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More Video in the Grocery Basket

11 Aug, 2005 By: Judith McCourt

Forget milk and cookies. It's milk and DVDs.

Video unit sales at supermarkets through July 31 were up 17 percent from the same period last year, according to Nielsen VideoScan data. What's more, 97 percent of grocers surveyed by Home Media Research say they now carry DVD for sale — and 67 percent say they plan to add more DVD units to their video departments.

As for the holdouts, all said they plan to begin selling DVDs within the next 12 months.

“We're absolutely seeing the growth,” said Scott Guthrie, SVP of sales and distribution for Buena Vista Home Entertainment. “The grocery channel has lagged in the development of this category (DVD), that's no secret, and now they're doing a bit of catch-up.”

Many grocers had viable rental departments until the late 1990s, when complicated copy-depth and revenue-sharing programs triggered a mass exodus. DVD has brought them back into the home video fold.

“We've always seen huge opportunity in supermarkets because of their foot traffic and, particularly for us, because they have moms with families,” Guthrie said. “That's their core consumer, and it's always been Disney's core consumer, as well.

“Now, they're capitalizing on that traffic and converting it into sales.”

Predictably, family and children's titles do particularly well at supermarkets. The combined family-kidvid genre is the top-selling DVD category, accounting for 59 percent of sales.

The advent of DVD also has given a boost to action and comedy films, never strong in the VHS era. Action and comedy films were cited as top sellers on DVD by 47 percent and 40 percent, respectively, of grocers surveyed.

Buena Vista is the overall market share leader in the supermarket channel, generating 23.1 percent of video sales in the first seven months of this year, according to Nielsen VideoScan data. Three of the top five sellers at grocery outlets so far this year are Disney titles: The Incredibles (No. 1), Bambi (No. 3) and National Treasure (No. 4).

MGM Home Entertainment is No. 2 in market share so far this year, accounting for 20.1 percent of all video sales in grocery stores. The catalyst: a huge library of catalog titles and low price points.

Supermarkets also are emerging as the last stronghold of the videocassette, particularly now that mass merchants are phasing out cassettes. Three-fourths of grocers surveyed by Home Media Research said they still carry videocassettes, even though VHS makes up just 7 percent of total video unit sales.

Furthermore, grocers aren't planning to dump VHS anytime soon. More than 60 percent said they plan to keep cassettes in stock, at least through next year. Just 13 percent say they will give VHS the boot, while 26 percent are undecided.

New DVD releases sell at a premium of nearly 25 percent over videocassettes. The average new DVD release sells for $20.50, compared to $16.60 for a new VHS release. Catalog DVDs sell for an average of $12.20, while catalog videocassettes fetch an average of $8.80.

When it comes to merchandising video product, grocers use a variety of locations to attract consumers. The majority (57 percent) now have dedicated video departments, while 37 percent sell videos at the checkout aisles.

More than half of the grocers surveyed (58 percent) said they cross-merchandise video product throughout the store at least some of the time.

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