Catalog represents pure profit as rentals.
Some supermarket buyers say that the revenue generated in their video departments by catalog product is as high as 40%, and they feel that with a little effort, it could go even higher. Is there anything supermarket buyers can do to maximize these titles even further? After all, they're already paid for.
"Driving catalog titles depends upon how you display them," said Jenny Maddox, director of video advertising and marketing at Wax Works/Video Works in Owensboro, Ky. "For example, for a holiday like Valentine's Day, you could group romantic titles together in one spot; for Father's Day, family titles like 'Parenthood.' You want to get the best out of each holiday that comes along."
Bob Gettner, video buyer/coordinator at B&R Stores, Lincoln, Neb., agrees that it doesn't take much to draw attention to older titles, which, when they rent, "generate pure profit."
"The good thing about catalog titles is that they're a great traffic builder," he said. "We often do in-store specials, like half-price days, or we'll do something like 'Happy Hour,' where everything in the video department is half price during certain hours of the day."
Gettner said about 75% of his stock is catalog, and it generates 40% of his revenue, a figure Maddox believes may be high for most stores, but "isn't far off the mark."
Gettner said he rarely will purchase a new catalog VHS title, simply because he's so well stocked. With holiday-themed collections, or something like a James Bond collection, Gettner says the studio's price is often "more than we want to buy."
Other retailers agreed. "We don't bring in repriced titles in any kind of collections," said Marilyn Aldrich, video buyer, Dahl's Supermarkets, Des Moines, Iowa. "Most of our stores already have these titles, and they move pretty well."
Holly Edwards, video buyer, Macey's, Sandy, Utah, said she does participate in themed collections, but only because her business is strictly sell-through and her customers seem to want them. "They do well for us," she said. "Our customers will buy those older titles."
Is it frustrating for studios trying to sell these collections to grocers who don't seem to want them?
"The video business as a whole is a new release business, and that's magnified at grocery," said Martin Blythe, vice president of publicity at Paramount Home Video, Hollywood, Calif. "Because of space restrictions, they just can't carry the same kind of inventory as the [large specialty] chains. They need to focus on their strengths."
That said, he believes that grouping titles together is a great idea. "When Paramount packages titles in clusters, it may be because of a major new theatrical release coming out at that time," he said. "For example, when Pearl Harbor hits, we'll debut five classic war movies for the first time, including Catch-22. If consumers are thinking about Pearl Harbor, they may want to check out similar titles from the catalog section."
He believes the real secret to igniting catalog product is to bring it in on DVD. Not only do DVDs have a longer shelf life, he said, but they take up less room.
Maddox, too, believes buyers should bring in catalog titles on DVD, because consumers are just so hungry for the product. "They all have this fun new toy [a DVD player]," she said, "and they're really into building their libraries, especially with catalog classics."
Video buyers agreed that consumers may be interested in buying catalog DVDs, but certainly not renting them. For DVD rental, they say they're only bringing in new releases at this point. Aldrich said she's doing that on the advice of her distributor, and Gettner said he "learned quickly when we first started with DVDs that catalog DVD is not what people are renting. If they want [a catalog DVD title], they buy it."
That's why it's important for a buyer to fully understand the demographics of his or her area, and just how deep DVD-player penetration is, said Joe Vertullo, senior vice president of sell-through and DVD sales at York/Maverick Entertainment, Encino, Calif. "Buyers need to be aware of the saturation level of DVD players in the areas," he said.
Currently, York/Maverick has repriced some of its older titles, which Vertullo said buyers with limited space may have passed on first time out, but who might be interested now that the VHS price has dropped to $9.99 and the DVD price to $14.99. Current offerings include "Bar-B-Q," an urban comedy; "Captive," with Richard Grieco; and "Angel's Dance," with James Belushi. In May, it will release "Jacob Two Two Meets the Hooded Fang" for the first time on video at the same price points.
Vertullo noted that titles like these are a great way to enhance catalog sections, because they give consumers something new to watch, and they give buyers a chance to try something different at low risk. "Their return on investment on titles like these are tremendous," he said. "Some buyers might be afraid of urban pieces, but when they can buy them at a sell-through price, it becomes a no-brainer. It's a good opportunity to take a chance and see how they do."