For Hastings, upside in the downturn

The current economic recession will create opportunities for well-positioned retailers. This couldn’t have been more clear than during Hastings Entertainment chief John Marmaduke’s keynote speech at the Future of Packaged Media conference here this week.

There’s no more loyal customer than one with a $20 store credit, Marmaduke told conference attendees, and that philosophy is one key to Hastings’ success. It’s doubly valid now.

(While the chain has not been immune to the economic downturn, it has generally outperformed other media retailers over the past several years.)

Hastings layers its core mission—which it sees as helping people in the communities where it’s based discover new entertainment—with a unique value proposition delivered in stores that buy, sell, trade and rent.

New release DVD rentals are $3.99 a week, but titles brought back the next day garner a $2 store credit. The way Marmaduke sees it, Hastings’ DVD selection and rental copy depth beat Redbox and the other $1/night kiosks.

“There is unmet demand for video catalog,” he says. To meet it, Hastings wraps its new rental wall around a large section of catalog titles.

Its used trade helps it fight iTunes, since a used CD can be purchased for less than $10, all the songs transferred to a PC, iPod or other portable media player, then sold back to Hastings again for a few bucks.

Rental and trade-ins drive frequency for many customers.

The CEO is frequently asked when, if ever, Hastings, which is a medium- and smaller-market specialist (Albuquerque is one of its largest markets), will move into the big city.

Last week, Marmaduke replied confidently that the Hastings concept will absolutely work in large metropolitan areas.

The challenge, he said, using north Dallas as an example, is that larger metropolitan areas are mostly overstored already.

The recession may create an opportunity in larger markets as other chains close stores, he said, intimating that by the time the economy bounces back, you may see Hastings make its move.
I'd like to suggest Los Angeles...

Posted by Marcy Magiera on February 5, 2009 | Comments (0)