If it weren’t for the egregious corporate mismanagement of Blockbuster‘s growth strategy, it is likely that the nostalgic icon featured in the Netflix documentary “The Last Blockbuster” would be one of the many streaming services on our SmartTVs. At the height of its popularity, the video rental retailer had over 9,000 stores worldwide spanning six continents, in addition to its DVD-by-mail, streaming and video-on-demand services. And if you’ve watched the movie, then you already know that the only store in Bend, OR, remains contracted under the DISH Network’s licensing agreement.
Like so many other fans, I listened with fascination about how David Cook monetized the library model of borrowed assets and pioneered a RevShare deal with movie studios that would forever change how movies distributed content to consumers. It is probably one of the earliest examples of a retail brand leveraging the direct-to-consumer model through its omnichannel strategy. In my opinion, it is a contributing factor that launched the content startup into a multimillion-dollar media company.
The retail industry has changed exponentially since the Blockbuster days. The documentary highlighted several retail concepts that have helped shift brand perception and maintain relevance with consumers.
The evolution of POS. Blockbuster founder David Cook integrated database management software into the video rental shop’s business model. The universal interface, implemented across its franchises, fast-tracked inventory tracking, streamlined customer transactions and muscled out the competition. The modernized digital POS systems are far more sophisticated, offering API mobile integrations, seamless cloud connections and big data insights.
Real estate saturation. Blockbuster opened a new store every 17 hours with two or three brick-and-mortar stores in each town or neighborhood, as cited by the documentary. Several CPG brands have implemented this growth tactic under the scrutiny of analysts and consumers alike. Analysts criticized brands like Dunkin’ Donuts and even Starbucks for their attempts at this superficial growth. One case study by Harvard Business Review suggested that the proliferation of Starbucks locations cannibalized existing store sales, undermining brand health and manager morale. By leveraging the sophisticated data and tools available only recently in the market, retailers can develop and execute on a market penetration plan by identifying patterns and striking on real estate expansion opportunities that weren’t as visible even five years ago.
Pioneers of consumer connectivity. Blockbuster attributes its continued success to how it catered to consumer interest—empowering associates to engage with consumers to crowdsource information on their viewing likes and dislikes shaped future film recommendations and media inventory. And the brand learned early on the value of creating a retail environment that encouraged communities to gather and interact with one another. This concept has been replicated to increase brand engagement for Costco, Lululemon and Samsung.
Even with one retail location remaining, Blockbuster continues to give consumers what they want. In the months since the documentary’s release, fans have traveled near and far to visit the Bend, OR location. Patrons boast reliving their childhood experiences on a sensory level from the olfactory smell of new plastic and the auditory ASMR of opening the blue and white tape box and clicking it shut. For the diehard enthusiasts, there is an ultimate experience of a Summer Sleepover, where for $4/night, guests indulge in a marathon movie night at the world’s last Blockbuster location with all the popcorn they can eat.