Southland Corp. fast-forwarded itself into the home video market yesterday with the announcement that it will begin renting videocassette movies and recorders by the end of February in 150 of its Northern Virginia 7-Eleven stores.
The Northern Virginia operation will be the first step in what the $7 billion-a-year convenience food chain said would be a nationwide operation for its new MovieQuik service.
The move will immediately transform 7-Eleven into the largest distributor of rental video movies in the Washington metropolitan area -- instantly dwarfing the 84-store Erol's video chain. A Southland spokesman said yesterday that MovieQuik will be in 500 District of Columbia, Virginia and Maryland stores by the end of the year. Nationwide, 7-Eleven expects to offer MovieQuik in nearly 3,000 of its 7,700 stores by year's end.
If Southland holds to its projections, it will become the nation's biggest video rental operation in the estimated $5 billion-a-year business. Last year home-video revenue for the first time exceeded the box office take for Hollywood studios. The sale and rental of movies has become one of the fastest-growing segments of the retail industry.
"What we have to offer is a number of locations, open 24 hours a day, seven days a week plus the ability to tailor our movie inventory to our clientele," said Robin Young, a spokeswoman for 7-Eleven's Capital Division, which oversees 650 stores in the District, Maryland and Virginia.
Young said one reason the Northern Virginia area was picked for the start of the new venture was that 40 percent of the households in the area own videocassette recorders -- one of the highest VCR ownership rates in the country.
The company said it will stock over 200 movies per store -- including such hit titles as "Raiders of the Lost Ark," "Beverly Hills Cop" and "Ghostbusters" -- and rent them out for 99 cents per night Mondays through Thurdays and $1.99 on weekends and holidays. Videocasette players will rent for roughly $6 a night.
The company said that while "R" and "PG-13" movies will be available, it will not offer X-rated movies for rent. "We're not interested in that market," Young said.
Membership in the store's video club is free, but renters will be required to show a driver's license and a credit card as identification. The company said the new tapes will be made available each week and a computerized rental system allows the store clerk to scan bar codes on both the cassette and the membership card to produce a printed rental invoice. The company said payment must be made before the tape is taken out of the store.
Erol's, which currently dominates the local video-rental scene with roughly 40 percent of the market backed by an estimated $6 million-a-year advertising campaign, doesn't appear threatened by the 7-Eleven announcement.
"This is a fast-growing business," said Richard A. Kerin, vice president of Erol's video-club division, "The more competition the merrier. I would say they complement us. This simply creates more interest in VCR rentals " which Erol's also provides.
With Erol's rental charges at $2 the first night, $1 each additional night, Kerin said the prospect of a rental price war is minuscule. "You're getting down to pennies difference," he said.
But Kerin concedes that 7-Eleven locations and the 24-hour-a-day availability could lure some customers away from Erol's.
While 7-Eleven expects MovieQuik to be a money-maker, the chain is not ignoring the fringe benefits of entering the movie business. Southland spokesman Doug Reed conceded that the stores are expecting to attract an upscale clientele to rent the films -- and that renters may choose to buy a sixpack of beer, some popcorn and other refreshments to go along with the movie.