The video rental industry was one of the more growing services retailers in the mid-1990 s. However, due to Blockbuster, many rental video companies have failed to compete against this category killer. West Coast Video, Video City, and Hollywood Video, which are among the few and only large competitor's of Blockbuster in the tri-state area. Many family-owned video rental stores could not compete against Blockbuster's assortment of videos. Blockbuster opened its first store in 1985 and has grown to become the world's number one video chain.
Blockbuster is open 365 days a year with 9, 800 stores worldwide. Customer base has risen above 50 million in the United States as well as several million more worldwide. The Gallup Organization, known for the Gallup Polls, declared that Blockbuster has 100 percent recognition. Most importantly, 70 percent of the population in the United States lives within ten minutes of a Blockbuster store. Category killers, however, usually attract customers from far distances. Because most customers are ten minutes away, small businesses in competition will fail.
A recent marketing campaign has been the promotion of DirecTV, a digital satellite service alternative to cable television. Also, an alliance with Radio Shack has been in effect promoting new technologies. To compete against the up rise of online rental services, Blockbuster has been testing online rental services which allow customers to reserve and rent videos from specific stores. The other services retailer is West Coast Video, a Philadelphia-based company that was once a supreme challenger to Blockbuster. West Coast Video was at one point, New Jersey's largest video rental chain in 1997.
That preceding year, the company acquired stores from Palmer Video, Super Video, and Great American Video. It became the fourth largest video chain with close to half of its 568 stores in New Jersey. However, the company has approximately 225 stores to avoid going out of business. This year, West Coast has closed most of its North New Jersey stores, including this analyzed store. The West Coast store has been bought out by Video City, a recent competitor trying to tackle the Northeast market.
However, they only operate a small number of stores in the area and specialize in e-commerce. They have no marketing strategies as of yet. The Blockbuster store is located in Nutley, New Jersey, a middle-class town that is fairly large. The town houses over 30, 000 people and the downtown area consists of a main street (Franklin Avenue) with a Shop Rite, small shops, fast-food restaurants such as Burger King, steakhouses, pizza parlors, and a number of schools.
Blockbuster is located at the most condensed part of this avenue and is the largest and most noticeable business at this part of the area. This Nutley location is the largest store in New Jersey with 2 floors. There is only a second floor entrance / exit and the new releases are located on the first floor. Blockbuster also has a large assortment and variety of videos that include: drama, comedy, horror, action, martial arts, children, musical, as well as the newest line of video games. They also carry the largest number of DVDs for rent as well. Pricing at Blockbuster is relatively moderate.
New release cost has risen slightly the last few years and is currently at $4. 23 per rental. The length of holdings for the newest releases are two days, the rest of the new releases are 5 days, and the videos must be returned before noon. Older category releases are 5-day rentals and cost $3. 17, which is cheaper of the two companies. Games are 5-day rentals and cost $5.
99. Blockbuster also offers the rental of game systems. However, they are quite expensive, they give the customer a chance to test out the system by renting it before they decide to purchase the item. New video game systems that have come out this year are X-Box and Nintendo Gamecube.
These will be very popular rentals and Blockbuster will carry all the newest game releases for these video game systems. Late fees are also a problem with customers; Blockbuster charges the cost of the rental per day. Blockbuster also has a popular program called Rewards and members pay a small fee yearly, which keeps track of customer rentals. Customers receive free rentals when they purchase a number of rentals on certain days and through the month.
The Nutley store also offers 30 rentals in a month and the customer must rent the free rental per day for the month. The size of the Nutley Blockbuster store resembles that of a category killer because most video rental stores are moderately sized. There is lots of space, wide aisles, and the categories are spread evenly throughout both floors of the store. The new releases are placed on the walls around the floor so that the customer must walk through the whole floor to find the movie that they desire. By doing this, customers have the possibility of finding an old release that they might desire by impulse.
The older release categories such as comedy, action, and horror are also located on the first floor because if a customer is looking for a particular category release, they might pass by a new release they have been waiting for. Other goods such as videos for sale are close to the register as well as snacks. These impulse items are not items that they will travel for and placed near the register for this purpose. Customer service is a major part of Blockbuster's image. They have at least 5 employees working at the store at one time to cover the cash register, management, as well as video returns and customer service. A Blockbuster employee is easily noticeable, whose uniform consists of a blue and yellow polo shirt with khakis.
They are always happy to assist the customers and will help them find the movie that they desire. Also, Blockbuster employees have a general knowledge of films if the customer requests advice The West Coast Video store is located in Belleville, New Jersey, about 3 miles away from the Blockbuster store. The town has a population of over 35, 000 people and West Coast Video is located on the main avenue, Washington Avenue. The avenue contains fast food restaurants (McDonald's and Taco Bell), a supermarket, motels, convenience stores, and many kinds of small businesses. The store, however, is not West Coast Video anymore and has been bought out by Video City. Officially, the store is now East Coast Video.
After interviewing Bobby Amin, they did not even advertise the new store and customers still believed it was West Coast Video. The setup and store appearance remained the same and the store sign still lights up as West Coast Video. The only inclination of a company change was different box covers on the new releases. East Coast Video's selection is rather small with major categories such as comedy, horror, action, etc. available but the more obscure categories like musicals are lacking. However, East Coast Video carries adult videos of all assortments.
This selection has kept West Coast Video customers loyal due to their availability and assortment. Pricing at East Coast Video is very close to Blockbuster's; new releases are 2-day rentals and cost $3. 99. Some of the new releases can be returned after 6 days and cost the same. The category releases are 6-day rentals and cost $3. 49.
Games are 5-day rentals and cost $6. 36. East Coast Video does not offer the renting of video game systems and the assortment of games is small. East Coast Video is moderately large with lots of space. However, due to the lack of assortment, the store looks empty.
Shelving units are placed in the middle of the store parallel to the wall of new releases. Similar to Blockbuster, this allows the customers to walk around the whole store looking for the movies they desire. One drawback is the adult movie section is located in a room at the top of a staircase in the back of the store. Those customers who do not want to draw attention will get noticed. Customer service is poor; this is due to the lack of employees working at the store. There are two employees that take care of the cash register so finding a movie is unlikely.
If the employees are walking around the store, they are hard to distinguish because they lack uniforms. However, if pursued with determination, an employee will be glad to help you. They are also very forgiving with overdue balances that may become a nuisance to a customer. Overall, Blockbuster, is very appealing, especially the Nutley store. It's large location is very attractive comparable to East Coast Video location. Blockbuster's overall domination has 3 Blockbuster locations within ten minutes of each other; the other two are located in North Arlington and Clifton.
Another advantage is that Blockbuster members can rent at any location because the stores are all linked together. Movies, however, must be returned to the store where it was originally rented. East Coast Video, on the other hand, has only one other location in Kearny and the stores are not linked. Blockbuster's strength has been great service, family values, and moderate pricing as opposed to East Coast Video. However, they are a fairly new company. Video City's strategy is to control the adult film rental category and attract loyalty within these customers.
Their website, however, offers only the sale of videos and does not provide information about the company's history whereas Blockbuster takes pride in their socially responsible efforts. It's very hard to avoid Blockbuster because of the availability of products, service, and convenience.