Contrary to the message in the 80s hit, video never did kill the radio star, but DVD may well kill video. According to the British Video Association (BVA), DVD rental overtook video for the first time earlier this year.
“This is an important milestone for both DVD and the video industry and has now set the trend,” says Lavinia Carey, director general of the BVA. “It clearly demonstrates that DVD is not just a format for lovers of technology, but is now firmly established as the home entertainment format of the present and future.”
DVDs were first launched in 1998 and the format overtook VHS in the retail market last year. This is due in no small part to the tumble in hardware prices – you can now buy a DVD player for less than £50. Indeed such is the growth of DVD that it helped the British video industry overtake the music business in terms of retail sales. The total value of the UK’s video rental and retail business rose to £2.55bn last year compared to a flat year for music sales – worth just over £2.1bn.
All this growth has opened up a whole new profit opportunity for retailers, including forecourts. It might not appear so at first glance as the grocery multiples sell chart CDs for less than a tenner and the latest DVDs at knock-down prices, but it’s true. One thing the big boys have not got is DVD or video rental. They can’t be bothered with the administration that goes with offering such a service.
However rental is a win-win situation. Films can be supplied straight to your door, racks merchandised by experts and the video clubs are simple to run. But the real bonus is that each video rental means two trips to your store and therefore two opportunities for incremental sales. Crisps, sweets and drinks for that big night in when the consumer is renting the film and on his or her return the next day, some cigarettes, a newspaper or a snack perhaps. It must be worth a go in forecourts, as Video Box Office (VBO) has appointed its first ever forecourt sector manager – Ian Borrows.
Borrows has been with the company since 1998 and has been responsible for developing business within a number of accounts including Palmer & Harvey Ace, Booker Premier and Shell. Commenting on his appointment he says: “We constantly review ways in which we can provide a better service to our customers using the expertise we have gained in the convenience sector and acknowledging that the forecourt sector is a very specialised market. We have now been able to gain endorsements from Shell, Total & Jet.”
One forecourt retailer who’s reaping the rewards of offering DVD and video in his store is Andrew Bloyce who manages Averill’s Drayton. He says home entertainment – which his customers can either rent or buy – is one of his top five customer drivers.
Says Borrows: “Forecourt operators are now seeing tried and tested convenience store products working well within their sector.
Competitively-priced, quality home entertainment products give forecourts a greater range of gift items and they also generate impulse sales for people wishing to expand their own collections.” He says VBO can offer a quality range of films, games, music and audio which can be displayed on eye-catching free-standing display units, wall units, plus a new space-saving spinner. “The spinner display unit allows our full range of products to be displayed in forecourts that may have restricted space,” he says.
VBO’s commercial director Anthony Skitt says it’s definitely DVD that’s attracting new customers to rental but he adds that every customer with a DVD player buys an average of 20 DVDs in the first year of owning the player. He says DVD now accounts for 54 per cent of all rental and 72 per cent of retail transactions.
VBO has exploited the boom in the retail market (or sell-thru as it’s known in the trade), with the launch of its DVD of the Month, which it says offers consumers outstanding value for money and is backed by national advertising in the Daily Star and
Daily Mirror. “The combination of strong product, great value and national advertising makes this an excellent proposition for our customers,” says Skitt.
The most important thing about VBO’s DVDs of the Month is that they are very popular films. The concept kicked off in August with The Matrix and has been followed by Four Weddings and a Funeral, Terminator 2, The Fast and the Furious, and for Christmas, Cats and Dogs. The films are sold in packs of 10, retailing at £7.99 each, and are presented in a compact counter display unit.
Skitt continues: “DVD and PlayStation 2 games are largely responsible for the rapid increase of entertainment to buy over the last two years. We have seen explosive growth in both these markets as customers continue to collect films and games, establishing their own libraries.” VBO believes forecourts are perfectly placed to exploit this impulse market, because of their late opening
hours and their easy access.
Christmas, of course, is a buoyant time for sales in this market as thousands more consumers unwrap their new DVD players or PlayStation 2 consoles on December 25. And there are developments outside the home as more cars are kitted out with entertainment systems to keep the kids quiet. Growth in DVD will of course mean price erosion of VHS. But VBO has already begun to exploit this with the introduction of £3.99 video titles in its Collections sell-thru range.
Skitt concludes: “Our aim over the next year will be to continue to supply our retailers with quality sell-thru titles at aggressive, high-street competitive prices and assist our retailers to manage efficient stock control within the multiple product category that is home entertainment. Evidence has also proved this can be an outstanding profit and footfall generator. The major multiples have never established rental as a core offering and primarily support new releases on sell thru. Our offering provides consumers with outstanding value entertainment available to them when they are most likely to want it, all of which makes home entertainment fundamental to the forecourt sector’s offering.”