Suppose there were a major product category that was consistently underplayed in supermarkets. And further suppose that category was experiencing erosion from specialty and mass channels, but that those same channels trembled at the prospect that supermarkets could easily recover all that has been lost, and blow them away.
That category exists, and it's home video. The untapped potential of supermarket home video was explained in some detail by Mike Saksa, vice president for marketing at Warner Home Video, in a talk to a group of supermarket executives gathered at the Video Software Dealers Association convention in Los Angeles. The group assembled at an early-morning retailers' breakfast, sponsored for its fourth year by SN, the VSDA and three studios.
Here's Mike Saksa's outlook on how supermarkets are a little less than the "big dog" that could easily awaken from its slumbers to snatch the prize of home-video profits from the teeth of its competitors: "[Supermarkets] are the big dog, but right now you are a sleeping dog, because video specialty and mass merchants are taking more of your share of business. But what they fear is that you have the essentials to be successful in the video business. You've got loyal consumer buying habits, and they're in your store a couple of times a week."
Another studio executive, Warner's Trevor Drinkwater, vice president for rental product sales, said that supermarkets currently represent 10% to 15% of Warner's revenues. The exact share is difficult to pinpoint since many supermarkets buy product from distributors, but the range suggests the potential upside of the category for supermarkets since, it was said, the total business is worth some $18 billion in retail sales; half of that in rental, half in sell-through.
You'll see a lot more about the presentation on Page 45, but here's a quick look at other points made about home video, and its future as a supermarket category:
Supermarkets should take better advantage of store traffic. Unlike specialty stores, supermarkets need only develop a video offer for shoppers already there, not induce store traffic in the first place. This can be accomplished by offering an exciting sales venue, with good product choice. The convenience of video rentals can also be enhanced -- and made to exceed that of other channels -- by offering a longer return period. The return period should be timed in accordance with when shoppers typically return to the supermarket, not in conformity with standards established by other channels.
Supermarkets can also enhance their business by stocking a fuller catalog of titles, not just family-oriented titles. Profits will be enhanced with the presentation of a wider choice. That's because heavy purchasers of video are motivated by being able to find titles, and are less driven by the popularity of current hits. The reverse is true of hit-driven purchasers. Currently, supermarkets generally aim their offers at the latter.