Margins between costs and minimum advertised prices are increasing, said retailers participating in SN's video roundtable. The MAP is set by the studios, and if retailers advertise a title below the MAP, they cannot receive co-op reimbursement. But retailers have been complaining about these slim margins for several years.
"It's maybe a little better, but if we are going to get some profit from sell-through, that's where it needs to come from," said Matt Dillon, video director for Boogaart Retail division of Fleming Cos., Concordia, Kan. "The studios need to adjust the MAP," he said.
"Columbia actually took a step to go a little bit higher with the MAP," said Bob Gettner, video buyer and coordinator for B&R Stores, Lincoln, Neb. "I just had a meeting with our Columbia rep not too long ago and 'Jerry Maguire' doesn't have a suggested retail price and the MAP is higher than it has been on other titles."
Here's the roundtable discussion of the MAP:
SN: Retailers have complained about there being way too little margin between their cost and the minimum advertised price. Has this changed at all in the last year or so?
DILLON: It's maybe a little better, but if we are going to get some profit from sell-through, that's where it needs to come from. The studios need to adjust the MAP.
MOLITOR: I agree, although some of the studios, like Columbia, have gotten a little bit better.
GETTNER: Yes. Columbia actually took a step to go a little bit higher with the MAP. I just had a meeting with our Columbia rep not too long ago and "Jerry Maguire" doesn't have a suggested retail price and the MAP is higher than it has been on other titles.
FEINSTEIN: It's $14.95 and that's good.
SN: Some of the studios are coming out with sell-through titles with no suggested retail price and only a minimum advertised price. We understand that the MAP is higher than the cost relative to other studios. What do you make of the lack of a suggested retail price?
DESORDI: I disagree with that.
MAXWELL: Suggested retail gives the customer a perception of what that movie is worth. But most of the time, you would be better off not carrying it than selling it at suggested retail. You would be too high.
DESORDI: Don't we start to get very close to a price fixing issue? I think that is really underlying that whole question.
SN: On the release of big sell-through event titles, most supermarkets and mass merchants are at, or very close to, the same price, which is the MAP.
DESORDI: The MAP has taken a lot of the challenge out of the business. We used to go right down to the press time of our circular on where are we going to set our retail. Now you can look across the country and there is a comfort zone. You don't get a big surprise when you run your circular and you don't see someone in a competitive area who is $2 or $3 cheaper and Monday morning your head rolls. That's the one luxury of having the MAP.