STUDY: DVD SELL-THROUGH BIG HIT IN SUPERMARKETS 2004-02-09 (2)

Dan Alaimo

NEW YORK -- DVD accounted for nearly three-quarters of all videos sold in supermarkets last year, according to exclusive statistics researched by SN with the assistance of Ingram Entertainment, La Vergne, Tenn.

The industry estimates reveal a total sell-through business in supermarkets of $293.2 million, with $211.1 million, or 72%, coming from DVD sales. Feature sell-through -- the big, heavily promoted and discounted theatrical movies -- were 78% of the total, or $229.9 million, while older catalog titles were 22%, racking up $63.4 million in sales. DVD was 70% of feature sell-through sales and 79% of the catalog business, the study reported.

"These numbers support the growth of video sales in the supermarket environment," said Leslie Baker, vice president of sales, grocery and drug, Ingram Entertainment. "Consumers are not just looking to mass merchants for their entertainment products as previously thought. Supermarkets are successfully filling the entertainment needs of their consumers, while also making it much more convenient to pick up a video during their regular shopping trip."

Noting strong catalog sales for lower-priced product, and an even stronger future potential for older titles on DVD, Baker said, "we have seen tremendous growth in the budget DVD category, and fully expect that to continue. Budget DVD compliments dedicated sell-through sections, it is a good value for the consumer and a high margin item for the supermarket retailer."

"Supermarkets have embraced catalog product during the last three years, and this has produced significant sales growth for those supermarkets that participated in dedicated catalog sections," added Bill Bryant, vice president, sales, at Ingram. "Catalog product is clearly an area for sales and margin growth within the supermarket class of trade."

The studios view supermarkets as a channel with strong growth prospects, Bryant said. "Studios are rapidly decreasing catalog DVD suggested retail prices, which will create tremendous opportunity for supermarkets. The DVD $14.95 retail price point will increase consumer impulse purchases and will dramatically increase sales and margins for supermarkets that choose to participate. Catalog DVD presents the greatest area of growth potential for supermarkets."

New releases will continue to be "loss leader priced" by the mass merchant class of trade, Bryant said, so supermarkets need to develop promotions that will enable them to compete. Cross promotions, particularly with soft drinks, have been very effective for supermarkets, he said.

Looking ahead to 2004, Bryant said supermarkets can expect higher sales from the overall video category, "and higher margins for the retailers that increase their commitment to catalog sections."

TOP 10 SUPERMARKET VIDEO RENTAL TITLES

Rank. Last Week; Title (Weeks Out)

1. N; Once Upon A Time In Mexico, Columbia

2. N; Open Range, Buena Vista

3. 1; Out Of Time, MGM (2)

4. N; Cabin Fever, Universal

5. 2; Jason vs. Freddy, New Line/Warner (1)

6. 4; American Wedding, Universal (3)

7. 5; Uptown Girls, MGM (2)

8. 3; Underworld, Columbia (2)

9. 6; S.W.A.T., Columbia (3)

10. 8; Johnny English, Universal (1)

N = New

As of Jan. 25, 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.