SMITTY'S MAY GET MORE BLOCKBUSTER UNITS

DAN ALAIMO

PHOENIX -- The two Blockbuster video rental stores that opened inside new Smitty's Super Valu stores here in November may hint at further supermarket expansion for the video specialty giant. "We are very pleased with the combination and we believe Blockbuster will be too," said Marc Weidinger, vice president of marketing at Smitty's. More Blockbuster stores within Smitty's are in the future, he said. "We will do them where it makes sense," said Weidinger. The two Blockbusters were the first to open within supermarkets. "We think it's a tremendously powerful combination. It certainly serves the consumer very well and I think we will both be very happy with the results," he said. Executives at Blockbuster Entertainment, Fort Lauderdale, Fla., have been quoted in press reports as saying they are watching the two-store test carefully with an eye toward expanding it. Multiple phone calls to Blockbuster by SN were not returned.

Blockbuster will consider opening additional units in Smitty's stores and other supermarket chains if results warrant it, Jim George, zone vice president, has said. Gerry Geddis, president of Blockbuster's video division, has been quoted as saying, "We have looked at this for a long time and it will be good to have them as a test." The two departments are full-sized 6,000-square-foot Blockbuster video stores. They open to the outside of the Smitty's structure and to the inside of it. By opening the supermarket video sections Blockbuster is "covering all bets," commented Tom Adams, managing director of Advanstar Associates, Carmel Valley, Calif. "It wouldn't make any more sense for Blockbuster to go in and open up a 1,000-square-foot supermarket department than it would for them to open up a 1,500-square-foot video store. If they can find the kinds of locations where they do a full-blown superstore within a supermarket, and if that is the best location in the area, then why wouldn't they?" he said. For Smitty's, the arrangement with Blockbuster "is consistent with the strategy that we have been following, of looking for very strong name-imaged retail partners to fit under the overall Smitty's umbrella," said Marc Weidinger, vice president of marketing at Smitty's Super Valu. "Obviously, a company with the tremendous reputation that Blockbuster has fits very well into that strategy. They have a very strong name. They provide an incremental draw into our location. Since we are running super combination stores, that is important. It's a very good fit in that respect," he said. "We are very much interested in being a leader and an innovator in our industry," said Weidinger. "This is just one other example of something that we thought made a lot of sense." The 6,000-square-foot commitment may be large by the standards of current supermarket video departments, noted Weidinger. "But in this day and age where the positioning of video in the supermarket industry has been getting stronger, we were in the process, and we will continue to be in the process of expanding our offering anyway. So this still makes sense," he said. Smitty's is looking at upgrading its present video rental departments, which are racked by U.S. Video, Denver. "It's constantly under review to make the offering better for the consumers. We are constantly working to improve that," said Weidinger, who would not comment further on the retailer's plans. The new Blockbuster sections were cross-promoted during the grand openings, including a Karaoke event and direct-mail and print advertising, said Weidinger. "They joined in very vigorously and participated in the celebration and the introduction of these two new stores," he said. The new Smitty's stores total over 107,000 square feet. They are combination stores including a supermarket and a discount department store, along with a pharmacy, food court, photo department, flower department, liquor department and party center. They also have Bank of America branches and Cost Cutters Family Hair Care operations. Blockbuster has long been known to be interested in opening in supermarkets, but has been unable to come up with a retail partner that would grant the amount of space it required. The deal with Smitty's was made by a Blockbuster franchisee, 22-store Ghost Rider Films, prior to being acquired by the parent company last year. Last summer, Blockbuster sold a racking operation to Major Video Concepts, Indianapolis, that serviced 50 small supermarket rental departments, mostly in Winn-Dixie stores in the southwest. It had picked up the company as part of another acquisition and had no interest in keeping it, presumably because of the size of the departments.