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Blu-Ray on pace for $1 billion in 2008 sales

BY Doug Desjardins

LAS VEGAS Home entertainment executives said they expect the Blu-Ray DVD format to gain traction this year and approach $1 billion in sales as player prices fall and consumer awareness rises.

“I think we’re going to come close to $1 billion in software sales for 2008,” 20th Century Fox Home Entertainment president Mike Dunn told retailers at the 27th annual Home Media Expo in Las Vegas this morning. That compares to just $260 million generated by Blu-Ray in 2007.

While those sales will represent only 7 percent of the $15 billion in total DVD sales expected in 2008, they’ll more than double to $2.5 billion in 2009 and overtake standard DVD by 2012, according to the Entertainment Merchandisers Association. The industry is counting on Blu-Ray to reinvigorate the DVD business, where sales were flat last year and are expected to decline the next few years.

During the Home Media Expo opening session June 24, Blockbuster Entertainment president Jim Keyes told the audience more than 2,000 Blockbuster stores now have Blu-Ray display areas that give customers a side-by-side comparison of movies on Blu-Ray compared to standard DVD.

Keyes said the chain is also training employees to explain the benefits of the high definition format. “This is the first time in a quite a while that we’ve had something really new to talk about in stores,” said Keyes.

But Forrester Research principle analyst James McQuivey said it would take at least another year for consumers to get on the Blu-Ray bandwagon. “I don’t think you’re really going to see it happen until the 2009 holiday season,” said McQuivey.

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Longs braces for challenge in Hawaii

BY Doug Desjardins

WALNUT CREEK, Calif. —Longs Drug pulled up stakes in three states last year to focus on its core markets, and that move is helping it reinforce its base in Hawaii, a place it’s dominated for more than 50 years but is now home to newcomer Walgreens.

While Longs has declined to comment directly on Walgreens’ November 2007 debut in Hawaii, it’s been bracing for what’s arguably its biggest challenge ever in the Aloha State. Longs increased its store count by more than 15 percent in Hawaii in 2007—roughly double its overall average—and plans to open its first drive-through stores there later this year.

Longs chief executive officer Warren Bryant touched on Longs’ recent efforts in Hawaii at its annual shareholders meeting in May. While he never mentioned Walgreens arrival there, he reassured shareholders that Longs plans to hold on to its top spot in the state.

“We opened six new stores in Hawaii in 2007, bringing our total to 38,” Bryant said. “Longs has had a strong presence in this market for many years and is taking steps to enhance that presence.”

Bryant didn’t comment on Longs’ expansion plans in Hawaii for 2008, but it is likely to match its six openings in 2007 to counter a similar number planned by Walgreens. One store due to open in Honolulu later this year will be its first ever in Hawaii with a drive-through window, and it plans to add another drive-through as part of a Maui store remodel.

Drive-through pharmacy is one area in which Longs has evolved slowly. The 516-store chain currently has 57 stores with drive-through windows and opens them whenever space allows in new stores and remodels. Walgreens is making them a staple of its stores in Hawaii and plans to have up to seven stores open by the end of 2008, and eventually open up to 30 in the state. Conversely, drive-through locations have been a priority for Walgreens for many years, and as of the end of May, the company operated a drive-through window in 5,381 of its 6,252 stores.

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FTC balks at Illinois clinic bill

BY Antoinette Alexander

WASHINGTON —The convenient care clinic industry is applauding the Federal Trade Commission on its recent approval of staff comments regarding the proposed regulation of retail healthcare facilities in Illinois.

The comments were filed by the staff of the Office of Policy Planning and the Bureaus of Economics, Competition and Consumer Protection with state Rep. Elaine Nekritz, D-North-brook, regarding HB 5372 and the proposed regulation of retail health clinics within the state.

“The FTC comments continue its advocacy of an open and competitive healthcare marketplace where retail-based clinics can play an increasingly important role in providing consumers in Illinois and other states with easier access to high-quality, affordable health care,” said The Convenient Care Association in a statement.

The FTC’s comments addressed Nekritz’ concerns about provisions in the bill that could be considered anticompetitive and her specific concerns over the bill’s prohibition on the location of a clinic “in any store or place that provides alcohol or tobacco products for sale to the public.”

According to the comments, although Illinois’ initiative to provide for the emergence of this new model of healthcare delivery is to be encouraged, “several of HB 5372’s provisions could harm healthcare competition and the emergence of new clinics, without providing countervailing benefits for Illinois healthcare consumers.”

One such provision in the bill would restrict the ability of third-party payers to negotiate lower co-pays with retail clinics and pass those savings on to healthcare consumers. In addition, the rationale for not allowing a clinic in a retail store that also sells tobacco or alcohol is unclear, according to the FTC, as this restriction could limit the supply of retail clinics and the basic medical services they would provide if retail stores were to decide sales of tobacco and alcohol were more profitable than having a retail health clinic.

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