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Mass Merchants Cycling Product Quickly

30 Jun, 2005 By: Judith McCourt

Just how bad is the shelf-space crunch studio executives have been griping about for the better part of a year? Seventy percent of mass merchants and other discount retailers surveyed by Home Media Research say they, too, are concerned about shelf space, with nearly half (44 percent) saying they think it is a serious worry.

That's not surprising. As of June 26, there were 46,223 DVD titles in release, up 856 from the end of May, according to The DVD Release Report. The steady flow of new and catalog feature films is augmented by such boom markets as nontheatrical kidvid, documentaries and, in particular, TV DVD, which has seen a product release rise of more than 50 percent in the first half of this year, according to the report.

When retailers were asked whether they limit what they carry because of shelf-space restrictions, more than half (58 percent) said yes. And when it comes to choices, 43 percent of mass merchants say they're opting to trim secondary and nontheatrical titles before they cut back on the box office hits.

Not only is there less room at retail, but the amount of time that a title gets prime retail shelf space is shrinking. More than two-thirds (69 percent) of mass merchants and discounters surveyed said they rotate inventory more quickly because there is so much product available.

Mike Dunn, president of Twentieth Century Fox Home Entertainment, recently told Home Media Retailing that “product proliferation” is an “overwhelming” concern because of the stress it causes at retail.

“If you look at what's happening now, a title comes out. Then, two weeks after it's released, you lose your primary display and your numbers go down dramatically,” he said at last week's Fourth Annual Home Entertainment Summit: DVD Magic 8. “It makes it very difficult.”

He's right. Survey findings show that 20 percent of retailers said they move a title out of the new-release section after two weeks. On average titles were taken out of the new-release section four-and-one-half weeks after street date. Even that's a far cry from just a few years ago, when it was not uncommon to see titles three or four months old on the new-release wall.

Speaking at DVD Magic 8, Glenn Ross, EVP and GM for Universal Studios Home Entertainment's family productions unit, said the time for suppliers to experiment at retail is over.

“The amount of time you get on a shelf at a place like Wal-Mart is so minimal,” he said. “If you aren't 50 percent sold through in the first seven to 10 days, they send it back.”

With shelf space at a premium, most of the big retailers (67 percent) said they are seriously considering expanding their DVD sections over the next year. And 65 percent said they plan on seasonal expansion, particularly during the fourth quarter.

Best Buy plans to increase the amount of floor space devoted to DVD and video games as part of its effort to distinguish itself with consumers and gain market share in entertainment software, the company reported in its fiscal-year 2005 report.

More and more retailers are looking to the Web to expand their selection. The study showed that 40 percent of mass merchants and discounters are sending customers to their Web sites for expanded product offerings.

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