British consumers are spending more money than ever on entertainment – and not just on eating out or drinking down the pub. They’re shelling out to be entertained in their homes and cars. As such they’re demanding DVDs and CDs at an astonishing rate. Market forecasts estimate that 196 million DVDs will be sold this year as well as 179 million albums.
For most forecourts sell-through DVDs and CDs offer the best profit opportunity. Rental DVD can work but only if you’ve got a large housing estate close by and a lot of local trade.
Richard Whalley, commercial director at Choices UK Local (formerly Video Box Office), says home and in-car entertainment items can sell very well in forecourts: “Audio for use in the car is the most obvious link and works especially well; but increasingly portable DVD players are being used to entertain children in cars. Plus DVDs and CDs also do very well in forecourts as impulse and gift purchases.”
Choices is cashing in on the gift purchase market with a bumper range of lines for Christmas. Its seasonal catalogue is packed with new DVD, music and games titles, gift sets and promotions, with recommended retail prices starting at just £2.99.
The new DVD titles include recent box office hits like Magic Roundabout, Hitch, Team America and Robots, all for £9.99. There are kids’ Christmas film favourites too, available in singles and 10-unit seasonal counter display units, with prices starting at just £4.99.
Pricing is obviously a sensitive issue, especially as the supermarkets and online entertainment specialists are selling new-release DVDs at knockdown prices. But Paul Murphy, head of sales at Total Home Entertainment (THE), says: “Pricing in the grocery multiples puts a huge focus on entertainment and key titles, and we believe this brings a great benefit for all retailers – to take advantage of the raised consumer awareness.” Murphy adds that THE makes sure its ranges allow retailers to compete on price with the multiples and high street stores.
Richard Whalley admits that in forecourts there is sometimes a temptation to premium price, but he says if you can show your customers good value, this generally increases sell through.
DVDs sell very well on promotion, with consumers buying them to add to their collections or as gifts for others. Choices runs regular promotions and pre-Christmas has a ‘2 for £10’ offer on 12 titles including Chicken Run and Just Married. Individual selling price is £5.99. The films come in a free-standing display unit, on a sale or exchange basis and offer profit margins of up to 33%. There is also a ‘2 for £12’ offer featuring recent releases and two-disc special-edition titles. Individual selling price is £7.99 and again the films come in a free-standing display unit, on sale or exchange with profit margins of up to 40%.
Meanwhile Choices Christmas music offering comprises a 20-unit counter display unit for £40.80 plus VAT. The unit contains four titles encompassing traditional carols, classic crooners, party favourites and sing-alongs. Rrp is £2.99.
A new product area for Choices is combined DVD and book gift sets. There are three sets available: Golf’s 35 Greatest Ever Moments; Football’s 25 Greatest Ever Matches; and a Go Fishing Special DVD. Rrp is £9.99.
Richard Whalley says: “We believe our Christmas package is the strongest on the market. By venturing into new areas such as books and gift sets, we are tapping into the valuable stocking filler impulse territory and providing neighbourhood retailers with an opportunity to earn extra revenue.
“All forecourt sites have the potential to benefit from home entertainment and our range of products are all on full sale or exchange giving retailers confidence to trial different product mixes. We also provide a full range of merchandising options to suit all locations.”
THE’s Paul Murphy adds: “My advice to forecourt retailers is to ensure they offer quality product and make the most of the impulse gifting opportunity by finding extra space for dumpbins in store. Our experience at Christmas shows a huge opportunity for gifting so I urge retailers to place displays at the front of their stores to maximise sales.”
For convenience stores, the ‘big night in’ has brought extra revenue as consumers rent or buy a DVD and pick up a bottle of wine or some beer and snacks for that night’s entertainment. But for forecourts, in addition to home entertainment, there’s the in-car entertainment (ICE) opportunity, which is driving sales of both CDs and DVDs. And that’s because more new cars feature sophisticated entertainment systems where passengers can each have their own screen and watch their own choice of DVD or play computer games.
Mintel’s In-car Entertainment report (March 2005) talks about ‘systems convergence’ where combined systems offer entertainment, navigation and communications, all in one. Then there are the ‘plug and play’ systems which enable consumers to use their non-car systems, such as iPods, inside their vehicles. All these systems create extra demand for music and film, and that demand could create extra profit for you.