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<I>Lord of the Rings</I> Blitz Begins

7 Aug, 2002 By: Hive News

They blend in with the locals so no one takes much notice when they move in. They approach under cover of darkness, studying their battle plans before descending on their targets. Their quarry is the One Ring. But these are not Orcs or Trolls; they are video release blitz teams.

For titles as big as The Lord of the Rings, stockers fan out across the country Monday night before street to creep into stores and make sure they have product on display the very moment they could sell it.

At Kmart, Kroger and American Stores (Sav-On and Osco drug stores) and several other chains, the teams come not from the Shire but from Tarrytown, N.Y.-based SPAR Group Inc. For home video blitzes, it dispatches as many as 4,700 merchandisers in the wee hours to set up displays, giving priority to 24-hour stores (which, like all good magic, must be ready at midnight) and early-opening stores.

"The difference between getting into that store on Monday night and a couple of days later could be 30 to 40 percent of sales," said Mark Tysdal, SPAR VP of Business Development. "Putting it back in home electronics [instead of near the entrance] could also cost 40 percent of sales."

The goal is to have all the displays up and every shipped copy of a title on the shelves nationwide by noon of street date.

"It used to be when we blitzed, that meant we'd try to hit 70 or 80 percent of the stores [early] and do it all day," Tysdal said. "Starting with The Grinch, we challenged ourselves to do all the stores by noon."

There's no fudging because merchandisers report in from the stores and their information is posted to a password-protected Web site where studio execs can keep tabs on the rollout's progress in real time. As each store is completed, a red dot on a computer graphic map turns to green -- with Kmart, that's 1,834 dots.

"Our goal is get in there, get it looking great and get out of the store," said Kori Belzer, COO of the company's field operations division, SPAR Management Services. "We can redeploy on Wednesday. Between the actual blitz event and Friday, we will probably be in the stores a couple of times."

It's a good thing because unfortunately, the first one doesn't always go off without a hitch. The La Habra, Calif., Kmart was supposed to get two medium displays of Rings -- one for each entrance -- but only one arrived Monday. It was too late at night to reach anyone who might know the whereabouts of the other display so the executives had to sort that out Tuesday.

More vexing still were pricing discrepancies. Kmart's Sunday circular advertised the DVD at $18.99 and the VHS at $16.95. Both initially scanned at the sticker prices, $22.99 and $15.99. Just after midnight, the corporate price updates kicked in on the scanners and the DVD came down, to everyone's relief. The VHS was still scanning at sticker and nobody could figure out why Kmart's opening week ad price is almost a dollar higher. (At press time, SPAR and Kmart were still trying to sort out the discrepancy.)

The store's overnight manager, Robert Gulley, was forced to put a disclaimer on the display because of the chain's policy of paying a $3 bounty for any item that scans at a different price than advertised.

A few customers bought the DVD right after midnight, claiming their promotional posters as they left. The stock would hold until daylight, when SPAR could get more product to the site. (Most Kmart shoppers have to get to work early and aren't out shopping after midnight on weeknights anyway, at least in La Habra, Gulley said.)

It's all in a day's work for SPAR Group. The company helps clients maintain their home video stock on a regular basis, not just for blitzes -- although it fielded blitzes for Shrek, The Grinch and Harry Potter.

"Our contracts are with the studios," Tysdal said, adding the studios determine the quantity to stock. "The business setup is that if the retailer wins and the studio wins, we win. The more they sell, the less they pay."

Although the per-item commission decreases at certain quantity breaks the executives would not disclose, the business is structured to benefit everyone, he said: "When you're looking at some of these major titles like Shrek and The Grinch, they can sell millions of these titles."

SPAR's merchandisers maintain relationships with store personnel and make frequent visits to keep the video shelves tidy. To prepare for a major release, they start evangelizing about hot titles weeks in advance.

"We started with preawareness to the stores to get them excited," Belzer said. "We've already displayed a standee that is pretty much just an advertisement. We send in buttons. In the midnight madness stores, they're sending in 200 mini-posters for the first 200 customers."

Studios decide which display configurations to send to each store. They determine product quantities based on site-by-site prior sales data.

"We play a secondary role. The studios actually manage the inventory," Tysdal said." We feed that database. We provide them with out-of-stock information. We do inventories for them. We're their eyes and ears in the field."

Merchandisers log bar codes with wireless scanners to report out-of-stock titles, relaying the information back to the studios via SPAR headquarters. The wireless units factor in product in transit to each site and eventually will be able to track the time merchandisers spend on each task, said William Walsh, SPAR VP Field Operations, National Services.

SPAR reps do three "resets" a year at each location, changing the mix or presentation of titles and even the ratio of DVD to VHS based on each site's sales.

"As a result of that we usually see an increase of 20 to 25 percent in sales," Tysdal said. "We spend a lot of our time in these makeovers and making sure it's right. We scan every piece of product that is on the floor or in the back room."

The company started in 1967 with health and beauty promotions for food and drug retailers. Over the years the business has grown to 300 full-time employees and several merchandise categories. The company trades publicly under the symbol SGRP.

While DVD has been a blessing for SPAR, fierce competition and Hollywood's endless quest for the superlative make each blockbuster release a challenge. The company used to be able to send merchandisers out solo for blitzes, Walsh said, but growth in the category and more complicated displays have meant sending teams of two or more on blitz nights.

"The studios continue to raise the bar on their displays that they are creating," Belzer said. "They are getting more and more detailed and more eye-catching for consumers."

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