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In a year where video sell-through growth was on center stage most of the time, the bigger news stories had to do with developments on the rental side of the business.Easily, the most noteworthy event in supermarket video last year was Kroger Co.'s decision to consolidate its buying. The Cincinnati-based chain selected ETD Entertainment Distributing, Houston, as the one video distributor all divisions

In a year where video sell-through growth was on center stage most of the time, the bigger news stories had to do with developments on the rental side of the business.

Easily, the most noteworthy event in supermarket video last year was Kroger Co.'s decision to consolidate its buying. The Cincinnati-based chain selected ETD Entertainment Distributing, Houston, as the one video distributor all divisions would do business with, replacing a more localized system that involved four distributors. This affected rental and sell-through buying.

Additionally, Kroger's new program called for divisions to buy sell-through product directly from Disney's Buena Vista Home Entertainment, Burbank, Calif., and strongly recommended participation in the shared transaction fee program of SuperComm, Dallas, also a Disney subsidiary.

The Kroger endorsement of SuperComm came in a year when revenue sharing programs of all kinds made inroads. Rentrak Corp., Portland, Ore., also saw significant growth, and toward the end of the year specialty-store giant Blockbuster Entertainment, Dallas, began testing a shared revenue system directly with the studios.

The tumult at Blockbuster also was a major news story during 1997 as a game of musical chairs played out in the executive suite. Earlier in the year, former Wal-Mart executive Bill Fields steered Blockbuster toward more sell-through sales, a course that was reversed after Fields' departure. The chain is now refocused on rental with a "Go Home Happy" campaign being tested in some markets. This echoes the guaranteed-availability promotions offered by many supermarkets and specialty competitor Hollywood Entertainment, Portland, Ore.

Two research studies into the buying habits of video rental customers in supermarkets represented another key news development in 1997. Simultaneously, PolyGram Video, New York, and distributor Ingram Entertainment, La Vergne, Tenn., embarked on surveys that, among other things, tried to measure for the first time how much incremental revenue on other products accrued to supermarkets with rental departments.

The results were encouraging for the future of rentals in supermarkets. For example, the PolyGram study found that consumers renting videos spend over $4 billion a year on other products in the store, and that customers who go to supermarkets primarily to rent a video spent an average of $15.61 elsewhere in the store. Meanwhile, the Ingram study found that an average video rental customer spent a total of $36.23 on other products in the store during the two visits this involved. Breaking down these revenues, the Ingram survey reported that on an average trip to rent videos, customers spent $5.60 on rentals and $9.80 on snacks. When they returned the tapes, they spent an average of $20.83 in the supermarket.

The year saw many major chains, such as Kroger, Albertson's, Dierbergs Markets, Bashas' Markets and K-VA-T Food Stores continue to roll out video rental to most new stores and remodels. In a turnabout, Kash n' Karry Food Stores, Tampa, Fla., which the year before had elected to get out of the rental business, went back into it with a rack-jobbed program. Southern California retailers like Vons Cos. and Lucky Stores extended their leased space departments.

Meanwhile, sell-through continued to make inroads with many chains, such as Tops Friendly Markets, Glen's Markets, Wegmans Food Markets and Meijer, rolling out large in-line sections. Buffalo, N.Y.-based Tops said it was buying its sell-through product directly from a number of studios, including Buena Vista, Paramount, Warner and Columbia TriStar. Other retailers are expected to follow in the year ahead.

Other trends that emerged during 1997 included the new DVD technology; the return to health of the video game business, which had been in decline for two years; and new sell-through opportunities in the computer software and music categories.

TAGS: Kroger