VSDA BENCHMARKING STUDY OFFERS TOOL FOR RETAILERS

The Video Software Dealers Association, Encino, Calif., recently released results of its 2000 Benchmarking Study, providing data to help retailers achieve profits.Further "regionalized" analysis of the information will be available in a seminar for retailers at the East Coast Video Show, which will begin tomorrow (Sept. 26), and run through Thursday (Sept. 28) at New Jersey's Atlantic City Convention

The Video Software Dealers Association, Encino, Calif., recently released results of its 2000 Benchmarking Study, providing data to help retailers achieve profits.

Further "regionalized" analysis of the information will be available in a seminar for retailers at the East Coast Video Show, which will begin tomorrow (Sept. 26), and run through Thursday (Sept. 28) at New Jersey's Atlantic City Convention Center.

The study examines "gross margins, average revenues, and pricing -- those issues that are as important to supermarkets as to specialists," said Mark Fisher, VSDA director of membership.

By comparing stores in different revenue brackets, the survey assists in drawing conclusions about relative profitability. The average retail store decreased in revenue from $290,000 in 1998 to $261,000 in 1999, for instance, while increasing net profit from 8% to 13% over the same period.

Meanwhile "high profit" retailers increased average revenue from $309,000 to $321,000 but saw net profits drop from 26% to 18%.

Rental pricing -- "another issue that crosses all boundaries" in the industry, said Fisher -- remained unchanged on average from 1998 to 1999, though not for stores with annual revenues above $350,000.

"It's apparent from the survey that the highest volume stores were retailing new releases, both VHS and DVD, for 10% higher than the average store," Fisher said.

Another finding is that DVD retail margins increased from 8% in 1998 to 25% in 1999. "Last year retailers were making investments in DVD, and this year they're making money," said Fisher. He added that these increases are derived in part from sales of used inventory and from rentals of catalog product downgraded from new release sections.

The survey's figures keep Fisher optimistic about home video. "There's still a lot of profit out there," he said. "The items that we looked at, such as the ability for a retailer to become profitable at a decent but not necessarily extremely high revenue level, certainly bode well for supermarket video retailers."

The 2000 Benchmarking Study, conducted for the VSDA by the Profit Planning Group, a subsidiary of Chicago-based Arthur Andersen, is offered free to the organization's members.