Friday, February 24, 2012

Priced to (never) sell


Barnes & Noble is smoking crack.

They're pricing DVDs like BluRays -- expensive ones -- and they're pricing BluRays like video games.

I couldn't believe my eyes yesterday when I happened to stroll into the DVD/BluRay section of the store closest to my work. I wasn't necessarily in the market for any DVDs or BluRays, but movie sections pull me in like the Death Star tractor beam.

I randomly went over to a DVD that I knew was a new release -- The Rum Diary -- and nearly fainted looking at the price:

$30.99.

My first thought was whether the price was actually listed in American currency.

$30.99? That's ridiculous. That would be high even for a BluRay. I can't say for sure what Target is charging for this same new release, but I'd bet they'd be afraid to go any higher than $19.99.

The price of a new release BluRay -- Real Steel -- didn't stagger me quite so much, but it was still high: $39.99.

Are they actually moving any of these units?

There has always been a price divide between boutique retailers and discount retailers, and I guess for these purposes we'll consider Barnes & Nobles to be the former and Target to the latter. You wouldn't expect to see the exact same prices in both stores. Barnes & Noble's movies are priced to snare people who would never set foot in a Target, considering it full of commoners.

But this is a pretty significant price divide, especially in an age when many people are buying their movies on the internet -- if they're buying their movies in physical formats at all. Barnes & Noble can never compete with online prices, but you'd think they'd come closer to competing with Target. If Target is charging $19.99 for a new release DVD -- which is still more than most people want to pay -- then you'd figure Barnes & Noble wouldn't dare go any higher than $23.99 or $24.99. That should still get them the couple additional dollars of profit margin they need to stay afloat, without sending a savvy consumer running away screaming.

In fact, I almost did just that. When I set down the Rum Diary DVD, the words "That's absurd" escaped my lips. Not loudly, but loudly enough for the salesman behind the nearest counter to look up. I almost hoped he'd take my involuntary expulsion of language as an excuse to interface with me, ask me if he could help me. I don't think I would have been able to resist telling him what exactly it was I found so absurd.

And here's another absurd thing: Barnes & Noble isn't even adhering to the basic principles of Pricing 101. Everyone knows that if you want a supposed psychological advantage over the consumer, you price a retail item as close as possible to the next price threshold without actually getting there. Like that BluRay of Real Steel -- I'm that much more likely to buy it at $39.99 than if they increased the price by a single penny. "Oh, it's not even forty bucks" I'd theoretically tell myself.

And I think that's what struck me so much about the $30.99 DVD price for a movie most people didn't even think was very good. It crossed the $30 threshold, which just seems totally out of bounds for a DVD in the year 2012. But it only just barely crossed it, which makes you wonder why it was even worth doing. I might not have noticed it if they'd just shaved off a dollar and charged $29.99. In fact, I might not be writing this post at all.

I should mention something here: Almost every movie Barnes & Noble carries has a sticker on it that discounts the price, either by 10 or 20%. If you cut the price of The Rum Diary by 1/5th, you're starting to get down into the industry standard range. I guess that's kind of a Pricing 101 trick in and of itself. Still, the listed price is what registered with me, what gave me the necessary sticker shock to come write this post immediately, a day before I planned to actually post it. If that was the takeaway for me, it's likely the takeaway for a number of other prospective customers as well.

I guess they have to jack up the prices for movies, because it's one of the few areas where they can actually control what to charge. Books very impertinently tell you exactly how much they cost, right there on the jacket. I've always wondered why that is -- must have something to do with publishers desiring to control the economics of their own industry. I'm sure the internet would tell me why if I looked. I always find this kind of annoying because it tells you exactly how much someone spent on a present. Why even bother with a gift receipt? Might as well give the actual receipt.

Unfortunately, we may be able to conclude something rather sad about this whole incident: Barnes & Noble is in trouble. They survived the initial industry correction that took down their primary competitor, Border's, by pioneering a popular e-reader. Border's had bupkus, and closed its doors. Those of us who like the idea of physical book stores breathed a sigh of relief and said "Okay, I don't have to worry about Barnes & Noble for another ten years."

But that may not be the case. In fact, a three-story Barnes & Noble adjacent to one of my favorite movie theaters just shuttered in the last couple months. This saddened me, as having the store right next to the theater made for a highly satisfying and enriching concentration of culture. You could even see into the book store from the lobby of the movie theater, and vice versa, through the glass walls that separated the two businesses. In fact, it was common for us to stroll through the book store while we were killing time before a movie. This theater is pretty progressive, and they used to even allow you to buy snacks in the Barnes & Noble Cafe and bring them into the theater. And we used to regularly avail ourselves of that option.

Now, every inch of those glass walls is covered with brown butcher paper.

It could just be that the rent was too high in this particular location. National chains make decisions all the time on which stores to close and which to keep open, based on such factors as the desirability of the location and the price to rent the space.

Still, I can't help but think that this could be a bad sign for the bookseller, and that their movie prices are a sign of their desperation. If they don't start making more profit, maybe all their stores will end up like the one next to the Landmark Theater on Pico.

Maybe I should have bought that $30.99 Rum Diary after all.

4 comments:

Dawn Grobe said...

Amazon says:
DVD
Buy new: [$30.99] $16.99
Blu-ray
Buy new: [$35.99] $19.99
Target says:
$19.99 online price
List: Original Price [$30.99] The Rum Diary (Widescreen)
$24.99 online price
List: Original Price [$35.99] The Rum Diary (Blu-ray) (Widescreen)

Looks like $30.99/$35.99 are the list prices. But I thought the whole point of shopping at B&N or Borders was the big chain discount. I would surely rather wait until the movie is on Netflix or the discount shelf at Target or Wal*Mart.

Vancetastic said...

Dawn,

Thanks for doing the research I was too lazy to do. ;-)

I guess there are degrees of discount, or maybe the discount model you suggest is no longer reliable. Or maybe if you went into one of those hoity-toity stores you would actually describe as a boutique retailer, they'd tack yet another couple dollars onto the prices.

Travis McClain said...

I was just in a Barnes and Noble here in Louisville in the last week or so twice. I went the first time to buy Amelie on Blu-ray. They had it priced at $19.99 which was higher than I wanted to pay, but no one else in the area had a copy on hand. They also had it at 30% off, so I got it for $12.99. That was quite amenable to my wallet and well worth the effort to go there.

I didn't buy anything the second time I was there, though I saw several sales that caught my eye. For instance, they had three of the four seasons of Jeeves & Wooster at $14.99 apiece, 50%. $7.50 a season for that is quite appealing, particularly as it's one of those pesky BBC TV series that seem to never go on sale. (We found the complete series box set at B&N a few years ago on sale for $30 and picked it up then.)

Before I left, though, there was a guy who asked about the forthcoming Springsteen album, Wrecking Ball. The sales associate checked the system, gave him the release date (9 March, I think?) and then she told him they were expected to receive 20 copies.

Twenty copies of a Springsteen album on its day of release. That's the kind of "bulk buying" B&N is doing. It's difficult to imagine they get much of a break at all from the studios and record labels with that kind of ordering.

There is one key thing that B&N offer that no other brick and mortar store does these days, and that is they stock the Criterion Collection. There may be a handful of mainstream titles that occasionally appear at Best Buy or Target, but on the whole, that's an entire catalog of niche films, foreign productions, etc. that is almost impossible to find outside the Internet these days. If you're attentive, you can get in on B&N's biannual 50% off Criterion sales. $20 per DVD is still a bit steep, but for something like that it's really the best you're gonna be able to do.

Also, I will give B&N credit for one thing above all else: They keep a very serene movie/music department. It's much more pleasant to browse there than any of the other mass retailers I visit. There is never any kind of hyper music with incessant employees booming into the sound system, and very rarely any children yelling, "Mommy! I want...!" over and over again.

Vancetastic said...

Good points all, Travis. You have defended Barnes & Noble admirably.