GIANT EAGLE SPREADING ITS WINGS IN VIDEO UNITS

PITTSBURGH -- Giant Eagle here is rolling out large, state-of-the-art, store-within-a-store video departments with a heavy emphasis on new releases and video games. Besides the expected array of rental and sell-through products, the Iggle Entertainment sections feature multiple game demonstration units, special display areas for event sell-through titles and one of the largest percentages of video

PITTSBURGH -- Giant Eagle here is rolling out large, state-of-the-art, store-within-a-store video departments with a heavy emphasis on new releases and video games. Besides the expected array of rental and sell-through products, the Iggle Entertainment sections feature multiple game demonstration units, special display areas for event sell-through titles and one of the largest percentages of video games to regular videos in the industry.

Decorative elements such as carpeting and fixturing are highly attractive and up-to-date, SN found in recent store visits in the Pittsburgh area. Some stores even sell video game hardware, software and accessories. "Giant Eagle is a strong example of the kind of video department that can be created when the category has the support of senior management," said a video supplier source, who asked not to be identified. "They have consistently been a market share leader in the communities where they operate. They were one of the first to introduce the new game and compact disc read-only memory software into their stores." Joe Faccenda, senior vice president of merchandising and buying, declined to comment.

Giant Eagle opened one of the new departments in McKees Rock, Pa., in March; another in a new store in Baden, Pa., in June, and a third in Erie, Pa., in mid-August. A fourth is set to open in an expanded and remodeled store in North Huntington, Pa., later this year. The Baden department is 2,000 square feet with a total of over 4,000 units of inventory, including 1,125 new release movies, 1,875 other videocassettes, 300 sell-through videos and 750 game units for rent. New releases represent about 30% of the total rental inventory, while games account for 20%.

The McKees Rock video shop is larger and more impressive, with a separate entrance from the parking lot, but contains about the same amount of inventory as the Baden department. The department is 2,500 square feet, with 1,000 new release movies, 1,500 other videos, 300 sell-through videos and 750 game units for rent. The new releases are 30% of the rental inventory while games are 23%. It also offers Ticketmaster services.

One of the retailer's first large departments opened in the fall of last year in New Kensington, Pa. It is about twice the size of the newer sections. The retailer is putting the departments into all new and remodeled stores. There could be six more by the end of the year. The company now has between 15 and 20, said sources. Giant Eagle has a total of over 100 stores, with more than 90 video departments. "Retailers can get a nice return if they commit to video as Giant Eagle has done," said another video industry source, who also asked not to be identified. "They are expanding in video because they believe in its potential." During SN's visit, the McKees Rock store offered about 500 units of game inventory for sale and had six game demonstration stations, including one for Nintendo Gameboy handheld games. The Baden store had four game demonstration stations. The emphasis on games helps bring more families into the video section and helps drive overall department volume, said the video industry source. "When you capture the games business, you capture the video rental business, too. That's why Blockbuster has been emphasizing games." About 20% of the space at the McKees Rock store was dedicated to video games. Prices on game hardware systems were $139.99 for a Super Nintendo Entertainment System Donkey Kong set, $124.99 for a Sega Genesis system, $229.99 for a Sega CD system and $399.99 for a 3DO system. Accessories in stock included the Batter Up Baseball Bat for $39.97, the Tee V Golf club for $99.99 and game controllers starting from $8.99. Prices on game software were, for example, $55.99 for a Sega Genesis version of "Jurassic Park," $52.99 for "NBA Jam" for Sega CD and $59.99 for Super Nintendo's "Donkey Kong Country." The retailer had about 40 units of "Donkey Kong Country" on hand and was running a "Get a Donkey Kong Country T-Shirt Free With Any Video Game Purchase" promotion. The department also had a large standee promoting the upcoming release of "Killer Instinct" for the Super Nintendo system. The McKees Rock department had a gray, salmon and teal color scheme, while the Baden store was mostly gray. Both had speckled gray fixturing made of wood. Also in both stores, sell-through products were displayed only within the video departments, not on the main sales floor.

Both new departments SN visited included soft drink coolers,

audio book racks, candy, blank tapes, video accessories and sell-through shippers on endcaps. One-day rental rates for new releases were $1.89; catalog, 99 cents; 16-bit or greater video games, $1.89; 8-bit and handheld games, 99 cents, and audio books, 50 cents. The chain also offered two-night rentals for new releases for $2.89 and catalog for $1.69. At the McKees Rock store, some movies and games were reduced to 49 cents a night and value-priced games were highlighted as selling at $14.95 and up. That store also promoted a children's video program called "Lotsa Fun for Kids," which highlights titles approved by the Parents' Choice Foundation. The McKees Rock store also featured a prominent display near the main entrance highlighting a cross-promotion between Giant Eagle and Stridex pads. With purchases of Stridex pads, gel face wash or bar between Aug. 7 and 27, customers received a Catalina Checkout Coupon certificate for a free one-night movie rental. There also was a sweepstakes to win a World Wrestling Federation weekend ticket package for four.