NORTHLAKE, ILL. -- Dominick's Finer Foods here began testing the pay-per-rental, shared-revenue program from Supercomm, Dallas, last month, said Tony Filco, category manager. The retailer is promoting movies in the program with a guaranteed availability offer in five stores. If the featured titles are not available to rent, customers get a free rental of another title. The promotion is being advertised with in-store fliers. Among the titles highlighted in fliers SN picked up in Dominick's video departments were "Tombstone," "Schindler," "The Air Up There," "Iron Will," "Man's Best Friend" and "State of Emergency." The fliers said the guaranteed availability offer on these titles would end on July 31. Dominick's was carrying 20 to 30 copies of each title, SN found in visiting the stores. Rental rates were $2 for overnight new release rentals and $1 for catalog titles. Video games rent for $1 for a two-night period. Dominick's calls its departments "Showcase Video." Filco would not comment on the program except to confirm that the retailer is running it. He said that it is too early to discuss results from the test. "The feedback that we have received from the stores has been very favorable as to the impact that the guaranteed availability program has had on customers," said Des Walsh, vice president of Supercomm. "There's no question that this is a message that really appeals to consumers. They have been so used to being disappointed by the lack of availability of hot new releases that when a retailer guarantees availability it really strikes a chord. Wherever the guaranteed availability promotion has been run, it attracts considerable consumer interest and draws a significant number of new renters to the video departments," said Walsh.
Other retailers using the pay-per-rental system have tracked the sign-ups generated by the program. "We think it is a significant tool for not only revitalizing existing members, but for attracting new members to video departments," he said. Walsh would not comment on specifics of the Dominick's test. "Dominick's is the dominant retailer in the Chicago marketplace and it is also a significant regional player in the video rental business," he said. With pay-per-rental, shared-revenue programs, retailers pay a $7 to $12 fee to acquire a tape, and then share the revenues 50-50 with the supplier. Retailers would otherwise pay $60 to $70 for new release tapes they would own outright. There are two companies offering these programs to supermarkets: Supercomm and Rentrak Corp., Portland, Ore. Rental activity is tracked by computer software. Proponents say the increased depth-of-copy allowed by the programs enables retailers to satisfy more customers and boost revenues. Critics say retailers can do better by purchasing the inventory themselves. Supercomm now has about 850 stores from about 30 companies using its program. Among the bigger players are Pathmark, Safeway, Winn-Dixie, King Soopers, Fleming Cos., Price Chopper, Dillon's, Fry's, Fiesta Mart, Nash Finch and now Dominick's. Besides movies, the company also is offering compact disc-read only memory on a pay-per-rental basis. "Many people have reservations about revenue sharing, but once they test it and see how simple it is, they decide to expand it," said Walsh. The biggest obstacle hindering the growth of pay-per-rental has been lack of participation by the major studios. Stores using the system typically spend about 25% of their new release budget through Supercomm, said Walsh. "The key thing that we've got to do is get additional studios on board. We believe we have been making significant progress in testing with a number of the major studios, and we hope that we will be successful in expanding those tests considerably based on meetings that we have scheduled at the VSDA show," he said.