Target Eyeing Packaged-Media Consignment Business Model

Big box retailer Target reportedly is planning to sell music CDs and DVDs on a consignment basis – rather than the typical wholesale bulk business model. The retailer would only pay studios for titles sold. Separately, Best Buy is stopping selling CDs this summer.

Citing sources, Billboard reported the national retailers are bowing to ongoing consumers trends away from packaged media and toward digital and subscription streaming services such as Movies Anywhere and Netflix.

Packaged media’s decline at Best Buy has been ongoing for years. CEO Hubert Joly cut back shelf space on DVD and Blu-ray Disc movies shortly after joining the consumer electronics retail chain in 2012.

Entertainment sales, which include packaged media, generated $509 million (6%) of third-quarter domestic sales – up 4.1% from the previous-year period. The percentage hasn’t changed much over the years.

For Target, the move underscores the retailer’s exit from digital retail three years ago when it shuttered — after 18 months — the Target Ticket platform with more than 30,000 movie and TV titles. At the time, Target transferred all digital consumers to CinemaNow – the digital retail platform once owned by Best Buy.

Target Ticket didn’t survive despite the retailer giving Redcard holders a 5% discount on purchases, excluding rental.

Meanwhile, Target announced that winter holiday sales from November through December grew 3.4% across its core merchandise categories, including home, apparel, food & beverage, hardlines and essentials. Entertainment wasn’t among them.

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