PUYALLUP, Wash. -- Summit Trading Co. here has begun using a shared-revenue, pay-per-transaction system to boost new release copy depth.
The independent opened a new 47,000-square-foot store at the beginning of the year with a 500-square-foot live inventory department containing about 2,000 units of inventory. The single-store operator began using the program from Rentrak Corp., Portland, Ore., in February, said Gary Carlson, store director. "Although the program is brand new with us, it seems to be working very well," he said. With pay-per-transaction programs, which are also known in the trade as pay-per-rental, retailers pay a $7 to $12 fee to acquire a tape, and then share the revenues 50-50 with the supplier. Otherwise, retailers pay about $60 to $70 for a new release tape they would own.
There are two companies with such shared-revenue programs for supermarkets: Rentrak and SuperComm, Dallas, which is a Disney subsidiary. This has allowed Summit to increase its stock of new release copies, said Carlson. For example, on "The River Wild" the retailer now has 45 copies, where it would have only bought about 10 from traditional distribution, he said. "Rentrak definitely has increased the amount of new titles that we have to offer," he said, citing that it benefits both A and B rentals.
"At this point, Rentrak appears to be a very good move for Summit," said Greg Rediske, president of Video Management Co., Tacoma, Wash., which handles buying, merchandising and other aspects of inventory management for the retailer. "[Summit] wanted to be extremely heavy in new releases, so about 30% of the display fixtures are dedicated to new releases. That is why it is involved with Rentrak." The pay-per-transaction program has had a very positive effect on rental revenues, said Carlson. "The more titles you have that people want to rent, the greater your chances of satisfying their needs and creating a happy customer," he said. The family-run retailer had a small video rental selection in its old 11,000-square-foot store, noted Carlson. In designing the new department, it put emphasis on creating an open and comfortable shopping environment, he said. "We wanted it to be visible and open, yet a quiet, relaxed setting where the customer could browse through the tapes and choose a movie without feeling rushed or hurried," he said. A low wall in the front of the department allows customers passing by to get a good look at the video selection. The Summit video section is not as big as some supermarket competitors in the area, said Rediske, "but it is a shoppable and comfortable department. It is large enough to do a very good job in video." A dominating presence in the store is the department's marquee. "The video department is located along the front wall of the store and we wanted something that would highlight it and create a point of focus for the customer," said Carlson. Video is one of several services that Summit offers in its new store. The others include a post office, a bank and a pharmacy -- all of which help draw and increase traffic, said Carlson.
"We are trying to put in as many things as we can that will bring customers into our store and make this a kind of a community center. Video is just part of that idea," he said. Summit expanded its video presentation because "we felt there was a good potential in our market to do a better job in video. So far it has worked. Our business continues to grow and expand." The video department is now doing as much business in one day as it had been doing in two weeks in the old store, he said. Although there is an Albertson's down the street with a video department, Carlson regards a nearby independently owned specialty store as his main video competition. "They have the selection and the titles, and they do the business. Albertson's doesn't have as many tapes. They are a competitor, but they are not a major force in the market," he said. For buying decisions and other day-in, day-out operating matters, Carlson relies heavily on Video Management Co., which performs its services on a fee basis, not for shared revenue. "By using an outside company like Video Management, it has really made the program come together nicely," Carlson said. "We are busy running a supermarket and doing all the things that make a supermarket go. Meanwhile, there's a lot to do in the video department." Video Management made the contacts with Rentrak and with video distributor Major Video Concepts, Indianapolis, said Carlson. "They were instrumental in setting up our department and helping us get it going," he said.