| Photo processing: the hub and spoke concept |
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| Written by Andrea O’Hagan, Photo-Me UK | |
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In the past five years, pharmacies have seen incredible changes in the photographic sector. The market has gone from extremely buoyant, with peaks in films being processed, to one of decline.
Historically, pharmacies were the place where the British public would take their films to be processed and, even if there was no on-site minilab, the pharmacy would send it to a central laboratory for processing. As film volumes declined, central labs decided that such a service was not always profitable so fewer and fewer pharmacies were able to offer the service, especially in remote locations. Over the past year we have seen some labs pulling out of film collection altogether as the sparse volumes make the whole process logistically and profitably implausible.  Figure 1: Typical trend in developed countries: US-market Gap in the marketWhereas some pharmacies decided to abandon the service altogether, others saw the gap in the market. Films were, no doubt, declining, but digital was beginning to make up the shortfall. For the first time in 2006, we saw the trends starting to turn in a positive direction as digital prints rose and consumers moved towards retail once again for their photo printing. Paydens' wayPaydens Group was established in 1969 and now operates 74 pharmacies across South East England. They vary from small village pharmacies to large high street shops with additional departments such as perfumery, photographic and alternative therapies. The pharmacies are all located around London, Kent, Essex, Sussex and Surrey but there is also a successful online business (www.paydenspharmacy.co.uk ). The company’s wholesale pharmaceutical division trades as Sangers (Maidstone) Ltd. Over the years Paydens’ involvement with photography has been widespread but limited. At one stage, the Maidstone head office housed a minilab of its own where it would act as a central fulfilment hub for films coming into the various stores. However, when the old equipment needed replacing, the decision was taken to subcontract all photographic developing and printing to a third party. All stores have always taken in films and used various central laboratories for fulfilment. However, with the dramatic decline in films being processed, the business decided it must look at a way to profit from the digital business as well. The Paddock Wood store installed an e-station instant print kiosk in June 2005 to establish whether there was a market for digital camera users. This proved to be a wise choice and a successful investment, confirming that a future rollout would be viable. However, it also proved that an instant print kiosk on its own, though popular and profitable, was restricted because some customers want enlargements and bulk orders that they do not want to place on the kiosk. They are happy to wait a little longer for these high-value orders if it means they can save money. Therefore, the idea of a hub and spoke operation was born. During the same year, owner Mr Pay acquired a pharmacy in Erith. This store already had a minilab and was processing its customers’ films and digital work. This store was to become the “hub” that Paydens required to provide its stores with a full photo service. The minilab was upgraded and a local e-station installed for instant printing, while being networked to the lab for all other work. This was the second stage of the evolution of the concept and again it worked. As the Erith store was allowed to run as a standalone unit for a time, other remote locations rolled out their e-station kiosks. This number has now reached 36. All these remote locations (or “spokes”) offer an instant print facility on 6x4in and are linked via broadband to the Erith store, so customers can order a greater range of sizes and place large volume orders. Paydens is just one example of a growing number of pharmacy businesses that are taking advantage of the growth in digital. Other innovators
The other stores are finding the service profitable and they can offer their customers a service that they would not otherwise be able to. For example, stores can also produce ID photos at the kiosk, as they are equipped with their own digital camera and backdrop. These are produced on the thermal printers on-site and can generate profit margins of over 300 per cent. At the same time, the Ashby store is reaping the benefits of acting as a fulfilment centre. While the work coming in from the other stores covers the cost of running the minilab, any work taken in at a local level is pure profit. For the non-chain pharmacy
Processing without a minilab Figure 2: Photo kiosk trends. If you have a small pharmacy and think that a minilab is out of the question for your needs, you will probably find an instant print kiosk is the answer. The latest versions can be delivered and installed from just £3,500. You will be able to offer your customers digital prints in a matter of seconds, and a fulfilment centre can be arranged if you would like to offer different sizes on a three-day service. |
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