AGENDA: Digital promises a rental revival - Customers may now be faced with a perplexing choice of TV sets, but the rental market is ecstatic. New technology promises to reinvigorate the market for the two big boys in the TV and video rental sector, Grana

For the past ten years, cheap, reliable TV sets and unexciting technological improvements, such as Dolby sound, meant six million TV sets were sold annually and there was little reason to rent. Now the happy coincidence of widescreen TV arriving at the same time as digital has made rental a viable alternative.

For the past ten years, cheap, reliable TV sets and unexciting

technological improvements, such as Dolby sound, meant six million TV

sets were sold annually and there was little reason to rent. Now the

happy coincidence of widescreen TV arriving at the same time as digital

has made rental a viable alternative.



As much as pounds 1000 apiece, high-tech TVs are prohibitively expensive

for most households and there is a natural hesitation to invest in

unfamiliar and fast-changing technology.



So the market is ripe both for Thorn, which owns the Radio Rentals,

Radio Rentals Express, Easiview and DER Direct brands, and for Granada

to pick their new customer niches in an attempt to expand the market and

encourage loyalty among their existing one million to 1.5 million

customer base which they each claim to carry.



According to Granada Home Technology’s marketing controller, Dudley

Moor-Radford, his pounds 3m TV ad campaign with Jeremy Clarkson, which

launches this week, is targeted at the new customer profile - ABC1 males

aged 25 to 45 - first singled out in its TV 2000 campaign.



That campaign and Granada’s World Cup push, which showed the advantages

widescreen would offer footie addicts, helped boost new business figures

by a staggering 76% in June. May, July and August also showed

year-on-year new business gains of between 17% and 35%, the first for

Granada in four years.



The task now, says Moor-Radford, is to continue that growth: ’It’s about

driving immediate sales rather than brand building.’



Nevertheless, Granada is adjusting its branding: its 460 remaining

stores (down from 550 two years ago) will go all beech flooring and

chrome in the next two weeks; Granada Digital will appear on all

corporate literature and logos (though shop signs will stay the same for

at least the next quarter); a helpline will be launched to give advice

on the new TV technologies, ’to support Granada Digital branding, not

for sales’; and the Digital Privilege Club, currently with 40,000

members, aims for a direct mail push that will take it to 100,000 by

Christmas.



ABs have never been as important as they are now to the expansion in the

TV rental market and Thorn, too, is going after them with a

vengeance.



For the first time, Radio Rentals is putting ads with what marketing and

merchandise director Mike Ryan calls, ’a different tone of voice’ in

glossies like Homes and Gardens and House Beautiful. It claims its own

pre-World Cup push on widescreen TVs netted it 20% of the market in

widescreen TVs and brought it a whole new customer base of AB males aged

25 to 35.



On the high street, Radio Rentals shops are reflecting the change with

13 of its 500 stores now rebranded Radio Rentals Express, and a total of

50 of the 500 coming under this umbrella by the end of the year. ’It’s

about shifting people’s perceptions of what the brand is all about,’

says Ryan.



As part of that, Radio Rentals is going into third-party deals, the

first one with the Woolwich, rolling out in two months. Ryan won’t say

what it’s all about except: ’We’re having to be much more clever in the

way we target people, rather than taking a broad-brush approach.’



Direct action



Although his pounds 10m marketing budget is much the same as last year,

it is being spent very differently. Direct mail and below-the-line

activity are being taken more seriously, so although 65% of DER Direct’s

allocation is going on TV ads, Radio Rentals has attacked its burgeoning

student customers with 240,000 branded beer mats, 400,000 postcards, one

million takeaway meal lids and posters in student union bars and

toilets.



’We see rental having value either because of your economic situation or

particular circumstances in the short-term, like students. That’s very

much a point of difference with Granada - our shops offer a range of

merchandise, like white goods, which Granada doesn’t,’ says Ryan.



Thorn’s student business, across all categories, is up 20%

year-on-year.



Its diversification into white goods four years ago is a measure of how

it once forecast the future of its TV and video rental business. Today,

however, Ryan is dismissive and claims the doldrums are over. ’Sky

Digital alone reckons it’ll have six million customers in four years.

It’s pretty aggressive and I feel comforted by that,’ says Ryan. ’That’s

going to have huge pay-offs for us.’



But John Binks, marketing director of GfK Marketing Services, is not

quite so confident. His survey statistics (see box) show the TV and

video rental market is remarkably stable. ’It could go either way as new

technology could certainly push people back to rental.’



That’s what the arrival of colour TV and even the advent of VCRs did 15

years ago, but it’s a long time since most rented before they

bought.



Rental brands are hoping digital will change that pattern.



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