ATLANTIC CITY, N.J. -- Supermarkets need more help from suppliers to be more effective with sell-through and the related cross promotions, said speakers at a supermarket video seminar here.
Video suppliers need to do a better job of competing with other vendors in the highly competitive supermarket environment, said Ed Sam, national sales director for The Movie Exchange, Oaks, Pa., a major rental and sell-through racker in the Mid-Atlantic and Northeastern states. The seminar was part of the East Coast Video Show, which took place last month.
"When we walk into a supermarket and we are asking for incremental shelf space, there are hundreds and hundreds of vendors asking for the same thing. To get that, it is important that we understand how supermarketers think. You can't go in there with the same mind-set that we have when we go into a video retailer," said Sam.
"When you go to a store director, and you want him to do certain things for you, his mind-set, and his charge from his superior, are: more revenue, more profit, less expense. It's as simple as that." Control of labor costs is a major issue, he said. "So we have to be a support organization for a supermarket if we want them to be on our side and if we want them to sell our product."
Supermarkets need more information from suppliers on the profitability of sell-through, said Jerry Lynch, business group manager at Wegmans Food Markets, Rochester, N.Y. "The supermarket industry is very focused on efficiency," he said, using the Efficient Consumer Response initiative as an example.
"There needs to be more of a focus on getting inventory correct -- not having too much in the store, but just the right amount. Traditionally, studios focus on the upfront order. But we need to know what the net sales are going to be and how do we handle the inventory," said Lynch.
Building relationships, credibility and improving communication are keys to accomplishing this, Sam said. But video suppliers also need to provide supermarkets with goals, programs and better information on sell-through video, he said.
"Every good store director is goal-oriented. They have goals for the produce department, the bakery, the deli, the meat department. So now, they need goals for the video department. So we need to go in and present that goal," said Sam.
With low margins on the big hit sell-through titles, supermarkets need a program for building profits. Cross-promoted products are ideal for this and they don't have to be the tie-ins arranged at the national level, he said.
For example, Sam noted that retailers can build a promotion around the soft drink brand portrayed in the movie, "Independence Day." "If there is not a tie-in built in to the promotion, you can use a product from the movie. Create excitement in your stores by putting up your display of 'Independence Day' along with that product and some reference to the movie," he said.
Lynch mentioned that retailers need more flexibility on using co-op funds for both sell-through and rental. "The rules that are applied on how to apply those co-op dollars are extremely restrictive and unusual for someone in a supermarket environment. They keep a lot of us from using it to its full potential. Working with studios and distributors on that would certainly help," he said.
One cross-promotional avenue with mostly unrealized potential in supermarkets is tying video in with meal solutions, he said. "It's easy to have a 'pizza-and-a-movie-tonight' promotion. We've done that. If you have a level of cooperation with the other departments, and you can express the mutual benefit of the promotion, those aren't that difficult to do," he said.
Shrink also needs to be addressed, he said. "It needs to be controlled. It needs to be known. You have to know exactly what your shrink is to be able to address that," he said.
On low-margin hit titles, shrink "is very difficult for supermarkets to swallow. It becomes very difficult for us to get the support for those titles" at store level, he said.
"There needs to be less shrink and more margin. We would welcome some help in addressing those issues from the studios and distributors," said Lynch.