The New Old Economy

Kugler is president and co-owner of Distribution Video Audio Inc., a company that pulls in annual revenue of $20 million with a proud nickel-and-dime approach to fading and faded pop culture. Whether it’s unwanted “Speed Racer” ball caps, unsold Danielle Steel novels or unappreciated David Hasselhoff albums, Kugler’s company pays pennies and sells for dimes. If the firm had a motto, it would be “Buy low, sell low.”“It’s true, one man’s trash is another man’s gold,” Kugler said. “But we are not the graveyard. I’m like a heart surgeon — we keep things alive longer. Or maybe we’re more like the convalescence home right before the graveyard.”

The last major Hollywood movie to be released on VHS was “A History of Violence” in 2006. By that point major retailers such as Best Buy and Wal-Mart were already well on their way to evicting all the VHS tapes from their shelves so the valuable real estate could go to the sleeker and smaller DVDs and, in more recent seasons, the latest upstart, Blu-ray discs. Kugler ended up buying back as much VHS inventory as he could from retailers, distributors and studios; he then sold more than 4 million VHS videotapes over the last two years.

Those tapes went to bargain-basement chains such as Dollar Tree, Dollar General and Family Dollar, and Kugler’s network of mom-and-pop clients and regional outlets, such as the Gabriel Bros. Stores in West Virginia or the Five Below chain in Pennsylvania. If you bought a Clint Eastwood movie at the Flying J Truck Stop in Saginaw, Mich., or a “Care Bears” tape at one of the H.E. Butts Grocery stores in Texas, Kugler’s company probably put it there. He also sells to public libraries, military bases and cruise ships, although those clients now all pretty much want DVDs.

Kugler estimates that 2 million tapes are still sitting on shelves of his clients’ stores across the country, but they are the last analog soldiers in the lost battle against the digital invasion. “I’m not sure a lot of people are going to miss VHS,” he said, “but it’s been good to us.”

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“Thinker102″:  Over the past few years, I have watched a number of businesses offering shiny new merchandise in this area go under or endure real hard times. I have also seen a number of what I think of as ‘junk shops’ appear, places that offer old stuff at sort of low prices, and/or offer very very cheap new merchandise. I suspect these ‘junk shops’ might be the wave of the future…along, maybe with shops that can fully or mostly repair said ‘junk’.
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One Response to “The New Old Economy”

  1. SME Says:

    “maybe we’re more like the convalescence home right before the graveyard.”

    Refreshing honesty. Maybe that will be the new approach to marketing?

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