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Labor Allocation for Blockbuster
RES/341
January 15, 2002
Abstract
No consideration has been given to the changes in revenue resulting from the rollout of Blockbuster's (Blockbuster) Movie Value Pass (MVP). Since the allocation of labor for all stores is based on revenue, it is important to examine the effects to the revenue stream and invoice comparisons. With an Excel spreadsheet the impact of the new program on revenue, the average invoice total, invoices and the current labor matrix were examined over an eight week span. The issue, data collection and results are discussed.
Labor Allocation for Blockbuster
The Issue
The changes in the video rental industry have been looming for more than a decade. Promises of Video on Demaand (VoD) delivered directly to anyone's home computer (Cook, 2004, par. 6). Also, the increasingly popular NetFlix, DVD by mail, successfully disrupted the market in 1999 (Aaron, 2004, par. 6). As these changes have begun, so have the changes with the "brick and mortar" segment of the industry.
Blockbuster, Blockbuster, Inc. and others have been experimenting with frequent renter programs. The struggle within Blockbuster is not over revenue or average ticket, it is over invoice comps (comparable store increases/decreases). Over the past two years Blockbuster has seen invoice comps go down steadily. Using figures from a local store invoice comps have gone down about eight percent from August 2002 to August 2004. However, average invoice revenues had gone up twenty-one percent.
Now, Blockbuster is having to compete against NetFlix and Blockbuster's movie rental prog ...