Brick and mortar constraints in movie rental industry

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Brick and mortar constraints in movie rental industry

By | October 2011
Page 1 of 1
Constraints of brick and mortar stores:
* Geography
* Store size
* Store inventory
* the payback from the inventory
* Cost to own and operate the store

Traditional video stores can stock and offer roughly 3000 DVD's due to space limitations. So pretty much the shelf space is the biggest constraint limiting a firm’s ability to offer customers what they want when they want it. Just which films, documentaries, concerts, cartoons, TV shows, and other things make it inside the four walls of a Blockbuster store is dictated by what the average consumer is most likely to be interested in. Finding the right product mix and store size can become tricky. If Blockbuster offers too many titles in a bigger store there might not be enough paying customers to justify stocking less popular titles because the brick and mortar store does not only pay for the cost of the DVD, but also for the real-estate of the larger store, the workers, the energy to power the facility, etc... The geographic constraint or how many customers can reach the store is another problem. Brick and mortar stores cannot take advantages of such technology like recommendation system that is very famous with Netflix. Lastly, if you have ever visited a video store only to find your movie out of stock then you have personally experienced limits of the physical store model.

Why people prefer streaming?
Lot of the limitations of the brick and mortar stores are also the reasons why people prefer streaming: * more DVDs, shows, concerts, etc online
* convenience
* location
* Recommendation system