Home entertainment can be a real money-spinner for c-stores - if they get it right.

There’s a new name in DVD/video rental and retail in the c-store sector and it’s Choices UK Local. If it’s in anyway familiar, that’s because there are already 230 Choices home entertainment stores up and down the country. What’s more, the people behind Choices Local know a lot about c-store trading and that’s because up until this month they traded as Video Box Office or VBO.

Explains commercial director Richard Whalley: “We’re changing from a rental company to a complete home entertainment supplier. We had three consumer brands - Choices, Choices Direct and VBO and decided we could increase the value of our overall consumer marketing by using the same name across all three divisions. So today that means we have Choices UK, Choices UK Local and Choices UK.com.

In consumer terms the brand is Choices UK but for our c-store retailers the brand is Choices UK Local.”
The rebranding exercise introduces a funky new look, using brightly coloured imagery to encourage consumers to ‘watch, play and escape’.

Whalley is keen to tell retailers that all aspects of the change from VBO to Choices will be done for them: “Our teams will be installing new headers in-store before Christmas. For things like membership cards, forms and sleeves, the changes will be more gradual, into 2006.”

The new image also means new racking. Conscious of the fact that space is so precious in c-stores, Choices has developed a new spinner unit that holds up to 315 titles - nearly 200 more than its predecessor. Says Whalley: “It holds a large capacity off a very small footprint - less than 600mm. Retailers can use it for rental titles or retail or a combination of both. It’s three-sided so everything is displayed face on.”
There’s also a new gondola end solution that has tiered acrylic shelves. The 1mtr rack can hold up to 343 titles, which is nearly 250 more than its predecessor. Then there’s a free standing display unit which can be single or double-sided.

“Entertainment needs to be at the front of the store, near alcohol and ready meals if it’s going to be successful. But with wall space at such a premium it is often pushed to the back of the store. With this unit, retailers can keep DVDs under customers’ noses,” says Whalley. Dumpbins have also been given a makeover and now feature fun images of real-life Choices staff.

According to the British Video Association, the rental market recorded 153 million transactions in 2004, the lowest level for 15 years, and a drop of 2% on 2003. Rental value was £461m, with 78% of income generated by DVD and 22% by video. The decline of rental has much to do with the affordability of DVD to buy as well as increased piracy where dealers are knocking out copies of new release films for less than a fiver. However, that said, rental does work well for many retailers, providing income in its own right plus valuable incremental sales from drinks and snacks.

A new entrant in the market is online rental where consumers pay a monthly fee and get films sent direct to their home. TNS data found there were six million such transactions last year but Richard Whalley is not at all bothered by this competition. “Research says online rental is pulling in high volume renters but it accounts for less than 10% of the overall market and is quite static. It appeals to some consumers but not to those who like to browse and look at the boxes and definitely not to the ‘rainy day’ or irregular renters.”

With rental in the doldrums now is definitely the time to concentrate more on retail product. Choices is doing just that by expanding and improving its range available to c-stores. New releases are tricky for c-stores because, if they are to compete with the likes of Asda and Tesco, they will be selling for a very low or sometimes no margin.

However, Choices has a ‘nearly new’ solution. The company is enjoying great sales success with what it calls its ‘spiker’ titles. These are blockbuster films that are made available to the c-store sector eight to 12 weeks after their main retail release date. Typically they sell for £7.99-£9.99. Titles so far have included I Robot, Spider-Man 2 and Troy and Richard Whalley reports they have sold 60,000 units already this year. Spiker titles for October are The Magic Roundabout, Closer and Collateral. The DVDs give retailers 20% profit on return. Each title comes in a single or mixed 10-unit counter display pack for £68. Product is provided on a sale or exchange basis.

Christmas is of course a key time for DVD sales and Whalley says Choices “has really gone to town” for 2005. There are ‘2 for £12’ promotions on Disney DVDs and on Collector’s Editions of older box office hits including Die Hard. There’s also a range of book and DVD gift sets - The Little Books of Golf, Football and Fishing, rrp £9.99.

Obviously, Choices is not the only company supplying the c-store sector. Total Home Entertainment supplies 18,000 outlets in the UK and says independents form a major part of its business. Minimum order is £100, with a variety of offers available including sale or return on chart products, subject to minimum sales levels. Head of sales Paul Murphy says there is no criteria other than minimum order plus “the opportunity to develop a credible offer”. His advice: “Customers tend to use c-stores for impulse gift or self purchase so the key is to ensure the range is well placed and includes competitive high street pricing that can be achieved on promotion and budget ranges.”

Choices UK now offers c-store retailers a range of bargain books, all by well-known authors. Such authors include Catherine Cookson and Dick Francis. The books retail at ‘2 for £5’ which gives retailers a profit on return of 33%. When sold singly at £2.99, the profit on return goes up to 50%. All the books are supplied on a sale or return basis. Richard Whalley says: “They were launched in June, in time for the summer holidays and they’ve sold incredibly well. They are a relevant entertainment product that complements everything else we do. People don’t go into a c-store looking for a book but if they see them at a good price they’ll buy them. A lot of people are willing to pay £3-£4 for a magazine; now they can get two books for a fiver.”

Roxy 24 has installed 10 DVD and games vending machines in the UK, including one at a Costcutter in Wickford, Essex. The machines, which measure 172cm high x 66cm wide x 80cm deep, hold 450 DVDs and games which are chosen from an on-screen menu that also allows customers to see trailers and reviews.

There are three levels of purchase: bronze, for £1.99, gives the customer a 24-hour rental; silver, for £9.99, gives them unlimited DVD rental for a month, with each title allowed to be kept for up to five days; while gold, at £12.99, gives unlimited DVD and game rental for a month.
Sandy O’Neill, sales director at Roxy 24, comments: “The success of our machines relies on their location. We need high footfall and stores with a turnover of £20-25,000. So far, rentals are going very well indeed.”