WOODLAND, Calif. -- Supermarket and drug store chains have turned to other sources for their video products after entertainment distributor Valley Media here last month scaled back its operations.
Pathmark, Rite Aid and CVS are among the retailers that have transferred their video, DVD and audio business from Valley to other distributors, according to sources in the industry. Other retailers served by Valley also are exploring the use of alternative distributors, according to some reports.
John Vanderhoof, video buyer, Pathmark, Carteret, N.J., confirmed that his company was no longer buying entertainment products through Valley, although he declined to provide details about the situation.
Valley's reportedly messy separation from some of its retail clients was "not worth a comment," Vanderhoof said.
He said Pathmark had turned to alternate sources for its entertainment products.
Bill Bryant, vice president, sales, grocery and drug, Ingram Entertainment, La Vergne, Tenn., confirmed reports that his company had replaced Valley Media as a video supplier for both Pathmark and Rite Aid.
"We are very pleased that Pathmark and Rite Aid have chosen Ingram as their entertainment supplier,"he said. "We are pleased to be their primary video supplier."
Bryant declined to disclose the volume of the acquired business. He said Ingram was also "meeting with other retailers."
Valley recently said it had all but shuttered its distribution facility in Louisville, Ky., and furloughed 400 workers there. The company also eliminated another 25 jobs at its Woodland distribution center and elsewhere. The cuts follow previous reductions in which the company had trimmed its staff from 2,000 employees to 1,300 as of July 31.
Donald Rose, vice president, finance, Valley Media, told SN that the company was attempting to serve customers through its remaining distribution facility at its Woodland headquarters. He said Valley would maintain a minimum staff at its Louisville facility, and added that it could rehire the furloughed workers next year.
He also told SN that the company has retained some "fairly significant supermarket" clients.
Valley is shifting its focus toward "deep catalog," or older, classic videos and away from new releases, while maintaining its audio business and negotiating a possible merger with another wholesaler.
Alliance Entertainment, Coral Springs, Fla., which reportedly is negotiating to acquire Valley, has already taken over the distribution of video and music products to drug chain CVS, Woonsocket, R.I., according to a source at Alliance who asked not to be identified. Like Valley, Alliance's business is concentrated on music and audio recordings.
Officials at CVS could not be reached for comment.
At Rite Aid, Camp Hill, Pa., spokeswoman Sarah Datz said the company uses several different distributors for video products, and declined to characterize the chain's Valley Media video business as being transferred to Ingram.
"We don't have any contract with any one distributor for video," she said. "We make decisions based on individual titles."
Valley Media has posted a loss in each quarter for the past year and lists a total debt of more than $300 million. In the quarter ended June 30, the company posted a loss of $2.5 million on revenues of $145.9 million.
In April, the company eliminated its video rental product line and shuttered its Bristol, Pa., distribution center and its sales offices in Carnegie, Pa., and Boston.
Vanderhoof of Pathmark stressed the importance of having viable distribution partners.
"My belief is that for the business to be healthy, the studio needs to be healthy, the distributor needs to be healthy, and the retailer needs to be healthy," he said. "Right now we're all just struggling to achieve a modicum of health."
