Video looks to roll in second half of year

Drug Store News, July 6, 1998

The tragic romance of "Titanic," a pack of faithful pups led by the latest debut of "Lady and the Tramp" and an array of sequels add up to a strong second-half video season for drug chains. Retailers will see these titles and more promoted at the upcoming Video Software Dealers Association trade show in Las Vegas this month.

"We're expecting great performance in the next quarter because of great new introductions, such as 'Titanic' and 'Simba's Pride,' the sequel to 'Lion King,'" said spokesperson Yvette Venable at Walgreens.

The studios most likely to be riding highest on sales this fall are Disney and Paramount, whose executive director of public relations, Dorrit Ragosine, expressed the simple power of the year's lead title: "Obviously, 'Titanic' will have huge impact on the business in fourth quarter." The video will be released in a two-pack, unusual for the drug trade, but this should be no barrier to sales. Max Factor will tie in with a new color cosmetics launch, which Paramount's Ragosine calls "a great opportunity for chain drug stores."

About another title anticipated by drug chains, "The Lion King II: Simba's Pride," Dennis Maguire, senior vice president, sales and distribution for Walt Disney Home Video and its distribution arm, Buena Vista Home Entertainment, said. "This one is probably the most anticipated of the Disney Video Premieres (direct-to-video) we've ever had."

The sell-through video category has been gaining ground in drug chains in the past couple of years, as retailers add more home entertainment product by offering new hits, children's videos, Hollywood classics and other titles. "Pre-recorded video has been doing very well," noted Venable at Walgreens. Eckerd also reports pre-recorded video is making a very strong performance at the chain.

Home video and drug chains both benefit from a current surge in youngsters. "We have another baby boom going on, and the primary shoppers in chain drug are moms," noted Dan Capone, director of marketing for Warner Home Video.

Exciting class of trade

"The chain drug class of trade is very exciting to us--and very important to us," said Disney's Maguire. "It has some of the best retailers in America, and they certainly cater to the target market we go after. Video is still a high impulse item, and the convenience chain drug brings to consumers makes for a natural fit."

Disney's Maguire sees two main selling strategies emerging in drug chains. One, he said, is "to let the consumer know there is an everyday assortment at chain drug by building awareness." To achieve this, he said, "Besides shippers or displays for in-and-out high velocity hit product, an everyday assortment means consumers know they can shop and browse and find a variety of product."

Another strategy, Maguire noted, is a right-price message: "Not that drug chains need to match sharp pricing, but they need to communicate that their prices are competitive."

Although hit video is notorious for low margins, an everyday assortment with catalog or proven older titles is a way to make up margin. Maguire offered another way to look at home video performance: Disney's recent market basket studies show that an average purchaser of pre-recorded video will spend up to $10 more than the average non pre-recorded video purchaser spends.

Studios are trying to convince drug chains that by establishing an everyday video department, where customers know they can find video product, and with other recognizable product besides predictable top hits, drug chains will see bottom line benefits.

As Warner's Capone explained, "I think for retail chains, including drug, that are looking for product that will help them make money, then good products with equity and consumer awareness is the way to go. I'm not saying they should forego new releases, but don't get into only new release after new release, blowing out volume and not making any money."

Another challenge studios say they are responding to is that of space. "We're focusing on different channels, asking how we can tailor our programs to meet their merchandising template," said PolyGram's Ken Graffeo, senior vice president of marketing. "Drug does not have room for massive displays--we are trying to tailor our programs and work with them."

A look ahead

"Titanic" isn't the only two-pack home video release targeted for mass retail channels this fall. For the family market, Universal is ramping up its "An American Tall" franchise for an August release after six years in the vault. This special relaunch of "An American Tail" and "An American Tail: Fievel Goes West" offers an unusual promotion: a two-pack priced under $30 with a free CD-ROM (valued at $29) for children ages 3 to 6, as well as a cost-saving travel offer and a $3 mail-in rebate. The two-pack promotion is being billed with the line, "Adventure too big for one movie." Singles are also available.

The relaunch precedes the release of "An American Tail III: The Treasure of Manhattan," slated for later this year or early first quarter 1999. On the upcoming release, Bruce Pfander, executive vice president of Universal Studios Home Video, said, "This is another highly concentrated, targeted family film with ages 3 to 10 as the primary target. We're using An American Tail one and two to leverage the market of No. three."