KROGER CINCINNATI IS FADING OUT OF VIDEO RENTAL PICTURE

DAN ALAIMO

CINCINNATI -- The Kroger Marketing Area based here is evidently scaling back its video-rental program, pulling departments out of many stores and not putting rentals into new or remodeled stores, SN found in a telephone survey of 84 stores in the division.

Of the 84 stores, 31 still had video-rental departments, while 23 had been taken out within the last two years. Six were pulled late last year, one in January and another closed Feb. 13. One other new replacement store opened without video, while 29 stores said they either never had video or haven't had rentals in the last five years. Fifty of the stores were in the Cincinnati area, while 34 were in the vicinity of Dayton and Springfield, Ohio.

The closed departments were being used for a variety of purposes, including banks, children's play areas, books and magazines, and expansion of health and beauty care and general merchandise. No other product category or service replaced a rental department that closed last fall in a Dayton store. SN had been told by suppliers that the division had put bath and body departments in some stores, but could not verify this through calls to stores.

While many supermarkets are known to be questioning video rentals because of heightened competition from specialty chains, industry observers said changes at the Cincinnati KMA are especially significant because it is the home city of the nation's biggest chain. Not only does Kroger rank first among all supermarket chains in revenues, but it is also the leader in video rental and sell-through, observers noted.

Store employees told SN that, in many cases, the departments were taken out as part of major store remodelings. Most Kroger stores in the division continue to offer sell-through videos.

The Queen City Centre store in Cincinnati, not far from corporate headquarters, closed its department Feb. 13 after a Blockbuster store opened nearby and cut video revenues in half, said an employee. Shrink had also been a problem there. A call to the corporate communications department of Kroger was not returned.

Some Kroger Marketing Areas, like Cincinnati, have decided to start eliminating video rental, according to an industry source who asked not to be identified. These divisions have seen double- digit losses in some cases as a result of competition from big video specialty store chains like Blockbuster Entertainment, Dallas, and Hollywood Entertainment, Portland, Ore. These chains stock rental titles in great depth through their revenue-sharing arrangements with the major studios.

While some Kroger divisions are conceding rentals to the specialty stores, the industry source said a number of other supermarket chains continue to do very well in video. These include Giant Eagle, Pittsburgh; King Soopers, Denver; Pathmark Stores, Carteret, N.J.; Wegmans Food Markets, Rochester, N.Y.; Dierbergs Markets, Chesterfield, Mo.; Bashas' Markets, Chandler, Ariz.; and Randall's Food Markets, Houston.