Table of Contents

Executive Summary

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TABLE OF CONTENTS

Executive Summary

Industry Structure

INTRODUCTION

HISTORICAL DEVELOPMENT OF TV AND VIDEO RENTAL

THE RETAIL CONTEXT

DEVELOPMENT OF MAJOR CHAINS

OTHER DEVELOPMENTS

THE INDUSTRIAL CONTEXT

Table 1: Structure of TV and VCR Rental Sector, 1992e

Table 2: Trends in the TV Rental Retail Structure, 1986-1992e

Table 3: Development of Main Rental Chains (number of outlets), 1988-1994

Table 4: Leading Brands of VCR ( percent owners), 1993

Consumer Profile

OWNERSHIP OF EQUIPMENT BY HOUSEHOLD

ACCESS TO EQUIPMENT BY ADULTS

RENTAL VERSUS OWNERSHIP

EXPENDITURE ON RENTAL

Table 5: Household Penetration of TV Equipment ( percent), 1985-1993

Table 6: Access to TV Equipment by Adults ( percent), 1993

Table 7: Characteristics of the TV Set Universe by Size of Screen and Age of Set ( percent ownership), 1993

Table 8: Rented and Owned TV Sets and VCRs ( percent and million adults ), 1993

Table 9: Weekly Spending on Rental and Licence by Selected Income Brackets, 1992

Table 10: Households Containing TV Sets and VCRs by Selected Income Group ( percent), 1992

Industry Supply

INTRODUCTION

COMPANY PROFILES

ADVERTISING AND PROMOTION

Table 11: Market Shares of TV/VCR Rental ( percent by value), 1993

Table 12: Multiple Rental Chains, 1994

Table 13: International Structure of Thorn EMI Group ( percent sales), Year to 31st March 1990 and 1993

Table 14: Summary Results for Thorn EMI Group (£m), Year To 31st March 1989-1993

Table 15: Divisional Results of Thorn EMI Group (£m), Year to 31st March 1990-1993

Table 16: International Structure of Granada Group ( percent sales), Year to 30th September 1989 and 1993

Table 17: Summary Results for Granada Group (£m), Year to 30th September 1989-1993

Table 18: Divisional Results of Granada Group (£m), Year to 30th September 1990-1993

Table 19: Main Media Advertising Expenditure on Rental Chains (£000), 1992 and 1993

Table 20: Main Media Advertising Expenditure on Visual Hardware (£000), 1993

Industry Forum

THE RECESSION AND CURRENT TRADING

THE FUTURE

Market Size

CONSUMER EXPENDITURE

RENTAL VERSUS PURCHASE

RETAIL SALES

Table 21: Consumer Expenditure on TV and VCR Rental at Current Prices (£m at rsp),1985-1993e

Table 22: Weekly Expenditure per Household on TV Services (pence), 1985-1992

Table 23: Comparison of Rental and Purchase Markets (£m at rsp), 1993

Table 24: Selected Comparitive Retail Sales Indices (at current prices), 1990-1993

Table 25: Retail Sales of Hire Businesses (£m), 1988-1993e

Recent Developments

THORN EMI

GRANADA GROUP

COLORVISION

THE REGIONAL ELECTRICITY COMPANIES (RECS)

Future Prospects

OWNERSHIP SCHEMES

EXTENSION OF RENTAL OPTIONS

Company Profiles

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

ICC INFORMATION SOURCES

ICC INFORMATION GROUP LTD

GOVERNMENT PUBLICATIONS

OTHER SOURCES

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EXECUTIVE SUMMARY

Renting TV sets and VCRs has an old-fashioned image in the UK. Unfortunately, the idea that rental is going out of fashion is to some extent borne out by market statistics. Consumer spending on rental of TV equipments (TV sets and VCRs) declined from just over £1.2bn in 1985 to £975m in 1992, and is estimated to have dropped again in 1993.

Despite this long-term trend, there is some evidence from the results reported by the market leaders that the worst of the slide for the electronics rental sector may be over. During the recession and in a period of near-saturation for conventional TV equipment, outright purchasing has also been reduced, while renting (or sale) of satellite reception equipment has helped to sustain the rental chains.

Typical rental customers tend to be older and less affluent, and the downmarket uptake for rental has meant the market being restricted to TV sets and VCRs. However, recent years have seen the apparently successful introduction of much broader ranges of electronic products which will appeal to mainly ABC1s -- computers, mobile phones, games machines, and camcorders. There has also been a campaign to persuade the British to rent household appliances such as white goods.

Thorn EMI and Granada Group, two UK conglomerates, account for 85 percent of this market as a result of acquisitions during the 1980s or the failure of other competitors. Both operations are profitable, with Granada's UK Rental Division providing much of the cash to allow the group to diversify, and Thorn EMI operating as the world's largest rental company. Thorn EMI operates through Radio Rentals and Rumbelows, while Granada has recently converted all its outlets, including the large Visionhire chain, into standardised `Granada' showrooms.

The leading chains now follow a policy of selling and renting through the same outlets, and hybrid schemes such as Option-2-Own (Thorn EMI) have been introduced. Inevitably, this is blurring the distinction between selling and renting, and a process of familiarisation will be necessary for most consumers. Easy credit was behind the strong swing to purchasing in the 1980s, and the 1990s could see a revival for rentals.

In particular, the major innovations anticipated for television and home computing (digital broadcasts, multimedia, virtual reality) could force more people to consider the rental option, especially if entry-point prices for new hardware are pitched high by manufacturers, as seems likely. Paradoxically, the rental market could continue to contract in size but simultaneously become more profitable in the 1990s. Above all, the two giants of the sector appear to remain firmly committed to exploiting the potential for the rental sector.

Text © 1994 Key Note

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