Safeway has dropped out of the video cassette rental business -- at least for now -- because of a disagreement with its vendor over the sharing of the profits.
Company spokesman Ernest Moore said its video vendor, Video Theater Inc. of Princeton Junction, N.J., "notified us on Monday, Oct. 1, that they were leaving . . . and they had everything out of our stores by Thursday, Oct. 4."
Moore said that the vending company quit because "they felt they could do better in other areas, like New York and Florida."
Arthur Brina, vice president of operations of Video Theater Inc., said that his company had been unable to work out a satisfactory arrangement with Safeway to control the cost of labor for the Safeway-manned video rental centers.
"We were in a situation where they got their cut off the top, piled on all the labor expenses they felt like and what was left for us wasn't very much," Brina said. Safeway officials acknowledged that labor costs had been a problem at some stores.
Brina said Video Theater was sorry to leave the Washington area. "Customers of Safeway didn't want to see us leave," he said, "but we didn't have a partnership going."
Brina said his company hopes to return to the area next year if arrangements can be worked out with "another mass-merchandiser."
Since last fall, Safeway had installed video rental centers in 16 Washington area stores. Until they closed, the centers were renting 200 to 600 video cassettes a week for $2.50 a day to anyone with a major credit card or who posted a $50 deposit. The centers also rented video players for $7.50 a day to customers with major credit cards.
Moore said the centers had been a success and that Safeway hopes to begin renting video cassette movies again. "We don't know when that will be," Moore said, "but we are looking for another vendor now."
Meanwhile, Safeway customers who accumulated stamp credits toward free video rentals are being compensated with cash. A customer was entitled to a free video rental after renting 10 cassettes from a Safeway center. Safeway is paying 25 cents for each stamp that a customer had earned, Moore said.