Reeling Through the Times
May 1, 2005
Reeling Through the Times
These are the important years in Movie Gallery history, along with the corresponding Best Picture of that year (as awarded by the Academy of Motion Picture Arts and Sciences—i.e. the Academy Awards), just for fun.
1985 Movie Gallery is founded by Joe Malugen and Harrison Parrish in Dothan, Ala. The company begins operating video specialty stores in southern Alabama and the Florida panhandle, as well as franchising the Movie Gallery store concept.
Best picture: Out of Africa
1987 The company grows to 50 stores—five company-owned stores and a franchise operation of 45 stores.
Best picture: The Last Emperor
1988 The company begins to consolidate the franchisees into company-owned stores.
Best Picture: Rain Man
1992 The company now has a total of 37 stores and annual revenues of $6 million. Given its rural roots, Movie Gallery concentrates on building new stores in smaller towns and cities, and sets out to consolidate the industry through the acquisition of various "mom and pop" operators.
Best Picture: Unforgiven
1994 Movie Gallery goes public and begins trading on the NASDAQ market through its symbol, MOVI. It also grows from 97 stores to 219 at year’s end, quickly completing acquisitions of various video chains, primarily in the Southeast.
Best Picture: Forrest Gump
1995 Movie Gallery raises additional public funds and continues the acquisition and development of stores. It also celebrates its 10th anniversary, tripling in size to 662 stores since the year prior.
Best Picture: Braveheart
1996 The company ends the year with a total of 863 stores and expands its Movie Gallery culture to 22 states.
Best Picture: The English Patient
1997 All stores are converted to MeGA LINK, Movie Gallery’s exclusive POS system.
Best Picture: Titanic
1998 The company rolls out "Operations Excellence" to all stores, unifying them with one set of operating standards.
Best Picture: Shakespeare in Love
1999 The company launches MovieGallery.com on the Internet; completes an 88-store acquisition of Blowout Entertainment and ends the year with $276 million in revenue and 963 stores in 31 states.
Best Picture: American Beauty
2000 Celebrating 15 years in the video industry, Movie Gallery has a banner year. It moves its headquarters from a "campus" of buildings to the new Support Center where everyone is under one roof; it introduces its brand new look with a new logo; it reaches a milestone 1,000 stores; and it closes the year with honors from industry trade publication Video Business.
Best Picture: Gladiator
2001 Movie Gallery jumps into the year being named Video Retailer of the Year 2000 by the Video Software Dealers Association (VSDA) and Video Business magazine. Later in 2001, it acquires Video Update, entering Canada with the largest acquisition in video history prior to the Hollywood Entertainment acquisition, just completed at press time. It closes the year with 1,415 stores.
Best Picture: A Beautiful Mind
2002 The company is named Retailer of the Year 2001 by Video Business magazine and is named to Forbes magazine’s Top 200 Small Business List at number 50. It finishes the year with 1,784 stores.
Best Picture: Chicago
2003 The opening of the 2,000th store is celebrated in Cullman, Ala. Movie Gallery also enters Mexico with the first store in Puebla, southeast of Mexico City. The year also marks Movie Gallery’s expansion to all 50 states and nine Canadian provinces.
Best Picture: The Lord of the Rings: The Return of the King
2004 Movie Gallery celebrates its 10th anniversary of trading on the NASDAQ market. It is also named to Fortune magazine’s list of top 100 fastest-growing businesses (at 45th). It closes the year with 2,482 stores.
Best Picture: Million Dollar Baby
2005 The company opens its 2,500th store in Jacksonville, Texas. Then it takes a giant leap beyond that when it completes its acquisition of Hollywood Entertainment Corporation, creating a leading North American home video retailer that can now successfully compete in the urban, suburban and rural markets.
The combined company makes it the second-largest North American video rental company with annual revenues in excess of $2.5 billion and approximately 4,500 stores.
Hollywood is now a subsidiary of Movie Gallery, but will continue to operate under the Hollywood brand name. The company plans to continue its expansion of new acquisitions beyond this merger.
Best Picture: To be announced, as well as more Movie Gallery acquisition and expansion news before the year is out.
Is the movie rental business a dinosaur business thanks to the latest communication technologies such as HDTV? That’s what several Wall Street analysts have said throughout the years, but Movie Gallery management is not worried. After all, who better to know that dinosaurs can be resurrected and re-packaged and enjoyed as a blockbuster hit?
"When you look at it from a technology standpoint, technology is always a threat to certain businesses—especially in the minds of the people," begins Harrison Parrish, co-founder and chairman of Movie Gallery. "But think about this historically: When television came along, not only did it threaten radio, it threatened the theater business because nobody thought that people would want to go to a theater when they could sit home and watch television. In reality what’s happened is all of those markets have just expanded—the elasticity has gotten bigger and bigger."
Parrish also makes an analogy to sports and ball games. "With the televising of sports events, the thinking was that no one would want to go to a ball game when they could watch it on TV. Well, go watch Michigan play Michigan State and there will be 100,000 people there—why?—because they want the experience. And that’s our video stores. The convenience of the Internet or of other technologies cuts the experience out of it. And consumers still want the experience of going with the family and getting a movie and a game and some candy. And we don’t expect that to change one bit."
The Malugen/Parrish Two-Step
The men behind Movie Gallery—Joe Malugen and Harrison Parrish—have a real talent for running a business as a duo. While both are highly praised for having "an open door policy," and knowing how to work hard/play hard, they each bring distinct characteristics to the business table that complement one another in perfect step.
As Malugen himself describes it, "Harrison is a great merchandiser, motivator and salesman. He’s very entrepreneurial—always thinking about how to make money and coming up with some new avenue to add to our existing business." As proof of that, all one has to do is look at the concessions or candy department.
Four years ago, Parrish took that section under his control and leadership, developed plan-o-grams, EDI capabilities, and overall expanded it. As a result, the department has seen sales increases of 30 to 35 percent, according to Gary Hay, senior vice president of concessions.
Meanwhile, "I’m more of an administrator," Malugen adds. Utilizing his law degree and applying it to the business world, he says he is "more into detail and structure and organization."
Hay offers a funny story to depict the detail side of Malugen. "One day Joe and I were having a lunch meeting with the ConAgra representative and he pops this question to the guy about how much water content was in their popcorn kernels. The ConAgra rep said he had never been asked that before, and Joe proceeds to explain how that is the most important question because the more moisture that’s in a kernel, the better it will pop. And that’s Joe—always thinking about the details, always asking the simple questions that show he’s complex."
Concessions of Success
Video rentals may be the "bread and butter" of Movie Gallery’s business, but candy or concessions are the perfect accoutrement, according to Gary Hay, senior vice president of concessions and novelties.
For the past three to four years, candy has been an upgraded category, and therefore a larger contributor to the company’s growing success. Fashioning "a candy store within a video store," Movie Gallery is very open to experimentation with its 80-or-so SKUs of confections, and that experimentation works particularly well in its rural markets.
"In a rural market, the video store is the place in town where people want to go—sometimes it’s the only place in town," Hay explains. "They rent a movie and buy candy that usually can’t be found anywhere else around—it’s a total experience. The good thing about the candy is that it really makes it fun—and that’s what the movie business is all about, enjoyment and fun."
Hay and his team keep Movie Gallery’s candy presentations sharp by remaining flexible to the industry and maintaining a sense of savvy for their country-market customers. Every month, for example, the chain brings in two or three new candy items, and also features a "candy of the month," that vendors pay a promotional allowance for.
And so beyond department plan-o-grams, "we have in and outs that we keep on the floor for six to eight weeks," Hay maintains. "Towards the end, we half-price the candy and then destroy the display. There’s always something coming in, going out, something new, something fresh."
One thing not going out is Movie Gallery’s seven-ounce bag of cotton candy manufactured by Rainbow that sells for $1.99. A concession mainstay, the company recently converted the Rainbow name it to its own private label Movie Gallery name. "It’s our number-one seller," says Hay.
Honoring the company’s 20th anniversary, Hay has developed a program with NASCAR to sell limited-edition collectible coins to its customers. So far, one version with Coke has been produced, but Hay plans to eventually make 10 designs available—with candy manufacturers such as Hershey expected to be involved.