Because the new store draws from a wide rural area in northeast Ohio, the new department is using a different marketing approach that emphasizes longer rental periods, said Sam.

"We are promoting this store as the home of the five-day rental," he said. "We felt we needed to make it inviting for the customer to rent the movies and not have to rush back to return them."

The five-day program is good on new releases over 90 days old, with a rental rate of $2.79. New releases of 90 days or less also rent for $2.79, but only for two days. Video games are five games at $5 for five days. Catalog movies are $1.49 for five days, but with a special Lucky 7 promotion offering seven movies for $7 over seven days.

Another marketing device Movie Exchange is employing for the new store is a radio remote broadcast on New Year's Eve, using co-op funds from Universal's "The Nutty Professor." The event keys on the comedy's food-oriented theme. "Working with the store manager, we have arranged for vendors to sample about six different items, including Pepsi and some snack products," said Sam.

The Movie Exchange plans to continue expanding its leased-space, live-inventory concept, but in a controlled, opportunistic way.

"We want to grow with it, but at the right pace," Sam noted. "It's a bigger investment for us. We want to make sure that the locations we pick are the ones that are suited for super [video] stores. Not every store is suited for a superstore.

"Another important factor in deciding whether a superstore belongs in a supermarket is the partnership that you have with the retailer," he added."