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Rental Stores Need to Become the Place to Buy, Not Just Rent

4 Dec, 2003 By: Thomas K. Arnold

With yet another chain reporting down rental revenue (in this case, Hollywood Entertainment), it is fast becoming clear — as if it weren’t clear already — that the big thundering rental chains are going to plod their way to extinction if they don’t establish themselves as the place to BUY movies, not just rent them.

And that’s going to be a challenge, given the lock on the market that the mass merchants and club stores have had since the baby-step days of video sellthrough.

No wonder the rumor mill is grinding with speculation that Sumner Redstone wants to dump Blockbuster. No wonder Blockbuster is doing everything it can to present itself as a movie-selling store. No wonder the indie stores that are still in business are focusing on used-movie sales or even hardware sales — anything, ANYTHING but rental.

Will it work? Can today’s rental giants successfully transition into movie-selling emporiums? Doubtful, although here are five drastic steps, directed at Blockbuster but critical for the entire spectrum of rental dealers to note and to act on:

1) If Wal-Mart is selling a hot new release for $14.88, you’d better do the same — and don’t charge a penny more. Likewise, if the day after Thanksgiving Wal-Mart is selling The Lion King DVD for $11, match or beat their price. And don’t bitch and moan about taking a bath — for Pete’s sake, send people into Wal-Mart early in the morning, before you open, to pick up an armload or two, and then sell them at cost.

2) Lose those stupid “guaranteed rental” ads. Believe me, no one cares anymore. I don’t know anyone who this week rushed out to rent Pirates of the Caribbean. But I know a heckuva lot of folks who ran out to buy it at Wal-Mart or Target, because the latest blitz of Blockbuster “guaranteed rental” ads reinforced the notion in their minds that the video store is where you rent movies, not buy them.

3) Bump up your selection and include budget product. Take a cue from the mass merchants and at least create the perception of low pricing. I’ve seen several people scan the $5.88 bins at Wal-Mart and then pick up Shrek, from the main DVD section, for $21, because they’ve been misled into thinking Wal-Mart has the best price on everything. There’s no reason rentailers can’t play that same game.

4) Power up your commitment to used DVDs — and stop calling them “previously viewed.” Encourage customers to come in and exchange their oldies for new titles, but be selective in what you take back. You don’t want a meager selection of recent hits, but you don’t want a ton of crap, either.

5) Change the name. Blockbuster is synonymous with movie rental. Blockbuster: The Movie Store or some such derivation could help change that perception.

John Antioco, if you are reading this: Send the check to Thomas K. Arnold, care of this magazine. I’ll be waiting.

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