DVD rental revolution at touch of a screen

Leeds-based Endless is to focus Choices UK as a niche distributor of DVDs, games and music with three distinct businesses.

The first is a new DVD rental business, which is aimed at local convenience store chains such as Spar and Londis, and online under the name of Rentithere.

Endless is introducing touch-screen terminals into convenience stores which help customers to choose a movie, be it the latest action thriller or a traditional romantic comedy.

Endless managing partner Garry Wilson said the concept is being welcomed by convenience stores as its modern fascia and real-time technology fits in well with the requirements of today's sophisticated convenience store formats. After a customer chooses a DVD from the touch-screen terminal, they pick it up in a slim pack at the till.

Endless will roll out the concept over the next few months.

The second business is traditional DVD and games distribution to retailers such as Wilkinson and Next Online, and convenience retailers such as Spar, Londis and Budgens.

The third area is the mail-order business, which produces 12 catalogues a year.

Customers are typically introduced to the catalogues via publications that come with weekend newspapers. The catalogues provide niche DVDs that other retailers struggle to find.

"It could be heritage TV such as Colditz or Poldark, or else specialist areas such as the Second World War, the military or railway journeys," said Mr Wilson.

"Once customers buy from the newspaper publication, they will be sent regular catalogues."

Endless is planning to beef up the mail-order business by investing in technology in the division's distribution centre in Bradford.

"The centre in Bradford has been neglected," said Mr Wilson. "We want to invest in it to provide a better service for customers. If we can refine the customer database, it will help with stock management."

In addition to the 15m investment in Choices UK, Endless is also looking for bolt-on acquisitions to expand the business.

"We are investing a lot of money in this business, which is indicative of our confidence in it," said Mr Wilson.

"Not everyone has the capacity to download videos so they need to go somewhere else."

Endless bought Choices UK and its parent company, Webb, for just 1 from Burley-in-Wharfedale home-shopping group Findel three months ago.

Endless's investment in the business is in sharp contrast to another Findel disposal, online wedding business Confetti, which went into administration earlier this month.

Findel is focusing on its core activities of home shopping and education and was keen to offload the business to free up working capital.

Last July, Findel acquired the 70 per cent of Webb it did not already own – for 3.

However, in April, Findel was forced to make a 61m impairment writedown, of which 45m related to Webb.

Endless's cash injection will be used for both working capital and investment.

Mr Wilson said a shortage of cash meant that Webb had not been able to keep sufficient stock.

He said Endless would provide "several million" pounds of working capital to replenish stock.

It is believed that it was taking too long for the company to fulfil orders in a part of the market where retailers and customers demand next-day service, and that there was insufficient inventory.

The pre-Christmas season is the key selling period for the group.

THE ART OF THE TURNAROUND

Endless specialises in turning around struggling businesses before selling them on.

The company, which is an independent private equity house, provides both financial investment and hands-on turnaround experience.

It targets businesses that are facing challenges, or that find themselves in special situations.

The group, which has offices in Leeds, Manchester, Birmingham and London, has invested more than 110m in more than 30 transactions during its first four years.

Many of the investments were completed in less than 28 days from introduction.

With funds of 300m under management, it has access to significant levels of committed capital to support the companies it invests in.

The group says it is not afraid of tough deals, tight deadlines or challenging situations, which may deter other rivals.