Photography: capitalising on change Print E-mail
Written by Nigel Mc Naught   
The photography market has undergone huge changes in the past few years, changes that affect who our customers are, how they take their pictures, what they do with them and how the retailer can service them.  With six million digital cameras being sold in the UK over each of the past two years, compared with a mere four million film cameras sold in the peak year of 2001, there are obviously a lot of new people being introduced to the delights of picture-making. The downside is that the traditional pharmacist business of develop and print (D&P) has been eroded faster than anyone predicted. The annual sale of 100 million films just a few years ago has dropped by 25 per cent annually and in 2006 will be less than 40 million. Fortunately the single-use camera has retained a lot of its popularity.

As D&P revenue falls, the service providers are more reluctant to provide a wholesale D&P service to the pharmacist retailer, and the digital camera user continues to make their prints on their home printer. So how can the pharmacist even continue in the photo business? Is there a future?

Existing film D&P

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Unit sales of film cameras & digital still cameras
 

 

If your wholesale photofinishing lab no longer collects the dwindling number of films from you, how can you continue to offer the service? One way might be to do it yourself. You might not have enough volume to justify your own investment in a minilab, but is there someone in the vicinity with whom you can share arrangements? They will also be looking for more film volume and, although it’s a dwindling market, it will keep you in the photo business – an important consideration.

Pharmacists have been the traditional source for D&P for many years. Now you want to offer a digital print service, but is there enough digital business to keep you going? If you let the traditional D&P disappear will people think of you when they want digital prints? It is easier to change and adapt the business than start all over again. So by keeping the D&P going you have an existing client base for your digital print services.

Digital print business

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UK digital print volume by method in 2005: per cent of prints


There are essentially three ways that the consumer can get prints from their digital camera: printing at home, sending it online or taking the digital file to the local retailer. Before we examine these print options let’s ask a fundamental question: “Does the consumer actually want prints from their digital camera or are they happy to look at them on the computer?”

A consumer survey undertaken by the Photo Marketing Association International (PMAI) in the UK in 2006 found that 45 per cent of digital camera households made paper prints, a figure that is increasing every year. Although this means that over half the owners do not make paper prints, we should not forget the much larger number of digital camera users compared with film cameras – remember that annual figure of six million cameras bought?

This leads directly to asking where they get the prints made. In 2005 consumers made 60 per cent of their prints on a home printer. This may not sound like good news, except that the figure is down from 70 per cent in 2004 and is likely to be nearer 50 per cent in 2006. Of course the numbers of prints are increasing but it is the share of home printing that is decreasing.

So who is benefiting? While there is some growth in the online business, by far the largest increase is in prints at retail, which in 2006 will represent some 40 per cent of all digital prints. So the retailer can benefit from an increasing share of an increasing market but does need to promote the digital print service.

How can you benefit?


We have already spoken about minilabs and how you can share film business. You can also choose to start your digital print business the same way. Or perhaps you have more than one shop and can place your own minilab centrally, offering a hub and spoke system with either a collection service or an online link from your store to the central location.

Perhaps the simplest way to start your digital print service is to use an instant print kiosk. These standalone kiosks can be operated by the consumer, although you will need to be prepared initially to show your customers how to operate the system. Various kiosk models are available, which offer not just the standard 6x4in prints but also enlargements and copying files to CD. This latter is a must because memory cards do get full and CDs represent a better way to store the files than storing them on a home PC. Of course the best way to store is always the print, so the CD is just a backup!

Because there are so many kiosks to choose from, it is vital that you ask the long-term questions. How can it fit in with an increasing business, is it upgradeable and expandable? Does it provide for different products? Can it be networked with others? Can it choose to send prints to a minilab? So what are the pros and cons of operating an instant print kiosk and how well do they work? The print materials in a kiosk cost more than the traditional silver halide print, but there is plenty of evidence that the consumer will pay more for the instant service. There is no doubt that kiosks attract customers and offer a logical step to providing a full digital print service for your existing D&P customers. Indeed many retailers report that the average number of prints per order through kiosks is anything from 30 to 80 or even more.

This is not surprising given that memory cards are now available that can store a few hundred images at a time. And there we have a possible downside. It can take a long time to download hundreds of images, leading to a queue at the kiosk, so then you need another one and then... But is that a bad thing? Certainly not. If the customers justify the investment then it means you are getting the business. Furthermore you should not site the kiosk in the back corner but let it make a statement that you are in the image business. If you need another one it is obviously attracting new customers.

Home print and online


The home print business will always be with us. Recognise this and sell the materials, the inks and the paper. Then it does not matter which method the consumer chooses, you are still benefiting.

Finally what about the online business? The fastest-growing print source in the US, where the market is about 6–12 months ahead of Europe is the “order online, print at retail” channel. Your customers can send their images to you for printing and then collect them from you later that same day. If you have your own website then why not include a print facility?

Core and fringe business


One of the great advantages of digital images is the ease with which the image can be used in other ways. Photo gifts are gaining in popularity and have moved from the usual t-shirts and mugs to mousemats, bed linen, baseball caps and even birthday cakes. Such gifts can be obtained through wholesale suppliers or can be made in-store for a realistic investment. Many labs now offer canvas prints, which are popular with consumers and add value to the image. Indeed the local pharmacy is well placed to capitalise on the digital print business, either through a kiosk or a hub and spoke minilab, and added services allow competition at all levels. Existing customers will appreciate the new offerings and new customers will be attracted to products the mass merchandisers do not offer.

What products to sell?


Margins on digital cameras are frighteningly low and preclude all but the larger pharmacies form stocking them. Instead the pharmacist should concentrate on the items for digital photography that do sell. The market for memory cards is now much larger than the market for film, and most of the cards sold are for 512Mb or greater. However it is necessary to recognise that prices are decreasing.

We have already mentioned papers and inks, but don’t forget albums and frames. While digital photography allows the user to delete unwanted pictures it does give an opportunity for them to put more value on the images they keep and print. What better way to enhance that value than in a special frame?

As we look into 2007 we can see more emphasis on adding value to the printed image. Look for printed photobooks and companies offering that service to the retailer. Look for special themed calendars and greeting cards, photo gifts and posters, all of which are much easier to produce with digital files. Indeed in the not too distant future the standard 6x4in print will be the fringe business, and these added value items will be the core.
 
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