If you sense that you've rented and bought fewer videocassettes during the year, you've got a heap of company. In fact, 1991 is going out as the year the video customer finally slammed on the brakes, much to the consternation of store owners.
Overall videocassette spending (rental and sales) in 1991 is expected to reach $10.5 billion, up $1 billion from 1990. That 10.5 percent increase is no disaster, but it's a far cry from the 30 percent and 40 percent annual increases typical since the mid-1980s.The stagnation is underscored more dramatically in a recently concluded national ranking of the top 100 dealers in the business, conducted by Video Store, a retailing magazine that has been gathering such data for more than six years.
This year's Top 100 retailers grossed $2.3 billion (32 percent of the business realized by video specialty stores), a number that is virtually unchanged from 1990. The phenomenon of no overall growth is a first in this survey, and a rather sobering outcome in view of the general economic doldrums and home video's presumed cachet of being "recession-proof."
Observers seeking a home-video weathervane tend to closely follow the fortunes of the largest chain, the 2,000-store Blockbuster outfit. Once again it dominated the year, with estimated revenues of $1.4 billion and a market share of 19 percent among specialists. If you factor in the array of non-specialists dealing in video (mass merchants, music chains, grocery stores and so on), Blockbuster still controls 13 percent of the business. In fact, for the second consecutive year it outgrossed the total revenues of the 99 stores ranked beneath it.
But just being big is no guarantee of success. West Coast Video, the second-ranked chain with more than 400 outlets, suffered a decline in revenue to $120 million, down from $130 million in 1990. Two other chains in the top 10 also grossed less from year to year, for the first time: RKO Warner Video and Palmer Video.
Considering all 100 retailers listed (representing 4,500 storefronts), fully a third failed to earn more this year than last. To get an idea of how shocking that is, bear in mind that last year, only three out of the Top 100 reported a revenue decline.
Furthermore, Blockbuster itself is not immune. While last year it recorded an 88 percent jump in revenues, this time the increase was a more modest 35 percent, and most of that came about through store openings and acquisitions. The company expects per-store revenue, a more accurate barometer of retail health, to be down by 6 percent.
On that score, West Coast can claim a victory. Last year it converted to a franchise-only operation by selling or closing its corporately owned stores. With the store count reduced by 200, per-store revenue increased by 37 percent.
Why is the bloom off the video rose? The Persian Gulf war and the sickly economy are handy culprits. Store owners also tend to fault Hollywood on the ground that filmmakers aren't producing enough "must see" movies. In actuality, though, there's probably no single answer other than the truism that what goes up must come down.
Here are some other findings from the magazine's survey:
- In the first half of 1991, 20 percent of all VCR households did not rent or buy a single tape.
- Customers of stores in the Top 100 rented more than 661 million cassettes, down 4 percent from 1990.
- The average overnight fee at those stores was $2.49, up from $2.42 in 1990.
- A third of all cassette purchases are made at mass-merchant discount chains, with Kmart the clear leader.