VIDEOTAPE RENTAL STORE

OPERATE YOUR OWN
VIDEOTAPE RENTAL STORE

 One of the newest, and most profitable retail business opportunities available today is the Videotape Store. Profits from rental of videotapes movies have doubled each year over the past several years, and industry experts claim this is only the beginning.

 Not long ago videotape recorders (now widely referred to as video-cassette recorders) were being bought at a rate of one million units per year. Five years later, the sales rate had climbed to 12 million recorders per year, and sales are still increasing. Analysts say that within a few years there will be as many recorders in use as television sets. It follows that all these videocassette recorders are in need of tapes, just as an automobile requires gasoline.

 Generally speaking, the average Videotape Store can be set up with an investment or line of credit in the neighborhood of $50,000. Utilizing good management techniques, and taking advantage of natural promotional opportunities, such a store will gross $250,000 per year. Some stores are realizing a net profit of 35 to 45 percent with these income figures.

 The secret to achieving and maintaining these kinds of profits is in establishing and properly running a video club that offers really outstanding benefits to club members. These benefits should include special discounts on tape rentals and purchases; a regular catalog or newsletter that tells your members about the new tapes available; special workshops; get-togethers, and even outings.

 Think about the potentials: videocassette recorders are now within the price range of just about everyone in the country; new technology, better performance and greater development of the market will reduce the cost even further. More and more people are switching from costly evenings out to the comforts of home and videotape entertainment; market surveys profile the typical VCR owner as between 25 and 50 years of age with an income of $20,000 or more.

 That typical customer will provide about 70% of your income, with the remaining 30% coming from blue-collar workers, college students, and singles of both sexes. It's important that you be "in tune" with what the VCR owners in your area want, and fulfill those wants.

 In selecting a location, look for a storefront in an area surrounded by stores the typical VCR owner is likely to shop in. Six hundred to nine hundred square feet should meet your needs at first, but plan ahead for future expansion. The ideal location would be on a corner, affording visibility of your shop from several directions. The street fronting your store should ideally be four lanes with no median dividers, but with a posted speed limit of 35 M.P.H. or less. And by all means, make sure there's plenty of parking space available.

 The layout of your store should be planned with maximum efficiency in mind. Basically, a glass-topped sales and display counter across the front, separating the customers from the sales area, while at the same time conveying a feeling of openness, works best. Glass counters with shelves may be purchased at tremendous savings by contacting the rental fixture suppliers and used equipment dealers in your area. Check the yellow pages of your telephone and business directories for names and addresses of suppliers.

 You should strive to make the customer space in front of the counter comfortable and relaxing. There should be an overall atmosphere of friendliness. Place a couple of chairs or stools in front of the counter so that your customers can sit and browse through your catalogs. You might want a coffee table, free coffee, and catalogs on everything from VCR's to equipment accessories to special order movies.

 One of the important secrets to success will be the way your store is perceived by the customers. You and your salespeople can dress casually and project an overall relaxed manner of doing business; taking care of each customer individually, using their first names (if appropriate), and relating to what's happening in their lives. With this approach you will get to know them, and will establish long-term customer loyalty faster than by any drum-beating promotions.

 The best idea for the display seems to be on wooden shelves lining the walls of the sales area behind the customer counter. These shelves can be built by a local handy man and either painted or stained. It's important, however, that they be strong, be cause the weight of the videotapes can amount to 50 to 100 pounds per shelf, depending on the length of the shelf.  

 Arrange the videotapes on the shelves, in book fashion. Stand them upright with the title art on the boxes clearly visible to the customers. It's important that you not allow your customers to browse through your inventory, as they do with books on the shelves at the public library. In other words, your inventory of tapes is money to you and should be seen, but not touched, by your customers until they either want to rent or buy.

 An arrangement that works well with many stores is to remove the tapes from the jackets, and display the empty jackets in the viewing area for customers. Many of the jackets carry descriptive sales literature, which entices the prospect to either buy or rent. The tapes themselves, which do not carry any out side printed message, should be kept behind your counters, in an area accessible only to your people.

 You can locate your manager's desk and files in front of the inventory shelves. Space partitioned off in the back of the store will be quite adequate for storage, packaging and/or whatever minor repairs might be necessary.

 Our suggestion would be to allocate 60% of your store for the display-sales office area; 20% for the reception or customer area; and 20% for storage/work area. Check out a store. You should be able to assess the entire arrangement in a few visits, and pattern yours after it, or consider improvisations or changes you would make.