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Bookstores Mine Small But Savvy DVD Niche

30 Dec, 2004 By: Jessica Wolf

Bookstores have become an important face for the DVD market. With their bulging stock of books, music and DVD product, suppliers see them as multimedia hubs catering to a sophisticated consumer base.

Overall DVD market share for the bookstore retail channel is small, 2.4 percent for 2004, according to Adams Media Research. That's down from the channel's 2.6 percent share in 2003, but the dip can be attributed more to market share increases that most other channels experienced for the year, rather than an actual decline in sales at bookstore locations, according to Adams' analysis.

The market is visibly dominated by two major players: Barnes & Noble and Borders Books and Music. Barnes & Noble operates 653 stores in 49 states. Borders has fewer locations, with 450 stores in the United States, many concentrated in major urban markets, but also has an international presence, with locations in Australia, New Zealand, Puerto Rico, Singapore and the United Kingdom.

Both chains have stepped up product offerings and promotions on DVD and have remerchandised many of their stores to make DVD sections more accessible and visible over the past year or so, suppliers noted.

Borders has a bit of an edge, suppliers said, primarily because the retailer dove into DVD early and with a stronger shelf-space commitment than its competition.

That commitment has only grown more aggressive over the past 18 months, said Peter Faricy, Borders VP of multimedia.

The chain has expanded DVD sections across the board over the past year and a half — shifting some space from music sections — and has tried to position DVD sections in high-traffic store areas, Faricy said.

Strength in Diversity
Bookstores, Borders specifically, play a different game than the mass merchants, Faricy said, which is why shoppers will find a diverse selection of product — from the newest releases to documentaries, British TV programs, performance and music DVD as well as fitness and sports programming.

“I think we've found a way to leverage the fact that our customers all love DVD,” Faricy said. “Where we've distinguished ourselves is that we have one of the largest assortments of DVD in the retail market. Our message to our customer is, ‘We love DVD the way you love it.’

Bookstores are a natural fit for product from suppliers such as A&E Home Video and BBC Home Video. Not only do the buyers for the bookstore chains understand the eclectic programming these suppliers offer, but the stores themselves are a haven for the customer who may be interested in it, suppliers said.

“We've found that people who buy our product very often buy it after reading the packaging and after browsing,” said Meg Branagan, senior director of marketing for BBC Video. “These kind of retailers really provide the right kind of environment for that.”

Bookstore customers are definitely in the market for specialty programming, said Susan Margolis, COO for New Video/A&E. “The bookstores tend to really do a great job of merchandising and stocking these kinds of hard-to-find boxed sets, unusual compilations — often things that you just can't find at Wal-Mart or Target,” she said.

“We find that these customers aren't as price-sensitive perhaps as customers shopping at other stores. If they find what they want, they're willing to put down the money for a boxed set,” she said.

Browsing Behavior
Borders caters to browsers and that sense of discovery with its wide selection of DVD, Faricy said. Fitness is up 75 percent, and sales of sports titles are up more than 200 percent year-over-year at the chain, he said. Music DVD sales have increased 40 percent.Music DVD suppliers couldn't be happier with the attention their product is getting at bookstores, especially Borders.

“Borders recently put in these great new sections that are a great showcase for all the live performance projects on music DVD,” said Mike Carden, president of North American operations for Eagle Rock Entertainment Inc.

Paul DeGooyer, VP of Warner Strategic Marketing, said it's a pleasure to work with high-demo accounts like bookstores on music DVD product because “they really get it.”

When Books & DVD Collide
The fact that titles with strong literary connections, like “Harry Potter” and “The Lord of the Rings,” have been big hits on DVD has only helped draw traffic and visibility to the bookstore as an important DVD destination, Faricy said.

“On a typical new release, we may have a little bit lower sales [than other retail channels],” he said. “With titles like ‘Lord of the Rings' or ‘Star Wars' or ‘Harry Potter,' we do a little bit better than them.”

Not surprisingly, bookstores have proven to be great partners for the “Lord of the Rings” line of DVDs, said Justine Brody, VP of marketing for New Line Home Entertainment.

“Where they have a real advantage over a lot of other retailers is, they have the ability to cross-merchandise and build a big display with DVDs, books, soundtracks and licensed merchandise,” Brody said.

DIY Boxed Sets
Borders got a lot of attention late last year with its build-your-own boxed set campaign, which suggested shoppers pick three DVD titles and get the fourth free to custom build a boxed set.

USA Today editors picked up on it, DVD Web sites and chat rooms got into the idea, and clerks at the chain's stores came up with ideas for the promotion, Faricy said, all of which helped promote the image of Borders as a DVD destination.

Plans are in the works for another highly visible promotional campaign this year, he said.Borders also offers a monthly e-mail newsletter all about DVD with Borders Digital Cinema. The chain sometimes uses the electronic newsletter to tag promotions and deals being offered in the stores, but mostly it focuses on editorial content that will reiterate to customers the spirit of DVD at the chain, Faricy said.

“We want them to think of Borders as their advocate and authority on DVD,” he said.

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