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Fading to Gray

28 Jan, 2003 By: Stephanie Prange

A lot of people are bracing for a tough year at rental and, while video software held up relatively well last year compared to some industries, 2003 may hold a few new challenges.

Just the other day I saw a press release from the Food Institute claiming that variety stores and discounters are cannibalizing supermarkets right along with other businesses. So while grocers are poaching on video turf, commercial forces are eroding their core business, too.

Ultimately this will lead to the grayscale world in which all shopping channels are pretty much alike. Cavernous stores offering every imaginable product under one roof so large it has its own zip code.

By most accounts the 2002 holiday season was a disappointment. Even carnivorous Wal-Mart had sales below expectations. But if you look at the numbers, a few businesses fared well. High-end specialty retailers Coach and Sharper Image had banner years.

In Monday morning quarterbacking the season, retail analysts point to those retailers offering unique products with a strong brand behind them as the source of their success: You can't get Coach products anywhere but at Coach.

Which illustrates what I think will be the biggest challenge for home video this year. The suppliers will have a great time, but retailers will be competing for ever-smaller slivers of the business as more and more vendors jump on the DVD bandwagon.

Anyone who doesn't believe me has only to walk store to store at the nearest shopping center. At one outdoor mall near my home, I found home video (especially DVD, of course) at six stores in a row. Drugstore, supermarket, Blockbuster, Wherehouse, another drug store, another supermarket. Other stores on the same lots also offer DVD. This is less than a quarter mile stretch of boulevard we're talking about and we haven't even crossed the street yet.

That makes video specialty a tough market for the coming year because unlike designer label products and boutiques, video dealers have essentially the same thing to offer their customers as literally every other store on the block.

This year's imperative will be to distinguish your business from every other one on your block or mall that offers the same products you do. It means you will have to compete on price, service and, perhaps, catering to niches.

So there's your challenge for the year: find your own color, or risk blending in to the oblivion of a grayscale world.

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