Coming soon to a store near you: Fox executives

Hollywood executives love shopping at Barneys, dining at Spago and flying Upper Class on Virgin. But when three top executives from 20th Century Fox piled into their black Range Rover on a recent Tuesday, their destination was Target, Best Buy and Costco.

Each week on the day new DVDs hit stores, a group of executives at 20th Century Fox Home Entertainment go on a retail field trip to see how their merchandise stacks up (literally) against the competition and to watch shoppers in action.

“Men usually buy two or three, while women walk away with one,” observes Mike Dunn, president of the division. “Eye level is not always the optimal position -- low is good for kids,” adds Simon Swart, who heads up sales.

“The worse the weather, the better for business -- unless, of course, it’s a blizzard,” Senior Vice President Steve Feldstein says.

It’s practical wisdom that helps them position their product, DVDs, the “packaged goods” component of show business. Because packaging, placement and promotion can make or break a release, the Fox contingent has reevaluated them weekly for the last few years.

“All the research, all the marketing and advertising pays off at the point of sale, where the product meets the consumer,” says Feldstein. “Unless you know the landscape, it’s easy to get out of sync -- and it’s nice to see the impact of a strategy you’ve been working on for months.”

One Tuesday in late March, the trio drove through the rain from Fox’s Avenue of the Stars skyscraper to a Target store in Culver City and a Costco in Marina del Rey. Dunn and Swart served as back-seat quarterbacks while Feldstein slipped his 6-foot-5 frame into the driver’s seat. There was an easy familiarity among them, born of years in the home video trenches -- before the format became the cash cow of the industry, financing studios’ production slates with revenues anywhere from 2 1/2 to three times that of the theatrical end.

Entering Target’s tidy, brightly lighted interior, the Fox contingent liked what it saw: Fox titles such as “The Day After Tomorrow” and “The Girl Next Door” were displayed right beside the cash registers.

“Perfect impulse buying -- right next to the candy bars,” observed Dunn, a sharp but approachable man with a dry sense of humor.

Even better: On the first day out, Fox’s “Fat Albert” DVD, based on Bill Cosby’s TV characters, was placed on a new-release “end cap” -- retail-speak for the high-visibility stand at the end of the aisle where traffic is heaviest. A cut above the “bestsellers” section down the aisle. They didn’t find many surprises here because placement in the limited shelf space is negotiated upfront. While no money is exchanged, the store benefits from months of marketing and promotion. And new DVDs, often sold below cost, are “loss leaders” to bring in customers.

“The worst thing you can see is empty spaces,” said Swart, an upbeat South African. “That’s the challenge retailers face. What we’re going for is the right fixture[display piece] in the right store with the right amount of product.”

The “Fat Albert” packaging (bright red on white) drew the eye, “popping from 20 feet,” they agreed. Kenan Thompson, the star of the film, was featured on an “O-Ring” -- a cardboard sleeve for the DVD case that cuts down on glare and adds decoration. “Fat Albert’s” box also features Cosby’s highly recognizable face in the corner -- a magnet, the executives said.

In the store, packaging and labeling missteps became obvious. Type positioned too far down could be obstructed by store shelving, Fox executives found. “Long boxes,” developed to discourage shoplifting, solved that problem. But after the monotone black was found to be a consumer turnoff, they now get a four-color treatment.

Rapport with the retailer is crucial, said Dunn. Almost weekly, he meets with executives in such spots as Vancouver, Canada, and Bentonville, Ark., ascertaining their concerns.

“If the store is green, we try to look green,” he said. “If it’s blue, we look blue.” Although home entertainment is essentially a business of math, he said -- determining price, demand and shipment quantities -- “it helps to have relationships.”

Carefully planned releases

The retail debut of “Fat Albert” is the culmination of planning that began shortly before the movie’s Christmas Day opening. The Fox contingent digested exit research from screenings and developed their marketing strategy. Thompson, the film’s star, has subjected himself to four days of interviews in Los Angeles and another few back East. The studio has placed ads on Comedy Central and “American Idol” in addition to Black Entertainment Television and “The NAACP Image Awards,” which cater to African Americans -- a core demographic of the film. Portable DVD players have been provided as giveaways to viewers on some Fox affiliate TV stations.

“Nothing mandated, nothing force-fed,” said Feldstein, a savvy, irreverent sort. “They help us with promotion, and we provide added value to their audience.”

Settling on the number of DVDs to ship -- and when -- is an applied science that factors in the time of year, the box office gross and the genre of the film (animated movies such as “Shrek 2” rank among the top sellers). Fox sent out 3 million units of “Fat Albert,” a comedy that took in about $46 million in theaters. The DVD was priced from $15.99 to $19.99 -- at the discretion of retailers, because price-fixing is illegal.

Arriving at the optimal “street date” for release, one of the most critical decisions, began with a look at the competition. Higher grossing family films such as “Shark Tale,” “The SpongeBob SquarePants Movie” and the blockbuster “The Incredibles” were in “Fat Albert’s” path, so Fox decided to schedule around them. Better to go up against “Bridget Jones: The Edge of Reason” and “Finding Neverland,” they figured -- two adult female-oriented films.

“Sales spike during Easter and spring break, and we would like to have been out a week or two earlier,” said Dunn. “But ‘The Incredibles’ staked out March 22 -- and the movie with the highest box office gets the best day.

“A pesky little group called the FTC [Federal Trade Commission] prohibits us from coordinating with other studios. But retailers play traffic cop when there’s a tie so the titles don’t cannibalize each other.”

Packaging counts

At Costco, a soggy 15 minutes away, more formal shelves and displays give way to a warehouse approach. Swart pointed out what he termed a “pdq” -- a pretty darn quick cardboard stand that’s a shipping box and display shelf all in one. (“Just pull off the top,” he illustrated.) Here, “Fat Albert” was situated next to “Finding Neverland,” happily, they pointed out, on the end cap. “Bridget Jones” was around the corner and down the aisle.

Because Fox’s library is smaller than Warner Bros.’ and lacks Disney’s volume of animated fare, the company is forced to do more with less, Feldstein said. At Costco, DVD “two-packs” -- films with similar demographic appeal as “Robots” -- were value priced to cross-promote Fox’s new theatrical hit. A “Robots” watch and a $6.50 admission coupon were part of the package. In a deal facilitated by the home video division, big-screen TVs played the “Robots” trailer at the entrance.

“Tito’s Tacos, the No. 1 taco joint in L.A.,” Dunn exclaimed as the group passed the stand on the way back to the office. He was feeling good. Sales figures filtering in suggested that they were off to a good start. Thirty-five percent of the “Fat Albert” units were sold in the first 24 hours -- nearly double the norm. Seventy percent would be gone by the end of two weeks, and Fox was restocking shelves.

There was no letup, however. That weekend, the executives again hit the stores, this time each one flying solo. Calabasas resident Dunn went to a Wal-Mart in the north San Fernando Valley, Redondo Beach’s Swart headed for the South Bay’s Circuit City and Feldstein left his Hollywood Hills home to check out West Hollywood’s Tower Video and the Grove’s Barnes & Noble. Before their Monday brainstorming, they would share observations via Blackberry.

“This is the fun part,” Swart said, climbing out of the Range Rover. “But if anything’s wrong, they blame me. I have no problem with that. I make a living selling movies.... How lucky can you be?”