Lights, Camera... P-O-P!'

It's truly a wonder that today's cell phone-toting, multi-tasking, busier-than-ever consumers find the time for diversions like movies and music. But consumers make the time, and that's music to the ears of CD, video and motion picture marketers. Emerging technologies and heightened competition are changing the retail landscape and as a result, entertainment companies are being forced into making changes in their P-O-P merchandising methods.Video ManiaWatching movies at home borders on being a national obsession. Rentals and sales of DVDs and videocassettes hit the $20 billion mark in 2000, according to the Video Software Dealers Association. What's more, the VSDA says more than 50 million Americans go to the video store every week, and half of them have no movie title in mind when they enter the store. With such a huge potential audience, the fight to make each release stand out is fierce. After all, more than 460 feature films were released in 2000, according to the Motion Picture Association of America Worldwide Market Research (compared to 385 in 1990), and there are about 70,000 titles in release.By far the biggest news in home entertainment is DVD. Hailed as the medium of the new millennium, DVDs represent the most successful product introduction in the history of consumer electronics. In the four years since the technology was launched, 15 million DVD players have been shipped to retailers, according to the Los Angeles-based DVD Entertainment Group. In comparison, only 4 million CD players were shipped in the four years following the introduction of that technology."DVD has taken off like the proverbial rocket," says Seth Goldstein, New York bureau chief editor for Video Store Magazine. "In the beginning, sales are what drove DVD. But now rental is picking up. It's rejuvenated the rental business." Indeed, the VSDA reports that combined rental revenues of DVD and VHS grew 2.2% in 2000, a rise the group attributes in large part to DVD. But the new format is creating merchandising conundrums. "Where do you put DVDs? What do you do with VHS?" asks Goldstein. "Retail chains like Best Buy and Tower Records are dumping a lot of VHS and making room for DVD, but the rental stores have been a little slower on the uptake. They're wedded to the technology that put them in business and they're dancing with that right to the last note."Eden Prairie, Minn.-based Best Buy is "way ahead of the curve" with a 75/25 DVD/VHS ratio, says Lisa Farrell. Merchandise manager, movies and commodities. When Best Buy launched DVD more than three years ago, they installed special basket fixtures to hold the disks, which are half the width of VHS tapes. "But since the explosion of DVD, it's been a challenge to continue to increase the assortment of DVD while decreasing VHS."Whether to merchandise DVDs face out or spine out is another question. "DVD is close to the same size by facing, but the spine is half the width," says Keith Sutherland, general manager for a Tower Records and Music store in Sacramento, Calif. "So you can put 100 on a shelf instead of 50 if you position them spine out, but that's not much of a merchandising tool."Then there's the question of audience. Initially DVD was a guy thing, a magnet for 25- to 40-year-old gadget-oriented men, says Goldstein. "But that was a merchandising blip. The market has expanded to include a much wider audience." And with the average price for a DVD player down to about $200, it's crossing all economic segments.Scott Parks, vice president of advertising for Dallas-based Blockbuster, agrees: "DVD is quickly evolving to a mainstream audience, and our in-store signage reflects that. We make sure our message works for everyone who comes into the store." Like everyone else, Blockbuster is figuring out how to fit DVD into the product mix. "We're watching to see how big and fast DVD grows. We're going to let the customer and the market drive what we do." The rental giant continues to beef up its DVD selection and has three programs in place to encourage DVD rental: an in-stock guarantee program, a satisfaction guaranteed program, and the DVD pass program, which offers 30 DVD rentals per month for the set price of $19.99.Videos at RetailWhile DVDs have added complexity to the store environment for video sales and rentals, additional changes are forcing marketers to adapt their P-O-P strategies to fit within other retail constraints. Some formats, such as simple standees of movie stars, have given way to more subtle or utilitarian displays.Paramount Home Entertainment often uses window displays to initially attract the movie-hungry masses. "It's great real estate because you grab people before they've even walked through the door," says David Soltes, vice president of creative services for the Hollywood, Calif.-based company. Although plastic is a popular display format, Paramount recently opted for paper banners to promote the video release of "Mission: Impossible 2." "Paper is cheaper than plastic but just as effective," says Soltes. The large, four-part banners were affixed to the store windows with a temporary adhesive.The banners for "Mission: Impossible 2" were just one part of a lavish array of P-O-P produced for the movie launch. "Braveheart" was treated to an equally elaborate P-O-P campaign when it went to DVD last year. Less recognized titles, on the other hand, receive new packaging and nothing more. Soltes says the question of which movies merit P-O-P is a decision made long before a project lands on his desk. It boils down to this: Big movies get big P-O-P. "There's more equity in a title like 'Braveheart,' " he explains. "It's an Academy Award-winner that was a box office hit, so the sales goals went up and so did the marketing budget. It's ironic; it's often the smaller-budget movies that could use more help, but they can't afford it."Once consumers are inside the store, Paramount releases are often promoted on lapel buttons worn by store employees. "We're on a button streak," says Soltes. "We hear it all the time. 'Oh, we need a button.' " Buttons announcing availability dates were created for "Mission: Impossible 2," "Shaft" and "Snow Day." Buttons are popular, he explains, because they encourage interaction between employees and customers, and their low cost enables high production runs.Standees, however, aren't nearly as popular for video stores these days, according to Soltes. "Those are the most fun," he says, "and sadly, they've fallen by the wayside. It used to be that every title got one. Last year we only did two." He theorizes that video stores prefer to dedicate precious floor space to merchandisers that hold product. In a nod to compromise, Paramount has started producing standee-like merchandisers. "For 'Rugrats in Paris,' we're coming out with a prepack that has a standee approach. It's basically a standee with product stuck in the middle. So we're still trying to do both."Perhaps growing doubts about effectiveness are another reason behind the video standee decline. "You don't really have to merchandise new releases," says Tower Records' Sutherland, whose store ranks third among Tower stores nationwide in VHS rentals. He believes customers have already bought into a movie -- or not -- by the time it hits video, thanks to the movie studios' advertising campaigns dedicated to the theatrical release. "You just have to highlight new releases so people know they're in stores." He does that with "now available" wall boards and fliers.Efficacy aside, Sutherland is also reluctant to devote floor space to a standee. However, if he receives one he finds particularly compelling, he'll often "tear it apart and make it cooler to fit my space." Tower employs an in-house art department that "customizes" supplied P-O-P. This might involve painting and cutting a prepack, for example, until it's no longer a prepack but a wall display. "This is not a cookie cutter store. Individuality is part of our 'thing.' We have an art department so we can put our own spin on P-O-P."Best Buy also eschews studio-supplied in-store materials, says Farrell. "With the exception of shipper displays, we don't use vendor [supplied] P-O-P. We want to keep a clean, consistent look in our stores," she says. Using authorized images from the studios' Web sites or studio-supplied disks, her creative department produces everything from single-title endcap headers to 9-foot by 48-foot feature wall signage.Big Screen Holds SwayConsidering the plethora of home entertainment options, a decline at the box office would not be unexpected. But such is not the case. The Motion Picture Association of America reports that since the beginning of the decade, domestic box office revenue grew almost 60% to reach more than $7.6 billion in 2000.The number of theaters has expanded with abandon in the past decade. The MPAA estimates that in 1990 there 22,700 indoor screens; last year there were 36,600. In such a crowded marketplace, P-O-P plays crucial role in theaters' quest for customers."Bigger and better, that's what theater like," says Stewart Huey, director of creative operations for Universal Pictures, Universal City, Calif. "So we took a billboard and put it inside theater lobbies." To promote "Dr. Seuss' How the Grinch Stole Christmas" last year, Huey's team created billboard-size banners featuring the furry green antihero. "We'd never done anything like this before. It was cool and it was inexpensive in relationship to its impact," he says.Kelly Hoskins, director of marketing for the St. Louis-based, 200-screen Wehrenberg Theaters, says the huge banners are attention-grabbers. "They seem to be more and more popular. We have five or six studios that want to do them."Standees continue to be hot items for movie theaters. To promote "The Family Man" last year, Universal created a display that depicted the movie's characters gathered around a fireplace, with a bulb in back creating the illusion of fire. But, Huey admits, electric displays can sometimes be problematic because "not everyone plugs them in."Display set-up is always top of mind for Huey. "The ideal is something that grabs the eye but doesn't overwhelm the staff because it takes six hours to put together." Hoskins, for one, appreciates this mindset. She also appreciates it when studios send their own local reps to handle display set-up. "That's a wise idea. It ensures the displays are set up, and set up property."Tuning InLike video, music is an increasingly popular form of home entertainment. Gross dollar volume for all music products increased 8.3% in 1999 to $10.49 billion, according to the National Association of Recording Merchandisers' annual survey. Approximately 80% of retailers who responded to the survey indicated that their music sales were up.There is a growing presence of online purchasing options, but again, the impact at this point is minimal. NARM reports that about 1% of music was sold over the Internet in 1999. And in spite of complaints from the Recording Industry of America Association that the Internet music-swapping service Napster is cutting into its sales, shipments of full-length compact discs reached an all-time high in the first haft of 2000, up 6% from the same period in 1999, to 420 millions units.Scott Webber, merchandising manager for Virgin Records America, Beverly Hills, Calif., thinks he knows why. "When it comes to shopping for music, actually going into the store is a really big part of the experience, and floorstands add to that experiences. When you walk in and see a life-size cutout of Lenny Kravitz, well, that's something you just don't get on the Internet."Indeed, floorstands constitute a major portion of Webber's work. Currently he has a Janet Jackson display in production that will hold both new catalog product. Underlying all of his projects is the need for one-size-fits-all P-O-P. "We rarely customize P-O-P for a particular channel or retailer. It's simply not cost-effective. We need to make P-O-P that works for everyone." And that has become more challenging as the range of stores where music is sold broadens. Security systems, for example, vary widely. "We're constantly updated with samples of stores' security system so we can create bins that accommodate them. If no one can fit their products in our displays, we've defeated our purpose."Music NavigatorsInteractive P-O-P merchandising systems can help seal the deal in music sales. "Listening stations allow customers to become their own navigator, making their way through their personal music preferences," says Degeann Pasero, executive vice president, music distribution for Tambourine in San Francisco. Her merchandising-savvy company offers retailers the Listener's Choice Interactive Retail Music System. Stores can choose a music theme package (such as Mind, Body and Soul, Latin, Romance) and either a countertop or floorstand station to promote it. More than 800 systems are currently in place it airport gift shops, bookstores, cafes and other specialty retailers.Pasero estimates that the interactive units increase sales three-fold. And because the stations serve as mechanical salespeople, they free up employees -- no small consideration in a tight labor market. "Life is much faster-paced these days, and shopper's expectations are higher," she says. "They want to understand a product, especially one like music, before the buy."Emily Huinker, marketing creative manager for Metacom Music, Minneapolis, echoes Pasero's comments. "Shoppers want to feel confident in their buying decisions." Her company's four music lines -- Life!Beats, Just The Hits, Just The Hits For Kids and the new Workbeats -- are package for retailers to use in Metacom's interactive kiosks at mass merchants, drugstore and other non-traditional music outlets. "The kiosks creates an entertaining shopping experience and encourages people to spend more time with the product," she says. The company offers both temporary and permanent kiosks, the latter with changeable graphics.Tower Record has two types of listening booths -- one that samples corporate-directed music, the other that samples music loaded by the store staff. Sutherland says the systems, in place for more than 10 years, require minimal maintenance and space while providing ample rewards. "They definitely improve sell-through."Internet IssuesJust as the Internet has worked its way into so many other parts of consumers' lives, it can now be used to order CDs and DVDs. Netflix.com is an online service that charges $19.95 per month for unlimited DVD rentals, with a maximum of three at a time. Movies are ordered online, then shipped to the customer's home. There are no due dates or late fees. After viewing, customers use a prepaid envelope to return the DVDs.Netflix, Amazon (which focuses on sell-through) and other e-trailers offer the advantages of vast selection and information. Surfers can search for movies, view trailers and read reviews, all in the comfort of their homes. Thus far, these online options account for a miniscule portion of sales and rentals, but their potential is an unknown.Just about every traditional retailer has joined the online fray by hosting its own Web site. But most would probably admit that, at this point, those sites are an obligatory Web presence more than a bona fide sales booster. That said, Blockbuster is testing an online rental reservations program in two cities. Customers can reserve and prepay for movies online, then show up at a designated local store and head to an express checkout line. "We're taking the online experience and looping it back to bricks and mortar," says Liz Greene, vice president, public relations.But plenty of Americans aren't online or are just "more tactile," says Parks, so Blockbuster is also continuing to focus on enhancing the store experience. "We have video monitors in every store that run trailers and a staff that's knowledgeable and available to help customers find the movies they want." Blockbuster's P-O-P "hierarchy" system helps make the in-store environment usable and inviting. From the window decals and the three-sided "new releases" kiosk to the store walls and the large fixture toppers, in-store P-O-P is cohesive in look, logical in flow and kept to a minimum. "The hierarchy system helps customers navigate through the stores, providing a logical flow to help customers find what they want," says Parks.As Tower Records' Sutherland points out, "Online purchases can be cool, but they can't compete with the true shopping experience." DVD buyers, in particular, relish the one-on-one, he says. "DVDs are almost like collectibles. People come in and want to touch and see what they're buying. They want to talk to people about it. You can't take away the human experience entirely and expect to be a success over the long haul." But Sutherland does envision an integration of e-tail and retail. "I think eventually we'll have an online kiosk in the store. If customers can't find what they want, they can order it here and it will ship to the store or their home. That would be a good marriage."Fast Forward"By 2005 it's going to be absurd that we buy a CD in a bricks-and-mortar store," a research analyst predicted recently. Digital music downloads from subscription-based Napster clones will replace physical products, he insists. Others predict a similar fate for video at the hands of video-on-demand, where movies are streamed into consumers' homes via cable or high-speed Internet connections. But can the demise of physical product be just around the corner?It doesn't seem likely, especially if recent moves by Blockbuster's parent company, Viacom Inc., are any indication. On March 28, The Wall Street Journal reported that Viacom was giving up plans to split off its Blockbuster unit. Although Blockbuster's stock dipped to $8 late last year amid investor concerns about competing video-on-demand services, the company's video rental business is growing strongly and is generating cash for Viacom, according to the report. Blockbuster's stock has also rallied sharply in the first few months of 2001, to a high of $15.10 in late February.Meanwhile, Blockbuster continues to experiment with its own forms of video-on-demand services. In May of last year, the company inked a multi-year agreement with DirectTV Inc., El Segundo, Calif., to offer pay-per-view movies via DirectTV's satellite network. The companies agreed to cross-market each other's products to more than 50 million combined customers. In-store displays produced for Blockbuster stores tout features of DirectTV and invite consumers to sign up for the service.In short, it may be premature to discount traditional music and video retailers just yet. Besides, going to the store can be half the fun. "The retail experience will always be important to consumers," says Blockbuster's Parks. "There's an entertainment aspect to being at the store and being exposed to all those options. Customers still enjoy that interaction."

Lights, Camera... P-O-P!'

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