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Borders Books Chain Is Phasing Out Cassettes

15 Mar, 2002 By: Jessica Wolf

Borders bookstores are phasing out VHS, with new stores only carrying cassettes of children's, exercise and high-profile theatrical releases.

“As late as last September or October DVD was accounting for nearly 80 percent of all our video business, so right now we are going through a VHS liquidation,” said Borders video buyer Dan Bogucki.

Starting last year the company slowed down its VHS purchasing and started returning VHS product, and is continuing to liquidate VHS stock at all Borders locations, he said.

New Borders stores opened since mid-2001 are largely without VHS product, except for exercise and children's titles and big theatrical day-and-date releases, Bogucki said, and Borders deep DVD selection of catalog, cult, special interest and documentary product is not mirrored by VHS product.

Analyst Greg Durkin with New York City-based media research firm Alexander & Associates said it's not unusual that companies like Borders are moving away from VHS. “Wal-Mart has been gobbling up huge market share for VHS, and they're real hard to compete with on price points,” he said.

Bogucki said Borders has expertise in format changes as a top music retailer, recently honored as such by the National Association of Recording Merchandisers. “What we went through with CD is what we're basing a lot of our assumptions on about DVD, and for the most part we've been correct,” Bogucki said.

Borders is also in the process of remerchandising its video sections, said Len Cosimano, VP of merchandising, multimedia, for Borders. Cosimano said the company hopes to have a new merchandising design strategy in place later this year that will feature DVD sections more prominently — for instance, next to its in-store cafes — and better title organization. “We're not a first week discounter like the mass channel, so we're looking for ways to make customers become more and more comfortable with shopping Borders for DVD,” he said.

Bookstore DVD buyers pay, on average, $7.50 more than the average brick-and-mortar DVD seller, according to Durkin, citing Alexander & Associates' 2001 fourth-quarter holiday study. Durkin noted booksellers rarely offer discounts or promotions on video product.

“If they're getting that much more [for DVD], it's really about the type of shopper and the state of mind of the shopper,” Durkin said. “If you're buying a $25 book, it's really easy to rationalize that $25 DVD, whereas if you're in Best Buy and pick up a CD for around $10, you're not going to spend $25 on a DVD.”

Borders net income for the year ending Jan. 27, 2002 more than doubled from $43.6 million in fiscal 2001 to $87.4 million, the company reported last week.

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