CARMEL VALLEY, Calif. -- Supermarkets and video superstores, like Blockbuster, now account for almost 60% of the rental market, according to a report from Advanstar Associates.
Rental revenues in supermarkets will total $1.7 billion in 1994 for an 18.1% market share, the company reported in its June 20 newsletter, Hollywood Aftermarket. Video superstores will do $4 billion in rental revenues this year for a 41.5% market share, the report said. The video superstores have an average inventory of 12,200 units per store, compared with 2,550 for supermarkets. The report said there are 6,156 video superstores and 10,439 supermarkets with rental departments. "The key trend with supermarkets was the increase in the number that are doing video full-time and full-scale," said Tom Adams, managing director at Advanstar. "That is probably the biggest change going on right now in the rental business, other than the continued gradual capturing of market share by Blockbuster, Hollywood and the other superstore chains." Supermarkets' rapid expansion into video rental may be slowing, Adams noted. "To some extent we are reaching the limits," he said. "It appears that most of the chains that are going to get in, have gotten in, and have opened up most of the departments that they are going to open up.
"On the other hand, because of the traffic they've got, they have the opportunity to grow without adding new doors. That's a real advantage they've got over the specialty stores in terms of future growth. The specialty stores are a destination in and of themselves, but supermarkets have people already coming through the door," he said. Other video stores have an average of 4,475 units per store, $3.5 billion in combined volume and 36.1% of the market, said the report. There are 21,500 of these retail outlets. "Professional retailing has taken over from the mom-and-pop approach of the early days," said Adams. "The transformation is now pretty complete. Except for the smaller markets, it's a supermarket-superstore business at this point."
In monthly turns per tape, supermarkets are far in front of other classes of trade. Supermarkets had 2.42 turns per tape per month compared with 1.63 turns for superstores and 1.18 turns for other video stores, according to Advanstar. Supermarkets tended to be lower on average rental price compared with major specialty stores, said the report. Supermarkets charge $2.25 for a typical rental, while video superstores charge $2.72 and other video stores charge $2.55.
Sell-through volume for supermarkets was combined with that of drug retailers in the Advanstar report. Together they will total $938 million in 1994 for an 18.3% market share. The report showed specialty stores and the supermarket and drug store channels gaining in sell-through volume at the expense of mass merchants over the past two years.