PRICING CALLED CRUCIAL FOR BOXED SETS

PAT NATSCHKE LENIUS

Boxed and gift video sets can be profitable holiday merchandise for supermarkets that offer the right collections and price points.

Having a successful boxed set video program often hinges on whether the product is a collector's or special-edition item that retails for under $40, according to several retailers.

Some retailers have been able to sell special edition boxed sets for up to $100, but most contacted by SN said they would expect to have the most success with merchandise priced significantly lower. Most prefer to offer special orders for products that retail for more than $40 or $50.

"The ceiling is $39.95. Usually we will say no to a set if it retails for higher than that," said Steve Gretzinger, video coordinator at Angeli Foods Co., Iron River, Mich. "We would special-order a higher-priced set for a customer, but as far as merchandising a boxed set on the shelf, $40 is the limit." The lower retails are necessary to compete with Wal-Mart and Target, which usually price video sets competitively, said Russ Kates, partner and co-owner of Steele's Markets, Fort Collins, Colo. "We have to price close to cost to get the sets through," Kates said.

For example, Disney gift sets -- such as "Beauty and the Beast," "Fantasia" and "The Lion King" -- are usually introduced at $99.95, but quickly drop to $79.95, almost at cost, which may be $78, Kates said.

The Disney gift sets typically contain the video, a soundtrack, a paperback that shows how the movie was made, and some knick-knacks, he said.

The assistant video director for a 20-store Northwestern chain said a boxed video set with a retail price over $39 is too expensive for supermarkets.

"Boxed sets priced at a little over $30 are moving OK, but those over $50 seem too high-priced. I would think that $30 to $35 would be the maximum," he said.

It wouldn't be cost-efficient or space-efficient to carry sets with higher retails, the retailer said. As an alternative, the chain, like many others, special-orders higher-priced products.

"If our cost is $52 for a four-video set, that is too high and we won't be able to sell it. We could special-order those higher-priced boxed sets for customers who request them, but it would be a waste of space for us to carry them on the shelf," the assistant video director said.

Seaway Food Town, Maumee, Ohio, tried offering gift packs of videos about five years ago but hasn't carried them since, said Sharon Stagner, merchandising coordinator.

"We were less than pleased with the results of those sales. Some sold for over $50. We think the prices may have been too high," she said.

But the growing acceptance of credit card payments in supermarkets could help increase consumer interest in boxed video sets, Stagner said.

"Some of our stores now accept credit cards and we are currently converting others. Maybe as early as this time next year we could reconsider carrying gift boxes of videos if we are taking credit cards for payment," she said. Brenda Vanover, video coordinator and buyer at K-VA-T Food Stores, Grundy, Va., a 62-unit chain, said price points of $29.95 and $39.95 on boxed video sets are too high for most customers.

The stores currently are not carrying gift sets or boxed sets but, depending on the price range, might be interested in a Walt Disney boxed set, she said.

"It would be hard to merchandise gift sets or boxed sets in the space we have. Our video space is limited. Also, there is the possibility of theft to consider," she said.

One Midwest chain with more than 50 stores has never offered video gift or boxed sets because of the high price point, according to the chain's video director, who did not want to be identified.

"For us to carry it, it would probably have to be in the retail price range of $15, or $19.99 maximum," he said.

Lower-priced video sets often sell better because they are more of an impulse purchase, said Karen Welch, video manager at Clyde Evans Grocery Shop, Lima, Ohio.

"The videos that sell best in a supermarket are the lower-priced items. One movie at a lower price can be more or less a spontaneous purchase," Welch said. "It seems like it is harder to move something higher priced. People tend to go more to video stores or even mass merchandisers, where there is a huge wall of videos, for special purchases like boxed sets." Steele's Markets has had little trouble selling boxed sets at high price points, Kates said. It has had success with special editions of Disney boxed sets that sold for $100.

Sales of "Beauty and the Beast" and the special edition of "Fantasia," which contained the old and new version of the movie, were brisk despite limited promotional activity.

"We just put them out and they sold. We didn't do anything special. We let customers know they were available. One was open on the counter in the video department so people could see what was inside," Kates said. "There was no advertising. We had them out around the holidays a couple of years ago. The first time we tried to sell 'Fantasia,' we sold all 24 pieces in the shipper." The retailer always has some gift packs of videos available at Christmas. This year Kates said he expects to carry a "Cinderella" video gift set and gift sets featuring "Beauty and the Beast" and "The Lion King" videos.

Popular animated films aren't the only type of gift sets that can do well. For example, the Star Wars Trilogy boxed video set, which sells at a suggested retail of $49.98, was a breakthrough seller for two retailers.

"That is the first set we had luck selling. We will probably keep the Star Wars Trilogy out for the holidays," said Gretzinger of Angeli Foods. The retailer introduced the boxed set about two months ago.

"It is still moving out. We have carried other boxed sets, such as the Die Hard, Lethal Weapon and Godfather series, but we never really had much luck."

What helped the Star Wars Trilogy was the hype surrounding its release, said Kates. "There was national advertising behind it, so people were looking for it. Also, we got some additional signage," he said. The retailers offered it in both the video and grocery store, Gretzinger said.

Though it didn't advertise the title, Angeli gave the Star Wars Trilogy strong visibility throughout the store.

"We treated it like the promotion for a big movie. Our price matched the competition. We priced it at $38.95," he said, noting that box sets were promoted with posters.

Angeli won't promote many gift sets and boxed sets for the holidays, but may carry the Jodie Foster Collection and the Alien Collection.

"We have more luck with action and science-fiction video sets vs. something like 'The Honeymooners' or a TV movie. We would be able to sell the James Bond video set. We may bring in a few pieces of the Little Women gift set for Christmas. Boxed video sets can be displayed anywhere. We put a scan label on them," Gretzinger said.

The Northwestern retailer has also had success with the Star Wars Trilogy boxed video set.

"There was new packaging and a lot of promotion behind it. They made a big deal of it. It is still doing well and we expect that to continue up through Christmas. The Star Wars Trilogy is the first boxed set we have carried for a long time that did well," said the assistant video director.

The three-pack set is retailing at a little above cost, so the chain is not making much money on it, he said.

"We have the boxed set and people know it, so it is drawing customers," he said.