For consumers there may have never been a better time to buy DVDs, with prices falling and new avenues for purchasing appearing almost daily, but how has this affected the consumer mindset and where does this leave traditional retailers?

Online retailing is by no means a new entry to the consumer electronics market; in fact it’s been five years since Online first overtook Supermarkets in terms of % market share [1]. Consumers have long since embraced Online and its ability to compete on both price and choice (with supermarkets and traditional high street retailers respectively), especially in the realm of high price purchasing such as consumer electronics. In this case, Online represents a step forward in consumer purchase planning, with the internet offering access to a range of price comparison websites, manufacturer specifications and consumer forums to collate information before purchasing, offering the consumer the chance to be more methodical in their decision making than in the pressure cooker environment of a Saturday afternoon trip to the local electronics department.

In light of such sea change in a, relatively, short space of time, retailers, distributors and content creators have turned towards entertainment in search of the next shift.

This movement has, in reality, been building for quite some time, with Play.com’s launch in 2000, offering VAT free purchases and an extensive selection of DVDs new and old, providing a glimpse into the future for high street retailers.  The effects of the emergence of outlets such as Play.com can be seen in Tesco’s particularly public wrangles with the Channel Islands over VAT free CDs and DVDs; an indication, if any was needed, that Online is being taken seriously even by retail giants such as Tesco. To that end, GfK data shows that Online has every right to be taken seriously, especially given that it now accounts for 37% of all DVD sales in the UK (representing a YOY growth of 8%) in comparison with the 42% share that Supermarkets hold.

What retailers need to understand is why Online has grown its market share so rapidly and how they can accommodate shoppers within the new, expanded marketplace. The focus has long been on Supermarkets’ ability to undercut High Street retailers on prices for the latest releases and, whilst this remains an ongoing concern, GfK’s latest data also shows a growing divide in the reasons and methods driving consumer purchases in the DVD market.

Whereas Supermarket purchases are, generally, driven by impulse, online shoppers take a more considered approach – actively partaking in journeys to certain websites with the intention of making a specific purchase. The additional thought process behind these purchases carries with it increased loyalty (guided in part by site registration) and increased satisfaction with each purchase.

What, though, does this mean for the DVD market moving forward? Supermarkets are guaranteed high volumes of traffic through their stores each and every day and with the latest releases available at highly competitive prices, achieved through ever increasing volumes of scale it seems that sales to more casual consumers are unlikely to waiver significantly against the Online market. Their reason d’être has never been delivering high levels of loyalty in terms of entertainment, but in driving impulse purchasing against the backdrop of a wider shopping mission.

Cause for concern remains with High Street retailers, formerly muscled out of the market for new releases by Supermarkets, as their inherent ability to stock a wider variety of back catalogue titles has now been stripped of its uniqueness by Online stores who avoid the expense of displaying all of these titles at physical locations. As with consumer electronics, DVD buyers can carry out their research as they shop – reading reviews, watching trailers or even using social networking to gather opinions, leaving High Street retailers with the difficult task of providing consumers with a reason to shop with them given the proliferation of options that are available to them.

Just to prove that this doesn’t spell doom and gloom for the High Street, HMV, a retailer previously stung by the decline in sales of physical CD singles at the hands of, among others, iTunes, has responded by diversifying its commercial strategy [3], moving into fashion, tech accessories and concert tickets in order to cover the shortfall in sales that both Supermarkets and Online have created, a move that has seen a 12% growth in profits over the last year.

Where the impending growth of video on demand (VOD) leaves them remains to be seen.

To find out more about consumer purchasing habits and attitudes contact the

[1] GfK NOP Entertainment Panel August 2010

[2] Tesco Revives Jersey VAT Avoidance

[3] HMV Commercial Evaluation

Picture courtesy of Maxwell Hamilation

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Tags: Consumer, Digital Music, DVD, Etailers, GfK Entertainment Panel, Retailers