RETAILERS HOPE FOR BIG DVD SEASON

Retailers are preparing their video inventories and stores for a big year-end finish.With Americans staying away from movie theaters in droves throughout 2005 -- and, in turn, being less than excited with what they've found on video department shelves -- supermarkets are looking for a dramatic fourth quarter as the year's heavy-hitter titles finally become available.There will be the big theatrical

Retailers are preparing their video inventories and stores for a big year-end finish.

With Americans staying away from movie theaters in droves throughout 2005 -- and, in turn, being less than excited with what they've found on video department shelves -- supermarkets are looking for a dramatic fourth quarter as the year's heavy-hitter titles finally become available.

There will be the big theatrical releases, such as "Star Wars: Episode III -- Revenge of the Sith," "War of the Worlds," "Charlie and the Chocolate Factory," "Batman Begins" and more. In addition, retailers are also looking for strong showings from children's titles, TV on DVD, and catalog product during this biggest of all gift-giving periods as studios look to bolster their offerings for the year and meet their sales numbers.

"We're hoping for just that," said Rachel Nichols, director, video operations, K-VA-T Food Stores, Abingdon, Va. "It has been slow. The industry has been down tremendously this year, and we're seeing the effects of that on our bottom line. So we are definitely bracing for that, and hoping for it -- and praying for rain and snow and sleet and any other kind of ugly weather that will keep them in the house watching movies."

"We expect that 2005 will be a lot like 2004," said Sean Bersell, vice president, public affairs, Video Software Dealers Association, Encino, Calif. "DVD remains a highly desirable gift, resulting in strong sales. There has been quite a bit of junk analysis in the media lately about the falling DVD market. In fact, the market has seen a healthy increase this year, just not the astronomical, double-digit rates of increase in recent years."

"Many studios are offering studio-specific holiday pre-packs," noted Bill Bryant, vice president, sales, Ingram Entertainment, La Vergne, Tenn. Distributors like Ingram are offering multi-studio Christmas-themed displays.

The marquee titles "should all perform well in December," Bryant added. "Most supermarkets advertise new-release titles in circulars, and display the product in a highly visible area within the main body of the store. In-store impressions are by far the best way to promote new releases."

"The classics are always hot during the holiday season, and this year will be no different," said Anne Parducci, executive vice president, family entertainment and marketing, Lions Gate Home Entertainment, Santa Monica, Calif.

"Our year as a whole goes reasonably well when it comes to video," said Ray Wolfsieffer, video specialist for Bashas', the 144-store chain based in Chandler, Ariz. "But of course if the studio doesn't produce anything for a particular month, then revenues drop a little bit. As in any industry, you look forward to holiday activity, and maybe they put out something that's halfway decent."

"November titles look very good, with a great assortment of high box office titles being offered for sale," said Brian Numainville, senior director, research and public relations, Nash Finch Co., Edina, Minn. Gift sets will be a favorite this year, he said, with many popular titles from last year's TV season being made available in complete sets.

Cold Weather, Hot Sales

"Children's becomes very important at the holiday season," noted Russ Crupnick, president, NPD Music & Movies, Port Washington, N.Y. "About 45% of what's bought in that genre is bought as a gift -- a big number."

At the same time, Crupnick continued, about 42% of TV programming on DVD is bought as a gift. With this in mind, he is expecting the TV product to have a good holiday season.

Titles like "Charlie and the Chocolate Factory," which is coming out in early November, will doubtless do well, and certainly content providers like Disney will dip into catalog.

Greg Rediske, president, Video Management Co., Tacoma, Wash., said it will be business as usual with holiday films.

"As has been the history, most of the big kids' movies are being released in November," Rediske pointed out, with more non-children's movies in December.

In light of this, Rediske noted, there could be some "last-second announcements for December, especially a kids' title. Christmas sell-through has gradually moved later and later into the year. It used to be October for the big sell-through releases, then November. Then, starting with 'Sister Act' a number of years ago, last-second items began showing good results. But the main grocery-type titles remain November releases."

In terms of new offerings, Crupnick believes the video market will be "a little bit thin. You've got 'Star Wars,' you've got 'Cinderella Man,' but you don't have a deep, deep, deep offering in terms of what's come out of theatrical this year." Still, he said, much of the DVDs that will be available "are very family-oriented, which is a good thing for supermarkets to be going into the holidays with."

While family titles do well during the fourth quarter, Wolsieffer said, "so much of the stuff they're putting out is also on cable. It leaves our customers wondering, 'Why repeat ourselves when we can get it free?' So we generally don't push so much on those."

"Good retailers know that the secret is to offer a broad assortment, and display them in a high-traffic area," Nash Finch's Numainville said. "This will again be the formula for success. The December lineup of box office hits seems to be pretty weak this year. Retailers will have to work harder by offering a broader array of titles to capture the same dollar sales as last year."

Retailers will be "creating seasonal sections and displays that tie in DVD and running gift-giving promotions," said Lori Macpherson, senior vice president, brand marketing, Buena Vista Home Entertainment, Burbank, Calif. "There are fewer '800-pound gorilla' titles this year. Sales should be spread across a greater number and variety of releases."

"Especially in supermarkets, DVDs are largely impulse buys, and placement is key," Parducci said. "We expect to see more displays at checkout, along with more signs and endcaps drawing people to the DVD aisles."

This holiday season will be a "good one" for supermarkets in the home entertainment category, Bryant predicted. "The strong release schedule is comparable to last year, and sales should reflect similar numbers."