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TK's MORNING BUZZ: 'Independent Retailers are Missing the Boat with DVD Sellthrough the Same Way They Did With VHS Sellthrough a Decade Ago'

21 Aug, 2001 By: Thomas K. Arnold

One of the benefits of working late -- real late, as in "The DVD Awards are right around the corner and I've still got a ton of stuff to do" late -- is being here when our brave market research people are compiling data, crunching numbers and deciphering trends.

Just after 7:00 last night, Judith McCourt, our tireless market research director, stopped by my office to share with me the results of a new "Instapoll" her staff just took of 212 video retailers.

Among the subjects: DVD trends. And what she told me was so compelling I scrapped the column I had written for this morning and took some careful notes so I could share this hot information with you.

"Independent retailers are missing the boat with DVD sellthrough the same way they missed the boat with VHS sellthrough a decade ago," McCourt said.

"They're leaving money on the table."

McCourt noted that while indie retailers have gotten behind DVD rentals -- 88% of them now carry discs for rent, alongside cassettes --only 36% of these retailers are selling discs. Operations with three or more store are much more likely to carry DVDs than their single-store brethren, 69% as opposed to 33%.

Retailers, what are you doing? There is no possible reason video retailers shouldn't jump headfirst into both segments of the DVD market. And what McCourt's research tells me is that more than half the retailers who are renting DVDs aren't selling them.

That's ridiculous. I know, I've heard all the talk about margins, and about how retailers -- small retailers -- can't make money on DVD sales "because Best Buy sells them for less than my distributor charges."

So what? Buy them at Best Buy and sell them at a few pennies' profit -- or at cost. But don't deny your customers the opportunity to buy DVDs. Carry them as a customer service, if for no other reason -- or as in investment in your own future.

Videoscan sales data for July basically indicates the DVD sellthrough market is up for grabs, McCourt says. While mass merchants own about 40% of the DVD sales market, and electronics chains have 35%, almost a full quarter still belongs to specialty retailers. Compare that to VHS, where mass merchants clearly dominate, with a market share of almost 75% and specialists have a mere 15%, and it's easy to see why McCourt is so distraught.

"Convenience is clearly a factor here," she says. "Independent retailers are building DVD customers through their DVD rentals --so why not sell them as well?"

I second those sentiments.

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

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