Audio/video tapes

Drug Store News, May 20, 1996

Blank video and audio tapes showed sales increases in 1995, making drug chains -- with about 2 percent dollar growth -- one of the growth outlets for this category. One vendor even called drug chains the channel with the most potential for blank video and audio growth.

One reason is this: although drug chains are not first to carry high technology supplies, as camcorders and CDs become more common, this boosts camcorder cassettes and high bias audio tapes into a better convenience position for drug chains.

Camcorder cassettes in VHS-C and 8mm formats are starting to move in drug chains since the installed base continues to rise. In contrast, VHS tapes ( the standard T-120 represents by far the bulk of blank video sales) is a mature market with a high installed base of video cassette recorders but little growth.

The rising camcorder tape segment brings higher rings (averaging about $5) than T-120's. The latter is often a low-margin promotional draw for both drug chains and their competitors.

Audio cassettes also rose this year in drug, with around 75 percent of sales in drug chains in Type 1 (standard) tape-but growth showing in higher quality Type II (high bias).

The growing popularity of recording music from CDs means consumers are more likely to trade up to Type II. Fuji, for example, is offering incentive for this tradeup with on-pack, 55-cent discounts so consumers can try its DR-2 for the price of Type I. For retailers, the result is higher rings.

In prerecorded video, it's clear that more consumers expect to find video where they shop and not just in a rental destination such as a video store or supermarket.

Home video sales rose 17.7 percent in 1995, while rental transactions declined 8.7 percent, according to New York-based research firm Alexander & Associates. That looks like an opportunity for drug, despite the difficulties of handling this largely in-and-out product, with its often unusual advertising/co-op, prepack and lead time constraints.