Analysis by Sheila Eggleston Buzz Lightyear's determined efforts to get Woody back, are nothing compared to the multiples' assault on the home entertainment market. Despite retail video sales worth £882m in 1999 being down 6% on the previous year, supermarkets were responsible for 15.7% volume share of the market [British Video Association]. Asda which took the lead from Tesco in 1999 plans to stay ahead. Music buying manager Andy Spofforth says: "Asda's aim is to grow its 6% share of the video market to its grocery market share of 15%." Ambitious perhaps but Spofforth believes it can be done within three to five years. Asda now has around 235 outlets and is opening at least one a month at present. The latest store will be the refurbished mega Wal-Mart Asda supercentre at Patchway, Bristol. Here a bigger catalogue is planned which includes DVDs (digital versatile disc) and computer games. Asda believes its new look video and audio section is the way forward ­ a store within a store ­ with dedicated staff, fixtures and fittings. The surrounding hardware, such as TVs and hi-fis, also help to woo customers to the software. At present videos are taken out of their cases and the cases are then put on the shelf. The multiple is trialling tagged stock in a number of stores because, says Spofforth, "people don't want to queue twice for a product". The effect of its roll out of Wal-Mart's Retail Link system ­ although it may not be fully felt until next year ­ will also ensure that out of stocks will be a thing of the past. Spofforth says that it will give Asda a leading edge in distribution. "Our service hasn't been the best in the world and now here's an opportunity for us to do something about it." The number of film titles released into the retail sector in Britain last year was 5,5l5 ­ a year on year increase of more than 80. Among some of the most popular were A Bug's Life, Lion King 2: Simba's Pride and The Matrix. However sales in videos declined last year because no titles could live up to the money spinners Titanic and The Full Monty. Buena Vista Home Entertainment UK marketing director Anthony Peet says: "Last year was an anomaly because there wasn't a Titanic. It won't be the same this year." BVHE believes it has three winners on the way ­ Sixth Sense on VHS and Tarzan on VHS and DVD in September and Toy Story 2 on VHS and DVD in November. Peet says 3.3 million units were sold of the original Toy Story and more is expected for the sequel. Thanks to DVD, Sixth Sense has already made its mark. "DVD of this movie hit the market at the same time as video rental ­ a deliberate action to encourage people to buy into the format," says Peet. BVHE's biggest Disney seller has been The Jungle Book sold as a limited edition. But one of the company's key initiatives this year is to change its stance on limited editions and make more titles available all year round under the Timeless Classics banner. "We want to manage them less like a one off release and more like an on going brand in the fmcg market," says Peet. Market value may have come down, but retailers have managed to increase volume share by fierce promotional activity. From October Asda will be making "Wow bays" a permanent feature in all its stores, with music and video competitively priced and changed almost weekly. At the same time £4m will be spent on TV and press ads. After just two years in this category, Somerfield is steadily building sales. Around 350 Somerfield stores now have a permanent entertainment section, while the remaining Somerfield and Kwik Save outlets have kiosk style displays with the top 10 and the latest promotions. DVD is currently being trialled as well as Sony's PlayStation which is being tested in 10 stores. Year on year CD and video sales have increased by 142% and Somerfield by 90%. A key driver of the market is seasonality. Just under half of annual sales occur in the last quarter. Easter this year was another high point and well above the norm because it was later and the terrible weather encouraged consumers to buy. Feature films drive the market, accounting for 52% of volume but the genres that performed best were TV products led by Friends ­ 35% of TV sales and 5% of the total market ­ and a surprising outsider BBC's Walking with Dinosaurs and children's videos [BVA]. Category management is another major issue. Asda has already completed its overhaul of the sector and Tesco is doing the same. Entertainment UK, part of the Kingfisher group, distributes a host of music and video products focusing on non specialist retailers such as Tesco, Asda and Safeway. Its work with Tesco on category management started at the end of last year and is now coming to fruition. Head of central marketing Paul Ludlam says: "While well established in food, category management principles are not prevalent in non food. "A key factor is that there is a massive opportunity to exploit the impulse buy." In general, the growth of DVD video has been phenomenal and the strength of its high sound and visual qualities is said to have pushed The Matrix to the top of the video chart. Launched two years ago, with huge support from the whole industry, DVD now accounts for £68m ­ 8% of the total video market [BVA]. Even the hefty premium prices of between £15.99-19.99 each hasn't deterred consumers from buying. "DVD is a huge opportunity. Sales this year are seven times as much as year to date sales. That's fast growth and faster than expected. We fully expect it to take over in the same way as CD took over from tapes and vinyl," says Ludlam. Warner Home Video accounts for more than half the releases on DVD videos. In addition to its own titles it also handles 20% of Buena Vista's. Another boost to DVD will be the launch of Sony PlayStation 2 in the autumn in both CD-ROM and DVD-ROM format. Spofforth said: "Once the price of the hardware comes down, the software comes down, you'll find the mainstream customer will buy into it. "VHS is still 80% of the market but there will be a major shift towards DVD. We put DVD into all our stores last Christmas and now will have a range of catalogue DVD." But will 2000 produce another Titanic? Seven titles grossed more than £20m at the box office in 1999 which the BVA says is encouraging for 2000. Up and coming on DVD is Men in Black, A Bugs Life and Pokémon, and for Royal watchers, two videos celebrating the Queen Mother's centenary. Distributor Lifetime Entertainment, part of Handleman, which distributes to Wal-Mart among others worldwide, says its putting even more effort behind multiple and independent retailers. Lifetime says the grocery multiples have recognised that exposure to non food lines encourages customers to spend more time in store and impulse buy while food shopping. The most important price band in CDs is £12-£13.99 and supermarkets have one of the highest proportions of sales in this bracket, says TN Sofres AudioVisual Trak. But Asda strongly believes prices are too high and must come down and is prepared to use Wal-Mart's buying muscle to do it. Music, says Spofforth, is the driving force. "Our product split is 60% music and 40% video. "At the moment we're trying to convince the record companies to reduce their cost prices. Once the price is down, volume will increase. "We're not talking about loss leading but we feel CDs in the UK are too expensive. They are cheaper worldwide and people can go abroad and simply buy them there. "And of course there's a European market in which Wal-Mart has a toehold. In the next three to five years the market will shift substantially and price will be a major issue and more mainstream specialists like ourselves will be the beneficiary." TDK which supplies Asda, Morrisons, Savacentre, Tesco and Waitrose with blank video and audio products predicted a decline in VHS demand for this year but now says the market will remain static against 1999 at around 69 million units. However the company predicts demand will start to wane in 2001 as DVD continues to grab the limelight. But TDK brand manager Donna de Souza says DVD video is currently in playback only format. "Recordable DVD for video use has yet to be launched in Europe. "It is expected during 2001 but will be very expensive and will take some time to become a mass market product. "VHS tapes will therefore remain the cheapest consumer option for home recording and decline will not be dramatic over the next two years." The MiniDisc has seen rapid growth,with more than eight million blank MDs delivered into the trade in 1999, compared to three million the year before. The grocery sector accounts for over 7% total sales of blank MDs in the UK [GFK MAT to April 2000] but de Souza says it is set to become a mainstream product in grocery retail given the decline in audio tape demand. {{FOCUS SPECIALS }}