Jay Vannatter has been selling and marketing Nikon products for the better part of 35 years. Vannatter began his career in 1983 and has witnessed many changes as the imaging business moved from film to digital. He assisted in navigating major challenges in the business environment due to the significant impact the smartphone had on the CDSC business.
In addition, he successively moved through the Nikon organization and is currently executive vice president of Sales, Marketing and Communications. I had the opportunity to talk to him about the Nikon brand, the importance of the Z-series mirrorless cameras and how Nikon is adapting to the new purchasing habits of today’s consumers.
JG: What are your feelings about the camera business in 2019?
JV: We’re nine years into a strong economy, and that’s contributing to solid business results. On the high end, ASPs continue to increase, and the Nikon D850 may be the best product in my 35 years at Nikon. There is an audience for the D5 that is looking for speed and durability, but the D850 is certainly the workhorse. Moreover, it appears people are willing to spend money, so the high-end is benefitting across the industry.
Talk to me about the mirrorless market. It’s clear Nikon strategically waited to jump into the fray. What did you think as you were looking at what Sony was building?
If you look at the mirrorless market overall, these cameras offer a feature set that consumers love. However, it takes time to properly develop not just a new camera system but also an entirely new mount. Several manufacturers have developed mirrorless cameras, but only we could create a Nikon.
The DSLR is still alive and well. As a matter of fact, the momentum behind the Nikon D850 continues even after the launch of our Z series. There are customers who want the larger size body and the functions of a DSLR. That’s the beauty of the two systems, they truly complement each other.
Do you see the pros getting into the Z system as a second camera?
We speak to our Nikon Ambassadors regularly; when we put new products into their hands, they give us honest feedback. What was a pleasant surprise was the clarity they gave us on how much they liked as well as appreciated both camera systems.
A key ingredient to our success that has helped connect the two systems is our new lens adapter. Virtually every NIKKOR F-mount lens will work on Z-mount system cameras when the Mount Adapter FTZ is attached.
Obviously, the Z introduction was important to the market. Do you see Sony as the brand you have to go after to be deemed successful?
To be honest, I don’t think so. They’ve done an excellent job. However, what they lack is 100 million lenses sold that you build on decade after decade. When you introduce any new high-end product, there’s an immediate demand based on the existing customer base. A lot of our loyal customers were waiting for us to enter the full-frame mirrorless camera market. However, I was surprised at how many people were not familiar with mirrorless cameras and their feature sets. We still see a lot of confusion and education needed in the marketplace.
Is the target for the Z series people dropping down from DSLRs, or is it those coming up from smartphones as well as point-and-shoot cameras?
That’s the $10 million question! We have built incredible and reliable DSLR and NIKKOR products for many years, so it is important our core customer understand what the Z-mount system offers as well as how the products can complement their photo and video capture needs. We’re also finding out that many customers are keeping their Nikon D850 cameras but are adding a Z 6 or Z 7 and adapting their lenses. Education needs to happen; but once they “get it,” they see the advantages of both systems.
In addition, because of the multimedia capabilities, there is an opportunity to speak to smartphone or point-and-shoot camera users who are looking to step up and want a compact camera with a robust feature set.
What do you think the customer needs to know about the Z system that maybe they don’t get yet, or that would help sell it?
Superior optical performance: that’s the foundation of the system. The Z-mount system is built for the future. It will only get better and better as we introduce more lenses and more technology.
Because of the flange distance and the size of the lens mount, they’re starting with a system that results in higher optical performance, delivering edge-to-edge sharpness. The flange distance and the 55mm diameter of the lens mount allows our engineers to design even better lenses.
What about older NIKKOR lenses?
When developing the Nikon Z series, the engineering team understood that whatever adapter you use, it must deliver the same quality as if you were using the lens on a D850 or D750. And they achieved that. When we introduced the Mount Adapter FTZ to the market, people were skeptical whether we could achieve that. Surprisingly, we are having to educate consumers on the FTZ, because they simply aren’t used to adapters that do not degrade quality. According to the reviews, the adapter really delivers!
Was there trepidation about changing the mount?
Whenever you sell 100 million of something, you think about how to protect as well as support the people who have bought into the Nikon system. It was really important to us not to abandon our current users. We saw introducing a new mount not as a challenge but an opportunity; an entirely new world of superior optical design and technology is open to us. From a quality, performance and usability perspective, you can take NIKKOR lenses and put them on a Z-series camera and they’ll work perfectly together. That’s an important part of our education about optical superiority.
Who is the target for the Z series?
The market is interesting today. In some ways it’s our core audience; however, there is also a new customer: the creator. They’re not using it to capture stills but rather to record video to post and share on platforms like YouTube. As you introduce high-quality video capabilities, you appeal to a new audience. While the core Nikon customer is very important to us, there’s also the videographer and content creator market. It’s a younger audience who’s coming to the party looking at it differently. Video capabilities are important, especially for customers involved in social media. They’re beginning to understand the need for quality and also that interchangeable-lens cameras perform much better.
Should everyone be talking more about video when it comes to these cameras and lenses? Should the industry focus be changing?
Social media and YouTube have created a market of videographers. The potential lies in tapping into that marketplace.
How is the lower end of the DSLR market performing?
The entry-level DSLR market is still very vibrant. The $399 price point for a two-lens kit is a magical price point. Sub-$500 is the entryway into better images, so it’s an important category to be in. In our experience, people are willing to spend $400–$500 on a camera that produces better results than what they are used to with their smartphones.
Dealers have great education programs right now. Should they be concentrating more on video and less on stills?
While traditional customers are still very interested in still photography, they have begun to experiment with video as well. We are also seeing that the younger generation is gravitating to video. Education is essential; it is important that retailers help educate as well as engage customers on both still photography and videography.
From a Nikon perspective, we will be offering a rental program that retailers can sign up for that allows consumers to rent a Nikon Z 6 Filmmaker’s Kit at a very aggressive price. We believe that getting the kit into creators’ hands will provide an opportunity to learn more about the Nikon Z series, showcase what it is capable of, as well as lead customers to purchase the kit.
How does that work?
We will incentivize the retailer to put it into rental and offer it at an affordable price.
Does it worry you that dealers are OK with the fact that their customers are older?
If you’re younger than 35, your preference is probably to order online. That perception is starting to change, as people see these products and realize how sophisticated they are. The younger audience is beginning to appreciate being able to touch and feel products as well as to talk to retailers who can educate them. The challenge is in how you reach that customer.
How do they reach that customer?
Social media and digital media target that audience. It’s certainly a different world. However, we also can’t forget traditional customers. They have a higher income and time to spend on their passions. If their passions are photography, all the better.
How do you get the younger consumer to get excited about photography and walk into photo stores instead of ordering online?
We’re seeing younger customers starting to appreciate the knowledge and service that photo specialty retailers offer. It’s about using digital media to speak to this consumer. How do you engage with a customer that’s doing their education and research online, and how do you create a story that invites them into your store? For example, our trade-in program has been very successful at driving customers into stores.
What should dealers be doing physically in their stores to make them more appealing?
They need to consider how to target those people in their geographic areas to make shopping in stores a better experience than ordering online. It comes down to salespeople who are extremely knowledgeable; who listen to the customers’ needs and help them decide what might fit those needs. Retailers also need to create stores that are more about an experience. They have a physical space; customers shouldn’t just want to go there to buy a camera. They should also want to hang out in the store, to feel photography, to talk to experts.
Our brand is our most valuable asset. The power of the brand comes from the experience and feedback received from millions of users over the years. Nikon has built its brand on delivering the support and tools that all levels of storytellers and content creators seek.
We also produce the highest quality products with the highest caliber of reliability. The brand has always been about superior optical quality; our products will continue to demonstrate that commitment.
In addition, every one of our employees is proud of what our brand has accomplished.
We’re in an era where millennials aren’t really brand loyal. They want the best, but brands like Nikon, Canon and Sony were taken for granted. Do you have to prove yourself all over again as a brand?
Many millennials have grown up with a smartphone being their primary camera. As they have gotten older, they are now interested in quality, which we deliver better than anyone. We see them not only as photographers but also as videographers and content creators. It’s important we recognize the difference in what their needs are and deliver on them. By doing that, they’ll come to appreciate our brand.
What are your greatest challenges and greatest threats?
Just as the smartphone changed how people enter the imaging arena, the Internet and digital marketing have changed the way people shop. Adapting to those changing habits is a challenge for any company in any industry. However, that’s the most exciting thing—looking at and understanding your customers’ purchasing journey and providing what they need to make a good decision. The customer purchasing journey is different today than it was five years ago.
It’s also important that our messages are being heard and are not being misinterpreted. Our research tells us that a very high percentage of people who walk into a retail store already know what they want. They’re looking to affirm or reaffirm what they may already know. Retailers have the advantage of talking about what a product does with someone who is interested and really gets it. This is the perfect combination to close a sale.
How do you get people to buy real cameras again?
To me, that’s not how consumers look at it. They think the smartphone is a real camera. So, it’s more about educating and inspiring people to want more. And we’re doing this online with great images. We use our ambassadors to educate as well as inspire to what they do. We’re also dedicating efforts to education and encouraging people to come to Nikon to get answers.
What are retailers doing well? What can they do better?
It takes a smart company and a well-run business to manage the declines of what our industry has gone through in the last six years. Those who have survived, both manufacturers and retailers, earned their stripes. What they have done well is realized the market was changing and recognized that the passionate photographer would be alive and well no matter what happened. And they target that audience very well.
What they can do better is to understand the path of the consumer. The consumer comes into their store with an amazing amount of information in their heads. If I were a retailer, I would be looking at all my salespeople to qualify those customers with the right open-ended questions. If you ask the right questions and you listen, they’ll take you down a path of success.
What keeps you up at night?
How to best reach the customer in this ever-changing world of digital and social media. The landscape has changed so much, and shopping habits also continue to evolve. So, what keeps me up is how to reach the ever-changing consumer.