BLOCKBUSTER TESTS SUPERMARKET DEPARTMENTS

DAN ALAIMO

COLUMBUS, Ohio -- Big Bear here has debuted a Blockbuster video department in one of its units, and plans to add two more by the end of the summer, said Tom Carton, president and chief executive officer of Blockbuster franchisee Buckeye Entertainment Corp., Dublin, Ohio. The department opened on a test basis late last month in a Dublin, Ohio, Big Bear store. A test Blockbuster department also opened in a Wal-Mart Supercenter in Denton, Texas, around the same time. Both departments are 2,000 square feet to 2,500 square feet and feature 4,500 to 5,000 tapes.

Big Bear's Blockbuster section will operate as part of a one-year test, said Big Bear spokeswoman Karen Bennett.

"This is the first Blockbuster Video to be located inside a supermarket in the United States," she said, adding that Big Bear initiated contact with Blockbuster. Within a few months, there will be a dozen such leased-space departments operating in the two chains. A spokesman for Wal-Mart Stores Inc., Bentonville, Ark., said the retailer plans to test the concept in eight more stores. Neither the Wal-Mart spokesman nor Wally Knief, a spokesman for Blockbuster Entertainment Group, Fort Lauderdale, Fla., would comment on the expansion's timetable. Blockbuster is a division of Viacom, New York. "We have had more discussions with Big Bear," said Carton, who is a former vice president and general counsel for the parent Blockbuster Corp. "We are cautiously optimistic about other potential opportunities. Big Bear wants to run with a couple more and we've tentatively agreed to work that through," he said. Blockbuster may conduct additional tests with supermarket chains in the future. Though Knief would not comment on the company's plans, he would not deny that it is considering such possibilities. Industry sources said Blockbuster has talked to Smith's Food and Drug, Salt Lake City, about putting departments into the recently acquired Smitty's stores in Phoenix. Blockbuster currently operates two of its regular-sized video rental stores in two Smitty's units. A challenge for the first Big Bear department will be Blockbuster identification, noted Carton. Local ordinances prohibit a Blockbuster sign on the front of the main store. Also, because plans for the first department came together in a little more than two weeks, most fixtures, signs and other decorative elements are not Blockbuster's norm. He expected all this to be changed within 30 days and all future departments to conform to the Blockbuster standard. At the Wal-Mart Supercenter, there is a sign on the front of the store, and the department has the familiar Blockbuster look, Knief said. The parent Blockbuster company operates the Wal-Mart department. Blowout Entertainment, a subsidiary of Rentrak Corp., Portland, Ore., now has more than 140 video rental departments in Wal-Mart Supercenters and over 50 others in Super Kmart Centers and Ralphs supermarkets. Both Blowout and Blockbuster are expected to continue operating in Wal-Mart units. The new departments are about half the size of regular Blockbuster Video stores. Stand-alone Blockbuster units range from 4,000 square feet to 7,000 square feet, with 7,000 to 13,000 tapes, "depending on location and size," Knief said. The Wal-Mart department has video games to rent, and sells soft drinks and theater-sized candy. But it has little sell-through inventory, so it doesn't compete with the host store. The Big Bear department has a higher percentage of new releases and the catalog section is more focused on family-oriented titles than Blockbuster specialty stores, Carton said. About 40% of the rental inventory is in new releases. The department had 25 to 30 copies of the top new release titles.

The Blockbuster department is carrying only videos in the Dublin Big Bear store. Other products Big Bear ordinarily merchandises with video -- such as magazines, computer software and one-hour photo processing -- are located elsewhere in the store.