I guess when you mention retailers, it'd entirely have to be up to them, but normally I've seen Godzilla movies displayed in either the Sci-fi/Fantasy or Action sections for the most part. I think it was mostly smaller retailers or Mom & Pop video stores back in the heyday that I'd sometimes spot a couple of Godzilla films in the horror section. My guess would be that maybe they saw some of the cover art (on VHS covers, for instance) for these movies and probably grouped them into horror based on their initial perception of the artwork design. I recall that a majority of those older & cheesy 80's horror cover designs, were generally either outlandish, violent, dark, disturbing, or grotesque -- which was likely the biggest draw in deciding to rent out the movies "blindly". So even monster movie images depicted on the cover, especially being stacked in a full row alongside other shocking or horrific images, was done so as a shrewd marketing ploy to entice in the rental or purchase of these movies.
I remember both SunCoast Videos and Sam Goody stores having a horror/monster VHS display where I got my first few Godzilla films solely because I liked the covers (Ghidorah The Three Headed Monster, Godzilla vs Gigan, Godzilla Raids Again, and Rodan) and that were placed along with horror films such as The Howling, C.H.U.D., Critters, King Kong Lives, Return of the Living Dead, Fright Night, The Fog, and Killer Klowns from Outer Space. Nowadays it seems that most horror cover art is far more toned down and less eye-catching than it used to be, not to mention that mostly all the newer Godzilla films have cover art that unmistakably depicts a largely action filled, sci-fi feel, with monster stare-downs and either weaponry or city destruction displayed within the foreground as well. So it'd be pretty easy to place these movies into either the sci-fi/fantasy or action/fantasy groupings. If the retailer only divides into say 3 sections only, then they likely have a children/comedy, action/drama, and a horror/sci-fi pairing which they separate films into. At least those are my best assumptions for how you get Godzilla films into the horror section.
As for my personal groupings, well I do consider monster movies as a realm of both sci-fi & creature feature horror (which are both my favorite horror genres), so I group those into two distinct catergories: actual Kaiju films or similar and classic B-horror creature features; and then modern horror & sci-fi creature features (non-Kaiju). So therefore, a movie like Cloverfield would go into the Kaiju category for me. Straight up sci-if horror (which is another of my groupings) excludes the gigantic monster element altogether as much as possible, i.e. Event Horizon or Invasion of the Body Smatchers, but would also include films like Alien, Species, Lifeforce, and The Thing as those are more commonly recognized as having out-worldly origins or are actual extraterrestrial entities themselves.
Now that just leaves the rest for the general Horror category, although I've recently split those into 4 subsets for viewing purposes: classic horror & Halloween friendly (mostly safe for family viewing), modern horror (subjectively, movies for both accompanied and non-accompanied viewing), J-Horror (Asian & Japanese horror, for accompanied and non-accompanied viewing), extreme horror/Giallo films (adult viewing only). The criteria for all of these, is horror that is not either sci-fi horror or creature feature based. Also, I'll occasionally split up horror franchises into another group as well whenever I might be loaning out movies to friends, for instance, if they wanted to borrow all the Wrong Turn films, the Friday the 13th franchise, the REC/Quarantine films, all the Hellraiser films, and all the classic Universal Monster movies. I originally took out the franchise horror films as a new group whenever I was continually adding more horror movies into the modern horror category that I had shelved, in order to have space for the newer films I kept adding in. But I bought new shelving racks, so I've more or less returned them back into the original grouping.
Currently, I'm not sure yet if I should make other categories specifically for expanding groups like Satanic Cults/Witches, Vampires, Werewolves, Zombies, or Paranormal/Ghosts, as sometimes I get asked for recs for these genres, so I was contemplating just making each their own individual category. I was also toying with the idea of making a Stephen King movie adaptation grouping or Lovecraftian themed category as well, but I might just make a list of those films instead, and only pull those movies if somebody asks me to loan them films within either category. So as of now, I have my horror movies sub-divided into 7 specific groups, which is currently to my preferred liking: Kaiju/B-Monsters, Creature Features, Sci-Fi, Classic/Halloween, Modern, J-Horror, Extreme/Giallo. Does anybody group their horror in similar fashion?
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