“The overriding objective of ChoicesUK plc is to deliver the best quality, service and range of pre-recorded home entertainment in whatever way suits our customers best.”
As our chosen physical company, ChoicesUK provides a DVD rental service through its physical UK stores and its supply of white-label DVDs to third party outlets. The organisation does have an online store, however this only facilitates the purchase of DVDs and does not allow DVD rental.
ChoicesUK, formerly Home Entertainment Corporation (HEC), was established in 1985. In this pre-internet period, the company’s main strategy was to exploit the UK video market.
Initially, the business was centred on video rental through its “Video Box Office” stores (now ChoicesUK Local) which supplied white-label goods to third party convenience stores. The company’s first B2C store opened in 1986, under the name of “Choices Video”, offering a selection of videos for rental and various confectionary products. In 1991, the company added a mail-order service for the sale (not rental) of videos and later DVDs.
ChoicesUK’s pre-internet strategy focused upon 3 areas:
- Video and DVD rental through “Choices Video” Stores
- Supplying third-party outlets with white-label videos and DVDs
- Catalogue based mail order service for videos and DVDs
These three areas, saturated the pre-internet marketplace, making ChoicesUK a highly competitive organisation to challenge the market leader Blockbuster Ltd
From 1991 to 2003 ChoicesUK experienced a period of relative continuity, where the established strategy remained largely unchanged, with the exception of minor incremental changes. This was followed by a period of industry flux, in response to the quick emergence of virtual rental companies and Video On Demand (VOD) services such as Sky Box Office.
The impact of the Internet on ChoicesUK’s strategy:
ChoicesUK is currently undertaking a defensive strategy to create a more competitive organisational structure to combat the increasing online threat.
One of the innate problems with the overall structure of physical store rental services, is the greater effort required by the company to facilitate the rental process. In comparison to the consumer-led virtual organisations, which encourage consumers to review films and recommend to their peers, in effect doing a lot of the virtual organisations day-to-day marketing and healthy cookbooks
In response to the threat from the Internet, ChoicesUK decided to re-brand its divisions and focus upon a single brand strategy to encompass all company activities. This improves brand awareness and increases the overall industry presence in the UK’s home entertainment retail and distribution market.
After this rebranding strategy, ChoicesUK has 3 divisions:
- ChoicesUK stores has 180 outlets located throughout the UK, cater for impulse rentals of DVDs, games and music.
- ChoicesUK Local still supplies third-party outlets with white-label DVDs.
- ChoicesUK Direct has incorporated the catalogue mail-order service, and transferred this service to an online mail order service, through the ChoicesUK website.
ChoicesUK has clearly chosen to circumvent the online DVD rental market, and instead chosen to focus upon its physical base of stores and supplying the convenience store sector with new white-label goods.
However, the success of the Internet rental process has made ChoicesUK recognise the strategic significance of modern data management systems. This has led to various collaborations and partnerships with e-commerce specialists such as QAS plc significantly improving the data management systems of ChoicesUK. In addition, further collaborations with Snow Valley Ltd and Charteris plc have created a single product file for ChoicesUK that can be sold across multiple channels. On top of this there is now only one service policy for the organisation so that returns can be managed more efficiently. This significant restructuring of its IT systems and infrastructure is summarised below:
Strategic Infrastructural change:
- The consolidation of group resources such as Purchasing and Marketing, adding to the existing group functions of Information Services, Human Resources and Finance.
- The disposal of non-trading and unprofitable retail sites, reducing its store base by 12.
- Substantial re-configuration of the stores has been undertaken to increase the space given to Electronic Games and Trade-in, reflecting the shift in entertainment markets in preparation for the release of next-generation consoles.
- Overall company wide cost reductions of over £3m to date, creating a more competitive cost-base.