SUPERMARKETS HELP RENTRAK HIT FISCAL MARK

MARY ANN FARLEY

PORTLAND, Ore. -- Supermarkets represented nearly 25% of the 1,916 new accounts signed by Rentrak Corp. during its fiscal year 2,000, ended March 31, it was announced here last week.

In fact, this past year has been the shared-transaction distributor's best year ever and Rentrak's biggest in grocery, according to Chris Roberts, vice president of sales.

He credited the increase in account activity to favorable splits. While two major wholesalers -- MS Distributing and Sight & Sound -- just went out of business, Rentrak keeps adding accounts. "The only thing that has changed for us is our terms, which have improved," he said, "and that has been very attractive to supermarkets."

With many titles, retailers now keep 60% of the profits as opposed to 45% in past deals, and some suppliers aren't even charging an up-front fee for their titles anymore, Roberts noted, pointing to Sterling Home Entertainment and Avalanche Home Entertainment as two small studios that allow dealers to keep 60% of the profits from the very first rental.

"When grocers now look at their options, and they see the integrity of our software and marketing support, we begin to make more sense," Roberts said.

"We're not here to replace how they buy their product," he added. "We're just another option for acquiring it, and that's what's driving a lot of our new grocery business."

Some supermarkets using Rentrak programs include Giant Eagle, the Bellevue, Wash. division of Safeway, C&K Markets, King Soopers and Harps Food Stores.

"Because of Rentrak, we can go a little bit wider on certain titles. In our smaller stores, there is a demand for some of the B titles, especially horror movies, and Rentrak helps keep our costs down on those videos. It works very well for us with those films," commented Craig Hill, director of video at Harps, Springdale, Ark.

However, Harps' decision to use Rentrak is on a case-by-case basis. "It really comes down to which purchasing option will earn us the most profit. Sometimes, it's Rentrak's promotional kit that makes us go with them on a certain movie. For example, we'll be getting 'Sleepy Hollow' through them for the month of May because of the promo kit, which will give us a lot of bang for the buck."

"With Rentrak we have been able to increase customer satisfaction by having the copy depth on the right titles in order to meet the demand," said Tony Federico, vice president of nonfoods for Ingles Markets, Black Mount, N.C. Federico added that Ingles has tripled the buys on key titles in an effort to keep customers from going to video specialty chains."

According to Roberts, just over half of Rentrak's 10,000 accounts are independent retailers with 10 stores or less, which, in a consolidating market might seem like risky business. But he emphasized that Rentrak wrapped up its best fiscal year ever and believes the company's success will continue.

Commenting on the studio's revenue-share programs as a threat to Rentrak business, Roberts said when studios charge retailers $30 per tape and force them to order multiple copies, he doesn't see that as revenue sharing. "Ours is the only model out there with a low up-front fee, where you pay only if the title rents," he said. "We're the only ones truly doing revenue sharing, and that makes for a very bright future for us. Whenever I see a fixed cost per tape [in a studio buying program] I smile because our model makes more sense."

Roberts added that Warner Home Video's decision to go direct earlier this month had no effect on Rentrak's business, as the company has never distributed Warner product. "It actually helped us more than it hurt us," he said. "Retailers are concerned about the changing business, but Rentrak hasn't changed. In fact, we're still profitable."