AUDIO BOOKS SEEN OPENING NEW RETAILING CHAPTER

Grocery tie-ins, along with heightened promotions of well-known authors, are helping some retailers draw attention to their audio tape selections.To promote its audio books, Harp's Food Stores, Springdale, Ark., plans to run a tie-in with its deli department, according to Carl Johnson, video specialist."We are looking at having a tie-in with the deli where the customer can purchase a large deli pizza

Grocery tie-ins, along with heightened promotions of well-known authors, are helping some retailers draw attention to their audio tape selections.

To promote its audio books, Harp's Food Stores, Springdale, Ark., plans to run a tie-in with its deli department, according to Carl Johnson, video specialist.

"We are looking at having a tie-in with the deli where the customer can purchase a large deli pizza and a 2-liter soda pop and get a free rental of an audio book," Johnson said.

Johnson said promotions like this are important because they help create interest in audio books, which can mean additional revenue for the video department.

"If we can get customers into the store to rent an audio book, maybe they will rent a video or vice versa. We may be able to attract some new customers to one or the other," said Johnson.

Ray's Food Place, Brookings, Ore., is placing audio books in all its stores, said Larry Hage, regional supervisor and video buyer. It looks at audio books as an extension of its video department, according to Hage.

"They are perceived as a profit center, but not on the same scale as video," he added.

Best-selling book titles and hit movie titles are the most popular audio book rental titles, retailers told SN. Promoting authors like John Grisham -- as well as other favorites such as Stephen King and Tom Clancy -- helps heighten interest in both new and old titles, retailers said. "The big box office smashes that do well on video are most likely to rent as audio books," said Hage. Audio book sales (net sales after returns) increased by 37% in 1992 vs. 1991. They were up 40.3% in 1993 vs. 1992 and rose 17.7% in 1994 vs. 1993, according to a fact sheet distributed by the Audio Publishers Association, Hermosa Beach, Calif..

A consumer survey revealed that 17% of U.S. households used and/or purchased spoken word audio in the 12-month period preceding the survey, based on research conducted early in 1993 for the Audio Publishers Association by NFO Research, Toledo, Ohio, and analyzed by Frankenberry & Associates, Minnetonka, Minn. "Audio books provide peripheral sales," said Sharon Stagner, merchandising coordinator at Seaway Food Town, Maumee, Ohio, which has carried audio books for the last year. "We are trying to widen the scope of our rental video departments, making them more of an entertainment center. Offering audio books is a natural follow-through on that." Bel Air Markets, Sacramento, Calif., perceives audio books as "another service point to our customers coming for videos," said Rick Ang, director of video operations.

Some retailers also see audio books as traffic builders. Clifford Feiock, video coordinator at Nash Finch Co., Minneapolis, said audio books represent a whole new market for video departments.

"People who rent audio books don't necessarily rent videos. We are trying to get different people into the video department," Feiock said.

Nash Finch carries an inventory of audio books ranging from 120 to 365 titles in eight of its corporate stores. Supplied by Rezound International, Minneapolis, the audio books have been carried about a year and a half.

Total revenues for the spoken word audio business have been estimated at $2 billion or higher by George Hodgkins, president of Audio Publishers Association and associate publisher at Audio Renaissance Tapes, Los Angeles.

Supermarkets have become as important as video specialty stores to the audio book rental business in the eyes of at least one audio book supplier, Rezound International, according to Terry Lipelt, vice president of marketing and merchandising.

"Audio books are not for every retail operation out there. It takes patience and persistence to make it blossom," Lipelt said.

Both Glen Fischer, video-photo coordinator at D&W Food Centers, Grand Rapids, Mich., and Bill Glaseman, video specialist at Bashas' Markets, Phoenix, said they currently are not carrying audio books because they have not perceived sufficient consumer demand to warrant the investment. However, both said they would be keeping an eye on the category for the future.

A video director for a large Southern chain said that audio books have been carried in one store for about two years. The selection, which is available on a rental basis, includes about 20 audio books.

The single store selected to carry audio books is considered upscale and has a "somewhat better than average" video department. The chain hasn't expanded into other stores yet due to space limitations, the video director said.

Ang said one Bel Air unit has carried audio books for about two years, but another five stores have been carrying them less than a year. "Bel Air has a few stores in outlying areas from the main city. Audio books appeal to commuters," Ang said.

Harp's Food Stores has carried audio tapes in three units for about one year, Johnson said. These stores were selected based on demographics and results of consumer surveys.

K-VA-T Food Stores, Grundy, Va., has had audio books for one year and now carries them in all 21 video departments, said Tom Hembree, vice president of operations.

All the retailers contacted who carry audio books display them in the video department. Ray's Food Place, Seaway Food Town, Bel Air Markets, Harp's Food Stores, and Nash Finch are supplied by Rezound. K-VA-T obtains its audio books from Anderson News and Ingram, and the large Southern retailer gets its audio books from a book supplier. Both Ray's and Seaway have a 140-count spinner rack display of audio books.

At Ray's Food Place, the location of the spinner rack is frequently changed to draw attention to it. At the same time, when rentals slow down, an audio book is played in the department, Hage said.

At Seaway, audio books are displayed near the service desk in

the video rental department, so someone can keep an eye on the rack, Stagner said. Seaway expects to reduce its audio book inventory to have a better mix, she said.

Harp's carries about 130 titles, Bel Air offers 100 to 200 titles per store and Nash Finch has 120 to 365 titles per store. K-VA-T currently carries about 20 audio book titles, but is about to embark on a new audio book program in two of the stores, Hembree said.

The new program will bring in the top 12 audio book titles each month. The top 12 program will include some titles for sell-through, which will be priced from $9.99 to $14.95, Hembree said.

Bel Air periodically offers audio books on a sell-through basis, usually priced under $10, Ang said. About every six months, it brings in a spinner rack for sell-through and keeps it out for two to three weeks.

Rental prices vary by retailer. At Ray's Food Place, an audio book rents for $1 a day or $5 a week. At K-VA-T Food Stores audio book rental is $3.50 for three days. Most Nash Finch stores that carry audio books charge about $1.89 for a three-day rental and $2.89 for a seven-day rental.

Harp's Food Stores usually charges $3.48 for a three-day rental, and from $4 to $5.98 for seven days.

"The seven-day rental seems to be the big draw, but average rental time is about three days. A lot of people rent three or four to take on vacation," Johnson said.

One benefit of audio books is that they tend to have a longer life span as a viable rental vs. the standard video, which has about five to six weeks to pay for itself, he said.

"Grisham's 'The Client' was released in May 1993, but still has life as an audio book two years later," Lipelt of Rezound said.

Rezound has analyzed the demographics of its customer base to determine why audio books succeed in some places and not others.

Demographic factors studied included income level and the amount of household income devoted to entertainment and reading materials in particular, Lipelt said.

Every zip code in the United States was studied for population characteristics, such as the breakdown of male vs. female, age, property values, how much rental property is in the area, percentage of the population living at or below poverty level, median household income, educational level and time spent traveling to work, he said. Demographics of the spoken audio user-purchaser, according to the 1993 Audio Publishers Association study, include: -- average age: 44 years, female; 46 years, male; -- gender: 58% female; 40% male; 2% no answer; -- average household size: 2.6 persons; 46% are parents; 31% are couples, 22% are single; -- education: 59% of male heads of household and 39% of female heads of household have four years of college or a post-graduate degree; 85% of males and 71% of females have some college education; -- average household income: $47,495 (58% earn less than $45,000 a year).

The study also found that nearly 50% of respondents usually listen to audio books or spoken audio in their car; nearly 50% listen to spoken audio because they can listen while doing other things; nearly 50% obtain at least some titles from bookstores, while 42% purchase from direct mail catalogs; 53.1% never buy a spoken audio title instead of a book, while 39.5% do sometimes; two-thirds of users said they keep the cassettes in their collection after listening to them, and 44% said they loan them to others.