WATCH OUT FOR RISING PRICES

NEW YORK -- Supermarkets may be enjoying a short-lived honeymoon with low-priced DVD product, according to a prominent research analyst in the video industry.Bob Alexander, president of Alexander & Associates here, said low-priced catalog product is appropriate for the supermarket environment. "The problem with the sale of videos in supermarkets was that the price point hasn't been right. The price

NEW YORK -- Supermarkets may be enjoying a short-lived honeymoon with low-priced DVD product, according to a prominent research analyst in the video industry.

Bob Alexander, president of Alexander & Associates here, said low-priced catalog product is appropriate for the supermarket environment. "The problem with the sale of videos in supermarkets was that the price point hasn't been right. The price point for new releases is in the $15-plus range. That's just not your typical supermarket checkout price." But videos in the $5 to $7 price range are priced comparably to other supermarket products, he said.

But while DVD pricing has been going down very aggressively, that trend is about over, he said. "It's our view that this is coming to an end real quick. We have been in a deflationary environment, and certainly the supermarkets know this, where there has been no price flexibility at all. If there has been any flexibility in prices, it has been on the downward side," he said.

"But I think we are entering into a pre-inflationary environment. We have huge government deficits. We have a $100 billion war bill. All the elements are there for a rekindling of inflation, and we are not going to see these kind of downward price trends that we have seen in the past," he said.

"The catalog product may be the last gasp of the deflationary spiral. I think the programs that come out in the spring and early summer will definitely not reflect this kind of price cutting," he said.