Corner Stores Being Pushed Out By Video Supermarkets
Sydney Morning Herald
Wednesday August 19, 1987
Just as the advent of the grocery supermarkets decimated the corner store business some years ago, it appears home video supermarkets are cutting a swath through the small, independent video stores.
"At a guestimate, 30 to 40 per cent of the video retail trade is accounted for by the large supermarket type stores," says Mr Arthur Griffin, the managing director of video distributor, RCA/Columbia Pictures/Hoyts Video.
"The video rental industry is entering a mature phase and we will see a shake-up in the mamma and pappa stores as the video supermarkets gain dominance.
"There hasn't been dramatic closures of stores yet, but that will change as the larger stores become fully computerised, have quick service and employ people on the floor to discuss the films."
Industry estimates value the national video rental market at more than $2 billion with NSW accounting for 30 per cent, worth about $800 million, of the market.
One of the new breed of video stores, Video Ezy, opened its first store in Hurstville in 1983. Last year, it had 18 outlets, today there are 34, while another 34 are planned for next year.
Costing up to $450,000 each to establish, the stores broach both NSW and Queensland markets and are located in prime suburban locations with a large residential catchment area.
The Hurstville store, the group's flagship, carries more than 22,000 titles.
According to Mr Kevin Slater, the managing director of Video Ezy, "off beat" area such as Palm Beach are left for the small independent operators who have a stock of only 600 to 700 movies.
"Based on the 18 stores we had open last year, trading has increased by 12 per cent.
Turnover on the 34 stores is expected to be just more than $50 million for Video Ezy," he says.
In comparison to the buoyancy of the video super store end of the market, Mr Griffin says the independent stores will have problems surviving because they can't compete with or afford the thousands of titles the larger stores hold in their video libraries.
At between $40 to $99, video titles are not cheap.
On average, a video must be rented out 35 times before profits are made, while a good-quality, undamaged tape will have a 2,000 unit run.
Also, the larger stores have a greater capacity to discount video rentals which often can see top movies available early in the week for a quarter of their normal rental fees at 99c to $1.50.
"The video boom from 1982-84 was due to novelty of the videos and the great number of films being released by the distribution companies," says Mr Griffin. "They were a mixture of the good with B, C and Z-grade films.
"However, the consumer is now more discerning and the industry growth depends on the big quality films being released.
"When Crocodile Dundee is released next year, it will be good for the whole industry and bring people back into the video stores."