DVD SALES GROW IN SUPERMARKETS WHILE SHARE DECLINES IN 4TH QUARTER

DAN ALAIMO

NEW YORK -- While supermarkets now represent a small part of the DVD sell-through market, they saw strong growth in the fourth quarter -- just not as strong as the overall market, said Bob Alexander, president, Alexander & Associates here.

The supermarket channel was 1.9% of all DVD units purchased, Alexander reported in his research company's annual "Holiday Market Snapshot" study. This is down from the 2.2% reported last year.

However, supermarket DVD unit sales actually grew 27.6% in the fourth quarter, he said. "Supermarkets are growing, but just not as fast as the overall market." Supermarkets did outpace several key channels for DVD sales, Alexander pointed out. "They were four times what the book store channel did, about twice what the drug store channel did, and not quite double the toy store channel."

The highest DVD market share in the fourth quarter was achieved by Wal-Mart, which had 36.5%, up about 7 points, Alexander said. "They sucked volume out of a lot of people for sure," he commented. "While Best Buy and Target increased DVD sales, Circuit City, Sam Goody and many other retailers were down."

The mass merchandisers did about half the DVD unit volume, and the electronics stores were about 20%, Alexander said. Meanwhile, music stores did about 4% to 5%, and video specialty stores did 10% to 12%, he estimated.

Among supermarkets, Meijer had about 25% of DVD unit volume in the fourth quarter, Kroger did about 15%, and Kroger division Fred Meyer also did 15%, according to Alexander. He cautioned that the data on these retailers was limited, and there is a large margin for error.

On the supply side, "the top studio in supermarkets by far is Buena Vista, which had about a third of that market in DVD," he said. Second was Columbia Tri-Star with about 20%. About half of the DVD volume in supermarkets was in children's product; the rest was in mainstream, live-action movies, he said. Between 55% and 60% of supermarket sales were new releases, he added. Overall, the video industry sold 196.9 million new or previously viewed DVD units in the fourth quarter, Alexander reported.

Top 10 Supermarket Video Rental Titles

RANK, Last Week: Title (Weeks Out)

1, N: Gothika, Warner

2, N: The Rundown, Universal

3, N: Honey, Universal

4, 1: Mona Lisa Smile (2), Paramount

5, 3: School of Rock (3), Paramount

6, 2: Dr. Seuss' Cat In the Hat (1), Universal

7, 4: The Missing(4), Columbia

8, 5: Cold Creek Manor (4), Buena Vista

9, 6: Matchstick Men (4), Warner

10, 8: Duplex (3), Miramax

N = New

As of March 28, 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.