PC software finally makes its mark; video, TV/VCR a powerful duo - discount stores - The DSN Productivity Report

Discount Store News, August 5, 1996

Computer software, long expected to become a mass market staple, finally became a significant category among full-line discounters, accounting for $530 million in sales.

Venture moved from generic software offering of a full branded offering of hits and popular kids' titles.

Music sales continued to soar at full-line discounters, due mainly to the ongoing shakeout in the music specialty industry. Discounters stepped up merchandising, increased selections and started paying attention to categories like alternative that had been given short shrift in the past. Many music companies are now developing promotion strategies aimed at discounters, which have very different needs than record stores. Both Wal-Mart and Target have met Best Buy's standard-setting price strategy of $12.99 or less for most CDs.

Video sales, spurred by larger-screen televisions and fully featured VCRs, continued to contribute strong sales.

Video games, driven by the massive success of Sony's PlayStation, surged after flattening in 1994. Sega's Saturn was a disappointment in 1995, but price cutting by Sega and 3DO this year has made the industry more competitive.

Audio had a surprisingly successful year, probably attributable to the declining fortunes of most of the CE specialty industry, particularly the implosion of Fretter/Silo, which went from 250 stores to zero since May 1994.

Wal-Mart tested a new-look consumer electronics department that eliminates the security corral and allows consumers natural access to the category. The chain also moved its one-hour photo operation to the center of some stores, next to CE, to create a mid-store customer service center.

A bumper crop of kids' movies, as well as new sell-through strategies for hit adult product and new sub-$8 price points on hits like "Look Who's Talking" stimulated sell-through video sales.

      Consumer Electronics
          Productivity