Wal-Mart increases two-pack offerings
Pairs new release with related DVD for value price
By Susanne Ault -- Video Business, 5/15/2008
MAY 15 | Wal-Mart is increasingly looking to boost its DVD profit, introducing two-packs that pair a new release and a related catalog title for $20.
On its Web site and in stores, Wal-Mart has been beefing up its selection of new releases bound with a like-themed catalog title for $19.96. The idea is to entice consumers to spend a few more dollars than they normally would on a new release.
Studio sources said the two-packs make up about 25% of Wal-Mart’s total sales on some new releases.
Wal-Mart first sold exclusive sub-$20 two-packs several years ago. But its selection has widened recently, encompassing titles from many major studios.
Current examples now available at the chain include Universal Studios Home Entertainment’s Charlie Wilson’s War/Erin Brockovich, both with Julia Roberts; Genius Products’ The Great Debaters/The Junction Boys, both featuring underdog plot lines; and Warner Home Video’s P.S. I Love You/Must Love Dogs, both romantic comedies.
To stay competitive, Wal-Mart has been tagging major studio new releases as loss leaders for some time. However, as the DVD category matures, Wal-Mart can’t bet on loads of shoppers rushing into stores for the latest Tuesday releases.
“It’s really in their best interests to create a $19.99 transaction than to sell a single DVD at $14.99,” explained a studio source. “You can break even at $19.99. And you can still drive foot traffic, plus drive the entire market basket ring.”
The source added, “This can really reduce the retailer’s losses in the first week. All the studios are” participating with this configuration.
Similarly, studios are attaching CDs, stuffed animals and other merchandise to new releases for the same $19.96 price point at Wal-Mart. Examples include the plush dragon packaged with Sony Pictures Home Entertainment’s The Water Horse: Legend of the Deep and polar bear beanie baby with New Line Home Entertainment’s The Golden Compass.
Studio sources note that these two-pack SKUs have been occasionally offered at Best Buy and Target. Walmart.com has made its own two-pack SKUs a permanent fixture by giving them their own section on its movie home page.
Wal-Mart spokesman Ravi Jariwala did not speak in depth on the chain’s strategy surrounding two-packs but said they have been embraced by customers.
“The selection has increased over the past few months as we continue to update and add new titles,” said Jariwala. “Saving customers money is in our DNA at Wal-Mart, and these two-pack exclusives allow us to provide additional value to our customers and drive excitement for new releases. We’re pleased with the customer response, and we’ll look for ways to provide additional values in home entertainment to our customers.”
