SPRING FORWARD 2004-02-02 (2)

AL HELLER

Video sell-through opportunities will continue unabated this spring, punctuated by family and children's releases for gift-buying timed for the late Easter holiday this year.

At Associated Wholesalers, York, Pa., which services 1,200 supermarkets and convenience stores, including 50 with video sell-through, springtime is a key period for establishing the retailers' image as a consistent seasonal destination. "Across the total store, our No. 2 season year-round is spring-summer, with Easter itself as third. But looking at video alone, Easter is second only to Christmas," said Brian Snyder, general merchandise category manager.

Springtime is when consumers seek an emotional lift after winter, and make impulsive buys of video titles they think could bring more fun into their households. "There isn't a bad time for supermarkets to be selling videos on DVD or VHS. There isn't necessarily one season better than another for the category, albeit Easter lends itself to gift-giving, and children's videos are a great alternative gift to candy," said Bill Mansfield, a 30-year veteran of the supermarket and drug store industry who served most recently as vice president-general merchandise at Marsh Supermarkets, Indianapolis.

At least one studio executive agrees. "For supermarkets, a holiday like Easter is just an extension of the year-round business," noted Steve Feldstein, senior vice president-marketing and corporate communications, Twentieth Century Fox Home Entertainment, Beverly Hills, Calif.

"It's all about merchandising. If a regular consumer knows they can find product they want in the supermarket, they'll go there any time of year. Supermarket operators are sophisticated merchants. They've shown shoppers exactly where to go for fruits and vegetables and ice cream, but not necessarily video," he said.

Mansfield drove home the point that "video sell-through was in its infancy just a couple of years ago, but if you don't have a video sell-through program now, you're missing out on tremendous sales." However, he added, the springtime and Easter periods carry some risk of spottiness because "spring break for high school and college-age kids falls around this period. A lot of children from colder climates head south, so they're not home to view the movies, and that could be an obstacle to sales."

He believes the greatest factor in sell-through velocity is the excitement of specific titles: "We may give Easter the credit, but it's really a function of the releases."

Focusing on the releases, Snyder of Associated noted, "We generally think animated when we think Easter because the holiday is so kid-oriented." He cited releases scheduled between now and then that are drawing his attention: From Buena Vista Home Entertainment are "The Lion King 1 1/2" on Feb. 10, "Spy Kids 3-D: Game Over" on Feb. 24, "Winnie the Pooh: Springtime with Roo" on March 9, "Lizzie McGuire: Star Struck" and "Lizzie McGuire: Totally Crushed" on March 16, and "Brother Bear" on March 30. Also, Paramount is releasing "School of Rock" on March 2. From Universal, "Cat in the Hat" arrives March 16 with plenty of DVD bonus material. Fox Home Entertainment will release "Happily Ever After" on March 16, as well as a package of a dozen animated, family and religious DVD titles, including "The Bible," "Easter Story Keepers," "Ferngully: The Last Rain Forest," "The Robe," "Thumbelina" and "Ice Age Special Edition," the latter containing a bonus four-minute animated short on both the VHS and DVD versions, and additional content on the DVD.

"Normally, around Easter is a great opportunity for family titles since families will be together. Also, programming of faith tends to do well this time of year," said Fox's Feldstein. "Maybe it could be considered as a micro-mirror of Christmas, without the same breadth or volume."

Such diversity of titles brings opportunities for added excitement on the selling floor through cross merchandising of licensed products, as well as foods that have product placement or other promotional tie-ins with movies, Snyder added. "We try to offer some movie items at our twice-yearly trade shows for our retail members. At our most recent show in October for this coming Easter, we offered such items as plush novelty toys and licensed notebooks. Our uppermost price points are around $9.99, although we might go up to $12.99 if a movie was really strong in theaters.

"We recommend that stores create merchandising themes, especially with food manufacturers that have tie-ins. For example, I could see a Pepsi endcap with adjacent freestanding displays of a video sell-through title and plush being effective," Snyder explained. "It helps sales in all of the categories, and when parents have happy children in the store, they extend their shopping trip."

Particularly for Easter and other key holidays, Associated maintains its prices through the holiday because "the nature of the sale is more impulsive and people tend to procrastinate in their purchasing. We take markdowns only after the holiday," Snyder noted.

By contrast, less of the hoopla excites Mansfield. "Over 30 years, I've never found an item or group of items that worked with a release of a video. At Tom Thumb, Harris Teeter and Marsh, we were never successful in co-branding that," he said.

"What succeeded were grocery or general merchandise manufacturers who partner with movie studios. If supermarkets would build displays that include those other items and offer rebates after purchase, then it would be a success. The fewer items it takes for a consumer to earn a rebate, the better. Otherwise, it makes it too difficult for people," added Mansfield.

"Perhaps it's a matter of the selling environment and shoppers' conduciveness to receive these messages at the shelf. The Disney Store can't keep this merchandise in stock. The supermarket is different," he said. "However, as the economy loosens up, adding to the size of the market basket will become less of an obstacle to home video purchasing."

Another proponent of cross selling is Leslie Baker, vice president-sales, grocery and drug, Ingram Entertainment, La Vergne, Tenn. "Adding a VHS or DVD title to an Easter basket is a good way to promote the category. Video product tends to do well for supermarkets during the Easter holiday."

Studios supplement the appeal of their videos with added content in both DVD and VHS formats, Baker said. "Some have done very well when bonus footage and games, or both, have been added to their releases. They provide an interactive element to the product."

Especially on DVD, which is easier to navigate than VHS, the bonus add-ons combine with superior picture and sound quality to deliver a more involving experience, added Fox's Feldstein.

"Due to the steady increase in sales, I would expect to see studios focus primarily on DVD moving forward. However, VHS is still somewhat viable in the children's category," said Baker.

"One thing about DVD," said Mansfield. "Everyone has seen all of the old movies on VHS, and perhaps collected large libraries of VHS tapes that they want to transfer to DVD to save space and have the better picture and sound quality, and greater durability."

Top 10 Supermarket Video Rental Titles

RANK: Last Week; Title (Weeks Out)

1. 3; Out of Time (1); MGM

2. N; Jason vs. Freddy; New Line/Warner

3. 4; Underworld (1); Columbia

4. 1; American Wedding (2); Universal

5. 5; Uptown Girls (1); MGM

6. 1; S.W.A.T. (1); Columbia

7. 6; League of ExtraordinaryGentlemen (2); Fox

8. N; Johnny English; Universal

9. 8; Seabiscuit (3); Universal

10.10; Jeepers Creepers (2); MGM

N = New

As of Jan. 18, 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.