PREVIOUSLY VIEWED MOVIES RIDE THE DVD WAVE 2004-04-26 (1)

DAN ALAIMO

Riding the crest of the DVD sales wave, some retailers are also doing well with previously viewed movies.

Aside from concerns about scratches -- most retailers offer guarantees -- DVDs have a much longer lifespan than their videocassette predecessors, and command a premium over the tapes.

"We get about $10 for used DVDs, and we sell a lot of them," said Bob Gettner, video buyer/coordinator, B&R Stores, Lincoln, Neb. Meanwhile, previously viewed VHS seldom sells for more than $5, he said.

"The only questions we get are, 'Is it scratched?' or 'Is it in 100% good condition?' Well, we're talking about rental product, and there are going to be scratches. It's just a matter of whether it affects play." B&R guarantees the used product, he noted.

"As always, we sell any of our surplus product after a period of time as previously viewed, and that seems to go well," said Ray Wolsieffer, video specialist, Bashas', Chandler, Ariz. Like other supermarkets with rental operations, Bashas' only sells off its own inventory; therefore, it doesn't buy used product from the many vendors who offer it, he said.

Previously viewed product is a growing and vibrant market, said Bob Alexander, president, Alexander & Associates, New York. One published report estimated that the used DVD market would exceed $1 billion this year, a fivefold increase over four years ago.

In his consumer-based research, Alexander said, "We've been seeing the sales of more previously viewed product in general, and some of the supermarket names have been attached to this trend." Alexander polls thousands of households each month across the country asking about the videos they bought and where they bought them.

"There has been an organized market in previously viewed material, and we are of the opinion that this is a good thing," he said. Alexander observed that the previously viewed customer is different from the one who buys new product. As a result, the purchases of used movies is not cannibalistic.

Previously viewed product usually sells at price points that supermarket customers are comfortable with, he said. "Several years ago, supermarkets didn't want to deal with $29.95 product because it stands out in a grocery basket. 'Give me something that sells for $5 or $10,"' they would say, and that's what previously viewed movies go for, he said.

Some catalog product is even priced too high for the grocery environment, he commented. "That's why the previously viewed product is so attractive to the supermarket product mix. The prices are exactly where they want them."

Alexander noted that the rental market is gradually declining, but it is still "enormous, and it's not the kind of thing that turns on a dime. There is a very slow, long-term decline in rental activity, but I'm happy with its potential for the rest of this decade," he said. That means a continuing supply of previously viewed product.

TOP 10 SUPERMARKET VIDEO RENTAL TITLES

Rank, Last Week: Title (Weeks Out)

1, N: Cheaper by the Dozen, Fox

2, N: The Matrix Revolutions, Warner

3, 1: Something's Gotta Give (1), Columbia

4, 3: Gothika (2), Warner

5, 4: The Rundown (2), Universal

6, 2: The Texas Chainsaw Massacre (1), New Line

7, 5: Brother Bear (1), Buena Vista

8, 7: Mona Lisa Smile (4), Paramount

9, 6: Honey (2), Universal

10, 8: School of Rock (5), Paramount

N = New

As of April 11, 2004 This chart, tailored for the supermarket video market, is based on information taken from more than 1,000 supermarket rental locations serviced by Ingram Entertainment, La Vergne, Tenn.