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STUDY: VIDEO RENTERS PLAY BIG ROLE IN OTHER SECTIONS

NEW YORK -- A new study has confirmed that supermarket video rentals result in significant incremental revenues for other products.Customers who rented videos spent an average of $28.87 on other products in the store, according to the study commissioned by PolyGram Video here. Of customers whose primary reason for visiting the supermarket was to rent a video, the average spent on other products was

NEW YORK -- A new study has confirmed that supermarket video rentals result in significant incremental revenues for other products.

Customers who rented videos spent an average of $28.87 on other products in the store, according to the study commissioned by PolyGram Video here. Of customers whose primary reason for visiting the supermarket was to rent a video, the average spent on other products was $15.61. For renters who went to the supermarket primarily to grocery shop, the average was $40.92.

Conducted by Alexander & Associates, also in New York, from Nov. 13 to Dec. 17 of last year, the survey contacted 5,027 households randomly by phone. The results were announced by PolyGram late last month.

"Supermarkets need to look at their video customers as more than just video customers," said David Kosse, vice president of marketing at PolyGram Video. "People who come in to rent a video and then make incremental purchases are a significant part of the supermarket business."

Almost 10% of the sample said they rented videos in supermarkets.

Extrapolating the survey data nationally, 140.4 million households rented videos in supermarkets last year, spending $4.05 billion on other products, PolyGram reported. This is nearly three times the $1.57 billion total rental volume in supermarkets SN projected for 1996 in its State of the Industry Report on Supermarket Video last year.

The PolyGram study also found that 46.7% of people who rented videos in supermarkets said their primary reason for visiting the store was to rent a video. That projects to 65.6 million households per year or 1.3 million households a week going to supermarkets just for video rentals. While 19.8% of these customers said they only spent an additional $5 or less on those store visits, the same percentage said they spent an additional $20 or more.

The amount spent on videos by these people was not covered by this survey, but Alexander & Associates reports separately that the average consumer rents 2.8 videos per trip at an average price of $2.71 per tape, said Barbara McNamara, manager of Alexander's Video Flash weekly tracking study. Alexander does not have separate data for supermarkets, where rental rates are generally lower than at specialty stores.

The PolyGram study comes at a time when many retailers are re-examining their commitment to video rental. Four major chains -- Stop & Shop, Quincy, Mass.; Dominick's Finer Foods, Northlake, Ill.; Meijer Inc., Grand Rapids, Mich.; and Kash n' Karry Food Stores, Tampa, Fla. -- got out of the rental business last year, while three -- Glen's Markets, Gaylord, Mich.; D&W Food Centers, Grand Rapids, Mich.; and H.E. Butt Grocery Co., San Antonio -- are getting out this year. (However, industry sources said that Kash n' Karry is now considering the possibility of putting video rental back in some stores.)

"Supermarkets need to look not only at their video rental revenues, but at the overall revenues that come from their video rental customers. If they lose that section and those customers go someplace else to rent, their grocery dollars are going someplace as well," said Kosse.

"If you are questioning the video rental market, take a really close look at the total impact on your bottom line. Don't just look at video as a stand-alone department. Look at how it affects your overall business plan," he said.

Another noteworthy finding of the PolyGram survey was a high percentage of personal computer ownership among supermarket video rental customers. While total PC penetration into U.S. households was 34.3% in 1996, according to research company Dataquest, San Jose, Calif., the PolyGram study reported a 43.9% PC penetration rate among all supermarket video renters, a 43.4% penetration among renters who went to the store primarily to shop for groceries, and 47.2% for those who were primarily in the store to rent videos.

Renters Spend

Video rentals result in significant additional spending on other products in supermarkets, according to this study, which classifies video renters into two groups.

Average additional spending by supermarket video rental customers: Primary Purpose of Trip:

To Rent Video $15.61

To Grocery Shop $40.92

All Renters in Supermarkets $28.87

Source: PolyGram Video/Alexander & Associates

A PC Business

A higher percentage of people who rent videos in supermarkets own computers than the general population, suggesting potential for software sales and Internet promotion. Supermarket video renters' personal computer ownership, by percentage:

Primary Purpose of Trip:

To Rent Video 47.2%

To Grocery Shop 43.4%

All Renters in Supermarkets 43.9%

Computer Penetration

of Total U.S. Households (1996) 34.3%

Source: PolyGram Video/Alexander & Associates and Dataquest.