vsda home entertainment 2004 notes

here are my notes from the various sessions i attended at home entertainment 2004 a few weeks ago.

wednesday, july 14

morning session: “isn’t that special – differentiating your store”

this session focused mainly on the experience of two owners, both with fairly large stores that have incorporated other businesses into the same store. the first was a 7,000 square foot store in a small town (population about 25,000) in iowa, which included tanning, gift sales, snack sales, and a rented-out mobile phone area. the other was someone who has been in the industry for 22 years, after having sold out two different times. he’s based in new jersey, with two stores. the one he talked about was about 10,000 square feet, which included a pinball arcade (!), novelty candy sales (and a regional soda), and home entertainment sales and installation (not really a circuit city sort of deal — the focus is on installations). previously he had tried incorporating a cafe, but did not have much luck with it.

afternoon session: “from the ground up — the launch of vsda’s igroup”

as i’ve been able to piece together the history, the vsda basically got bogged down by the shifting currents of the industry (growth of the chains, etc), and what is now idea (independent dealers of entertainment association), or the igroup, was formed as a way of reviving the trade organization from the independent retailer perspective. this session was basically a chance for the board to talk about the goals of the group, and just have a discussion with the membership that is at the show.

afternoon session: “are they management material? provide a complete education to your store managers with the vsda institute”

this was a short presentation about the training programs that the vsda offers, including a portion of the course about how to hire employees. it looks like solid material, and the cost is fairly modest ($30 a course, whether you take it on-line or in-person).

afternoon session: “now that’s a concept! the latest developments in video retailing”

this was actually three presentations in one: the first by bob tollini, a consultant taking a look at dvd rental vending machines. as he put it, it is currently a $0 billion market in the united states (although rental by vending has a foothold in europe). mcdonald’s is making a splash in this area with their apparent willingness to put in their own dvd rental machines (although i wonder how this really works with a franchiser) and use them as a loss-leader to get people in to buy food. obviously they can’t offer the depth of selection that a video store can, but they can offer the top new releases, and without much overhead beyond the initial machine cost and ongoing cost of the movies. and someone like mcdonald’s could have enough leverage to be getting movies at steep discounts.

the second presentation was by richard langdon, the cio of movie gallery, a large chain that focuses on smaller markets and locations, about the use of item-level rfid. they have run a couple of trials, but the only real advantage they found was in reducing the time required to do a full store inventory. the price of the tags and readers is still too high for it to be a no-brainer to implement, but that will just take time, i suspect.

the last presentation was by sean beauchamp and his partner from rentshark, a vendor of software solutions for online video retailers. since they weren’t allowed to pitch their own products, they just gave a bit of an overview of some of the issues facing video retails, especially from online. because they don’t really have a history in the video retail and rental industry, they brought both the bad and good of an outsider’s perspective. a sort of naïvety about what things will take off (like time-limited dvds and drive-thru rental stores), but also no large preconceptions of things that have to be done to be successful.

thursday, july 15

morning session: “marketing workshop 101: part 1 — advertising & marketing for the independent store”

this was exactly what the title promised: an introduction to retail marketing, with lots of good advice about how to promote your business. none of it was really specific to video retailers, and it had a bit of a small-town flavor, but it was all solid information. one key take away: you should budget between 4-7% of gross sales for promotion (including advertising, newsletters, in-store promotion, and community sponsorships).

morning session: “a conversation with adam glasser — studio views on adult retailing”

i couldn’t resist playing tourist here, and checking out what adam (aka seymour butts, and star of showtime’s family business) had to say. i was a little surprised at how sparsely attended it was. he just talked about his perspective on what retailers could be doing, based on his experience as a frequent visitor to stores all over the country (and world). the thing that kept coming to my mind is how victoria’s secret created the now very large lingerie market, as detailed in trading up: the new american luxury — who’s going to do the same thing for the adult industry? larry flynt and hustler are sort of acting as ground-breakers here with their store in hollywood, which is more like a borders than your stereotypical dingy adult store.

a footnote: adam gave out his email address, which was just an email address with an internet service provider. it surprises me when people use accounts like that for their business, since it invariably causes problems when the provider merges with someone else, or just decides they need to rebrand and screw up the email address of all their customers. surely it makes more sense to drop the $10 to register a domain name (heck, i registered one for my non-existent video business) and the little bit it takes to have that email handled by someone like fastmail.fm.

morning session: “marketing workshop 101: part 2 — an independent’s guide to promotions & partnerships”

this was a continuation of the earlier session, with more examples about specific promotional ideas (again, with more of a general retail slant, and not specifically focused on video retailing), along with an explanation of how to track the results of the promotions.

afternoon session: “am i a rentailer or a retailer? how to make money on sellthrough”

according to the moderator, sellthrough is an average of 20% of a video retailer’s business, and two of the panelists represented small chains where the percentage was even higher (with one being mostly new sellthrough, even with the competition of retailer’s like wal-mart and best buy, who use dvds as loss leaders for their other merchandise).

it was a very interesting session, with a number of good numbers thrown out that help me put the rough spreadsheet i’ve been putting together into perspective. (the average size of video retailers is about 3,000 square feet. average gross revenues are less than $300,000.)

friday, july 16

morning session: “it’s a movie, it’s a game, it’s probably both”

this was a panel discussion focused on games. none of the panelists were involved in doing both movie and game rental (i believe — i arrived a bit late and so missed the full intros), but the information was still good. game rental is a tricky business, because of the high cost of the product (relative to dvds) and the longer rental periods. but the margins in used games are pretty huge (as with used movies), so it is a booming business.

morning session: “international”

there were a lot of characters at this session. a guy from germany talked about the anti-piracy efforts they’ve taken, and that was a big focus of the session. in some parts of europe, they have two-tier pricing that means rental stores can’t legally buy a retail-priced dvd and rent it out.