Exclusives help entertainment retailers stand out

DSN Retailing Today, August 16, 2004

As mass merchants continue to expand their footprint in all merchandise categories, the term "differentiate" has become a buzzword for retail specialists looking to protect their tuff. And several retailers have become adept at promoting themselves by landing exclusive rights to new products and hit titles.

Musicland entered the fray when it signed TV's "American Idol" judge Simon Cowell as the official spokesman for an American Idol brand Nokia mobile phone. Under terms of the deal, the phones will be sold exclusively at Musicland stores for three years and Cowell will represent the line through ads and special promotions.

At the time the deal was announced, Musicland executives made it clear exclusives would play a big role in helping the chain diversify its product mix and get more creative in marketing its stores. While Musicland had sold mobile phones in its stores before, they were a small part of its business and not a category it would typically single out for a major promotion.

"We're looking at this with an eye toward creating more exclusive partnerships in the future," said Musicland ceo Eric Weisman when the deal was announced. "You can look for Musicland to pursue similar exclusive promotions in other categories."

That trend continued this month when Musicland hosted Metallica in its Minneapolis store for a book signing that helped kick off the band's summer tour. It launched a new online auction site called Showbidz exclusively for the two million members of its Replay customer loyalty program.

"[Showbidz] provides access to everything from tickets to backstage passes to signed memorabilia that they would not normally have access to," said Scott Burtness, vp of music merchandising for Musicland.

Best Buy is also putting an emphasis on exclusives in both music and video. "It's a great way to get customers involved and to create excitement around a release," said Brian Lucas, public relations manager for Best Buy.

The retailer signed a deal last month with MGM Home Entertainment that will give Best Buy exclusive rights to 12 MGM horror films making their debut on DVD this month. Titles under its Midnite Movies promotion will debut Aug. 24 and will include "The Land that Time Forgot," "Wild in the Streets," the "Return of Count Yorga," "Tentacles" and "Madhouse"

This fall, Best Buy will launch a new four-disc DVD set from Elton John called "Dream Ticket." The set will include more than 70 songs and feature never-before-seen performances and TV footage from his early years.

The Elton John promotion is similar to one Best Buy launched last fall with The Rolling Stones' "Four Flicks" DVD box set. "The promotion with 'Four Flicks' is probably the best example of how an exclusive can generate interest in a title and really give it a boost," said Lucas. "[Four Flicks] sold more than 100,000 copies in its first day of release and went multi-platinum in its first two weeks."

He said the "Four Flicks" promotion helped Best Buy and gave the entire category of music on DVD a boost. "It helped raise the awareness of music DVD as a category and created kind of a snowball effect for the format," said Lucas.

Toys "R" Us is another retailer that focuses on exclusives and it occasionally serves as a launching pad for new entertainment products. Last year, it helped launch Hasbro's Video Now portable video player at its Times Square flagship store in New York City with an appearance by teen star Hillary Duff. It did the same last month when Hasbro introduced its next generation Video Now Color portable player.

Of course, exclusives aren't always a win-win for the players involved. Retailers often complain about being shut out when a rival lands exclusive rights to a product or title, and that can come back to hurt the manufacturer. But the success of exclusives such as "Four Flicks" is making it worth the risk.

Retail analyst George Whalin said special promotions like exclusives are essential for specialty retailers looking to diversify and make themselves stand out. He said the high-profile launch of Musicland's expansion into mobile phones is a good example.

"[Musicland] really needs to redefine their stores, and one way of doing that is finding other product categories that appeal to their customer base," said Whalin, president of Retail Management Consultants.