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Trailer Cash

28 Feb, 2005 By: Holly J. Wagner

Artist rendering of an MGB store

Jokes about accommodations in the South notwithstanding, Movie Gallery has a unique strategy for opening small stores in small markets: modular buildings.

So far, the chain has opened 19 “MGB” stores — manufactured buildings that are erected on site and reduce the cost and time associated with opening new stores — and more are planned.

“It's a more efficient way of putting in a store,” said Movie Gallery SVP Thomas Johnson.

The stores average 2,200 square feet, but may be larger, and most require lots no larger than a third of an acre for the store and parking. While zoning in some markets won't allow the modulars, many smaller markets have welcomed them.

The first MGB store was put up in York, Ala. (population 2,854), in 2002. The chain opened seven more in 2003 and another 11 last year. They dot the landscape of small markets in Alabama, Georgia, Louisiana, South Carolina and Texas, and more are planned for Arkansas, Mississippi, North Carolina, Oklahoma and Tennessee.

“In short, we are pleasantly surprised at the economics and aesthetic appeal that have been achieved by our initial rollout of stores,” said Movie Gallery EVP, development, Keith Cousins. “I am comfortable, based on the current activity, interest and leverage of our regional developer base, that we will realistically open more than 40 additional MGB stores during 2005.”

Movie Gallery executives would not disclose the cost or time savings that result from the MGB format, but they said they are pleased with the results.

“Our goal has been to simply use pre-engineered structures and fit them very nicely into the surrounding commercial environment,” Cousins said. “From commercial-grade doors, identical Movie Gallery trade dress, standard fixture components and product offerings, the look and feel of the MGB store is on a par or better to many of the stores in our fleet.”

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