VIDEO: NEW AND OLD

David Merrefield

Inside this week's SN you'll find a multipage supplement about supermarket video with a number of news articles concerning which way that business is going.

The news about video sales in supermarkets has been fairly good this year, and seems to be trending upward. According to SN's seventh annual State of the Industry Report published earlier this year, the share of business flowing through supermarkets has been holding up reasonably well.

Supermarkets' share of rental, in the universe of all classes of retail trade, is about 15.6%, representing a decline of about 0.5% in each of the past two years, while sell-through remains flat at a 12.7% share.

For much of this year, the conventional wisdom has been that these shares would hold through the year, but now there's reason to believe supermarkets' video business may take off.

As you'll see by taking a look at this week's supplement, the reasons have to do with something new and something old.

What's new is new titles. Supermarket retailers are looking forward to a banner fourth quarter in terms of both sell-through and rental. The flow of new titles has already started with the biggest title of the batch -- "Titanic" -- which will street tomorrow. A number of children's titles will be released at the same time. Many of these titles should remain strong through the year-end holiday period.

Indeed, it's without precedent that so many titles are being released in or just before the fourth quarter: "The number of titles is just tremendous. It's unprecedented that there is this much product being released," one distributor told SN.

"There are a lot of opportunities and challenges as well. It's creating a bit of a bottleneck of product that will hit all at the same time in the fourth quarter. Supermarkets are going to have to make decisions on which titles they are going to bring in. There will be some supermarkets that will have to pass on some titles because they just won't have the floor space," he said.

What's old is old titles. Many supermarket retailers are discovering there's new business to be had from old titles. That's because they can be stocked in copious quantities, they can be retailed at low price points and they produce high margins. Many titles can be sold for less than $10, an attractive price for supermarkets, although videos selling for $14.95 and 19.95 are successful too.

"The budget-priced segment has grown dramatically. As more and more live-action films are put out at lower prices, we are seeing that consumers are accepting them. We are seeing a general shift in the category on price point," said one studio executive.

And, in many markets, supermarkets can be the first to the party by offering old titles.

"We are just on the edge of this market. I don't see many of our competitors doing a lot with it yet so I'd say that there is a golden opportunity for people who can stock it, rotate it and do a good job with it," said a retailer.

Take a look at this week's video supplement to learn more about how this category is once again on the move, and moving profits for supermarket retailers.