Standardizing and minimizing software packaging may maximize, insure share of retail real estate - Computer Product Retailing

Discount Store News, June 20, 1994 by Pete Hisey

Market forces may force software publishers to finally do something retailers have been begging them to do for years--standardize and downsize their packaging.

Unlike music, videotapes, video game software and paperback books, computer programs come in a bewildering array of packages, from the modest CD jewel box to cumbersome cardboard doghouses, trapezoids, and airplanes--a merchandiser's nightmare.

The software publishers, many of them operating out of garages and apartments with little or no marketing dollars behind them, contend that their packaging is their only means of promotion. Music has the radio, video has the movies, video games have the arcades, but computer software has little more than shelf presence and word-of-mouth ... or so the argument goes.

At the Software Publishers Association spring symposium in March, Kmart's Dan Van Hammond and distributor Handleman's Gary Eckes floated a standardized package roughly the size of the CD longbox to a less than enthusiastic response. Kmart, Wal-Mart and Blockbuster, among others, have been pushing for a standard for at least a year, but their share of the market remains, at least for the next year or so, too small to force publishers to change.

But what the mass merchants have not been able to do, the marketplace at large will soon accomplish. The very success of multimedia products has pushed the number of titles available from 300 last year to nearly 2,000 this year. Not even Comp USA can stock that many, and there are hundreds more in development at this moment.

The inevitable result of this proliferation is a vicious shelf war, in which larger publishers have an enormous advantage over smaller ones, no matter how good the title might be. Microsoft has adopted the old World of Nintendo strategy, developing fixtures and launching retailer-specific promotions and advertising strategies to insure its share of retail real estate, for instance, leaving smaller competitors out in the cold.

The numbers, at least at the mass market level, are brutal. Kmart and Wal-Mart, for instance, stock only about 100 titles at present. That number may triple or quadruple over the next year, but still won't come close to even presenting a representative sample of all that's available.

If the industry were to adopt the jewel box as the packaging standard, mass merchants could afford to stock as many as 1,000 skus, as Best Buy does today. The music industry's move to the jewel box has paid off big time, as deeper and deeper selections have stimulated sales of what at one time were marginal elements of the business (alternative, classical, jazz and country).

Software publishers would be well advised to follow that industry's lead--or be left behind entirely.