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TK's MORNING BUZZ: First It Was DVD Players, Now It's DVDs for Sale at a Savvy Supermarket Near You

8 Jun, 2001 By: Thomas K. Arnold

Grocers and video -- now, there's confusion.

First, back in the early days of video, supermarkets jumped onto the rental bandwagon, most with limited selections tucked away in the corner of the store but some with huge departments. Remember H.E.B. in Texas, which begat the Video Central chain? A big operation, run by a savvy group of people.

When sellthrough became a viable contender about a decade ago, grocers were left behind in the rush, just like their video specialist peers. The big mass merchants and music chains quickly dominated the market; the grocers found themselves outgunned. Besides, the margins weren't that great and, unlike rental, a return visit wasn't guaranteed.

By the middle 1990s, however, the tide was turning. Grocers had initiated many of the price wars that drove down rental rates and ultimately they were victims, just like the nearby specialty stores they had tried to run out of business. Grocers got rental rates down to 99 cents and suddenly realized they weren't making any money; there were a lot better ways to use that valuable floor space.

Still, video rental persisted in areas where supermarkets had cornered the market, where the rapidly encroaching big chains hadn't touched down and where a lack of viable local competition hadn't driven down rental rates, either.

When the copy-depth movement came around, however, a mass exodus began when grocers, who had always liked things simple and neat, found complicated goals, matrices and baselines far beyond their tolerance level.

I'm convinced that video would have virtually disappeared from supermarkets had it not been for DVD. All of a sudden there was a hot, trendy new format and by last Christmas, savvy chains like Von's and Ralphs had even begun carrying DVD players, selling them to card-carrying "members" for less than the big-box stores were charging.

Now, when I do my weekly trips to supermarkets near and far for Atkins bars, Tyson's chicken and raw veggies (yes, I'm dieting), I never know what I'm going to see. My neighborhood Von's put the DVD players away, at least until next Christmas, but has a rack of DVDs for sale right in front of the checkout lanes. A nearby Albertson's brought in DVDs as well, along with -- surprise, surprise -- an assortment of budget-priced VHS cassettes.

Neither store has ever rented videos.

Meanwhile, several other supermarkets whose rental departments were beginning to look as appealing as wilted lettuce now have jazzy, spruced-up DVD sections, while others have completely thrown in the towel, as if first copy-depth and then DVD was simply too much for the passive traditional retailer to comprehend.

Readers, I'm curious about what the grocers in your area are doing -- stocking up or closing out?

You know where to find me.

Comments? Contact TK directly at:TKArnold@aol.com

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