PITTSBURGH -- Giant Eagle here is striving for better efficiencies in its video rental departments by changing its rental rates and installing a point-of-sale software system, SN found while conducting store visits.
One industry source estimated the cost of the POS system at $3,000 per store, or some $330,000 for the complete installation in an estimated 110 video departments. This investment reflects the chain's strong ongoing commitment to video, said observers.
The new system replaces one the retailer had developed in-house, but sources said Giant Eagle was dissatisfied with it. With the new system, the retailer can better track rental title performance at the headquarters level.
Executives at Giant Eagle declined to comment. When contacted, Ravi Khatod, national sales manager at Unique Business Systems, Santa Monica, Calif., confirmed that his company is providing the computer program, although he would reveal no details, citing a confidentiality agreement.
However, he said the chain could expect results similar to others using software from the company. Among the supermarket companies are Seaway Food Town, Maumee, Ohio; Price Chopper Supermarkets, Schenectady, N.Y.; and Hannaford Bros., Scarborough, Maine.
Because of the system's central management capabilities, "they have seen an increase in per title performance. They are able to buy better because they can more accurately predict whether they need 25 or 30 pieces. In addition, they are finding better ways to maintain a high level of customer service and track collections. Late fees are a big part of this business," said Khatod.
A 100-store chain buying 40 copies per store of the top five rental titles at $65 apiece would spend well over $1 million, he said. "And you are talking about a product that is like lettuce, it will perish after 90 days if you don't take advantage of it. So information systems are becoming more and more critical in the video business," said Khatod.
"To maintain profitability, you have to become more intelligent about how you do business," he said.
At the same time the POS system is going in, Giant Eagle is instituting its new rates -- $1.99 for a one-day new release rental, or $2.99 for two days. This will enable better chainwide rental promotions in a competitive environment that is getting tougher with the expansion of Hollywood Video, Portland, Ore., into the area.
The new rate structure, which also applies to the chain's extensive digital videodisc and video game selections, is simpler than the previous one. It eliminates two levels of new release rates in some stores while standardizing the rates chainwide. For example, three Ohio stores in Stow, Fairlawn and North Canton charged $2.49 for new releases 30 days old or less and $2.29 for other new releases. Other departments only charged $1.89 for new releases.
The larger 2,000- to 5,000-square-foot Iggle Entertainment centers -- named after a local pronunciation of "eagle" -- are being converted first. One in New Kensington, Pa., was done a month ago, and others, like Fairlawn, Ohio, were done earlier this month, with more scheduled for mid-October, store personnel said. In some stores, the change was so recent that the stores were doing public address announcements to promote it while SN conducted its visits two weeks ago.
Catalog titles are 99 cents for one day, or $1.69 for two days, and audio books are 50 cents a day. In many stores, old catalog rates were $1.29 for one day and $2.29 for two, and audio books were 99 cents a day. In some stores, games and children's titles of less than 60 minutes had different rates.
Hardware rentals of DVD, and game systems Sony PlayStation, Nintendo 64 and Sega Saturn, are $8.99 for one day and $12.99 for two.