(Entertainment-NewsWire.com, November 28, 2012 ) San Francisco, CA -- In the wake of closings of major video stores and certain big-box retailers, United Kingdom supermarket chains now dominate the DVD sales market.
Based on recent sales figures, the U.K.’s four largest grocery chains, Asda, which is owned by Wal-mart, Morrisons, Sainsburys, and Tesco, now control approximately 40% of the commonwealth’s £1,8 million ($2.8 million) DVD sales market.
These sales figures give the grocery chains a lot of say in what consumers buy, how much they will pay, and what kind of profit margin exists per DVD. However, move distributors complain that the grocery chains don’t have the expertise some of the other retailers had, and no cache is maintaining long-term stability in the market.
It makes for a contentious relationship as the supermarkets and leading studios find themselves constantly battling, while independent studios for any kind of foothold in the market.
"The supermarkets are the most influential commercial players in the UK film industry, and bizarrely, they couldn't care less about that status," one frustrated independent studio executive said. "It's all canned carrots to them. There's no emotional connection to film; they are just interested in pushing down the price."
The dominance of Tesco and Asda makes for bad business in the movie industry because the markets use DVD sales as a loss leader, according the CEO of another independent studio.
"There's a massive pressure on pricing, but if they don't stock your DVD, you lose a big chunk of the market," he says.
For example, some of the biggest film blockbusters of the past year typically sell for below wholesale price at the supermarkets. For example, "The Hunger Games" sells for £9.99 ($16.10) and "The Avengers" at £8 ($13). In an extreme example, "Harry Potter and the Deathly Hallows: Part 2" was virtually given away by one grocery chain for £3 ($4.85) when their shoppers spent at least £50 ($81) on groceries.
One advantage, according to film distribution executives, of selling at major supermarkets is that they are able to keep the DVD medium viable by making it readily available to shoppers who may have only went out to buy bread and milk. "The supermarkets are purely about impulse buying," says one studio head. "I love the fact that they are committed to this category. They are still opening lots of stores, and that gives us the chance to sell DVDs."
Expansion into the DVD market is also happening at the giant grocery chains. For example, Tesco acquiring the Blinkbox VOD service last year, and now has it integrated with its DVD retailing operations. Sainsbury’s plans to launch a digital store at the end of 2012, with Asda and Morrisons both expected to follow.
While grocery stores have been able to maintain brisk DVD sales, not everything the studio executives want to sell has been moving.
"The supermarkets aren't great at selling everything," one studio executive noted. "They are great at big hits, but not at higher value items like TV box sets or Blu-ray."
In recent years the stuttering of DVD retailers, as well as the reduction in DVD sales space by WH Smith has left only home entertainment retailer HMV viable in the brick-and-mortar universe, along with Amazon online as significant alternative outlets for distributors.
The grocery chains are known for coercing suppliers in all product categories, with DVD being no exception. The recent economic downturn has only made the grocery chains more aggressive about squeezing costs.
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