Harold’s Photo Centers, a vibrant eight-store enterprise based in Sioux Falls, South Dakota, is one the longest established, most successful imaging businesses in the Midwest. The family-owned enterprise began way back in 1910 when Bob Hanson’s grandfather, Emil Hanson, purchased a portrait studio in Sioux Falls.
In 1938, Emil’s two sons, Howard and Harold, opened an additional camera store and portrait studio under the Harold’s name. The business continued to grow, opening another retail location and a wholesale color photofinishing lab. In the late 1960s, Howard and Harold’s sons—Bob, Rick and Tom Hanson—joined the company, and over the ensuing years six more locations were added. In 1992, Bob Hanson assumed ownership of the company and is its president and CEO.
Now that Bob’s sons Davis and Andrew, and his daughter, Emily, have joined the company, Harold’s is officially a four-generation enterprise that is celebrating its 100th anniversary.
Today, Harold’s has four stores in Sioux Falls (a rapidly expanding market with a population of 160,000), one store each in Brookings and Yankton, South Dakota, and two stores in Sioux City, Iowa. The bright, modern, state-of-the-art company headquarters, which also serves as the hub of the photofinishing business and its main warehouse, is located at 912 W. 41st St. in Sioux Falls. The majority of Harold’s stores still have on-site photo studios that account for a significant revenue stream, mostly from lucrative high-margin orders for framed enlargements and composite prints.
“My grandfather settled in the small but progressive Midwest town of Sioux Falls, South Dakota,” recalls Bob Hanson. “The city subsequently grew and prospered, and fortunately we have done the same. Our location has played a large part in our longevity, and our success is a direct result of the outstanding workforce that has been available to us. The area has provided honest, hardworking and creative individuals who have a strong work ethic. But, most important of all are our loyal customers that value their lifelong memories and trust us to preserve them.
“Like any family business, Harold’s has had its typical issues,” Hanson observes, ”but we have successfully separated business from family—work issues stay at work and family issues stay at home. Through the years, each generation has strived to support and respect each other, and that is one of the keys to our ongoing success.”
Harold’s Photo Centers does about 50% of its sales in photofinishing services, 40% in photographic hardware, and 10% in portraits. “We continue to struggle to increase photofinishing sales,” says Hanson, “but we’re confident that exciting new imaging products will allow us to serve our customers in hundreds of new and profitable ways.
“The similarities between our photo business today and 100 years ago are frankly amazing. Each Christmas Eve, as we rush to finish every order, we reminisce about how generations before us did exactly the same. Although technological advances have been transformational and remarkable, what hasn’t changed is our dedication to customer service. We are proud of our products, our people and our position in the industry. We look forward to the next 100 years with great optimism but also a realistic awareness of the challenges in our constantly changing industry. Indeed, rising to these challenges and serving the ever-changing needs of our customers is still our mission, just as it was back in 1910.”
Harold’s Photo Centers’ simple, eloquent tagline—“For People Who Want Better Pictures”—reveals a lot about the origin, focus and direction of the business, and it also explains how it has survived, prospered and expanded.
A crucial element in Harold’s success is that it has taken the prevailing photo specialty business model and turned it on its head: instead of being a camera store that offers a range of photofinishing services, Harold’s Photo Centers are broad-spectrum photofinishing outlets that also sell photographic equipment. As Bob Hanson succinctly puts it, “We will cheerfully sell cameras at competitive prices, but what we really put our energy into is things we make.”
And the scope of what Harold’s makes is pretty astounding, including photo frames and mats, and books in all sizes, shapes and themes that are custom made on-site, an incredible range of sophisticated greeting cards for all occasions, photo pads, mugs, business cards, and apparel, as well as the complete range of conventional and unconventional photofinishing. Indeed, photofinishing in all its forms comprises the core of Harold’s corporate identity. All the stores have Fujifilm minilabs; five have portrait studios, and six of the stores have full-line camera inventory, plus accessories ranging from bags to tripods and digital picture frames.
“We are happy to be members of the PRO group,” notes general manager Davis Hanson. “They provide us with inexpensive digital media as well as special prices on most cameras and accessories so we can compete more effectively. The fact that products in the PRO line are not carried by big-box stores and other competitors is another big plus.”
Finishing as a percentage of total sales has been declining over the past few years, and to offset some of the losses from film processing, Harold’s created an impressive array of alternatives—12,000 photo keepsakes and gifts, and greeting cards with sales of around half a million annually. Clearly, creative print products are an expanding category, and the company puts a tremendous amount of energy into growing this high-margin side of the business by means of constant innovation and attention to detail. Current products in this category include about 100 gift items, about 500 unique card designs, eight distinctive book products, plus dozens of posters, notepads, calendars and more.
Harold’s stores utilize 64 kiosks for standard prints and 24 kiosks for creative gifts, cards, posters, etc. Significantly, while these kiosks run Lucidiom and Whitech software, all have been custom designed and assembled by Harold’s technical staff to provide virtually unlimited file storage capacity and other benefits. Online sales (typically ordered online, picked up at retail) have shown a steady growth, but Bob Hanson is not satisfied. “We’re constantly developing strategies to increase the rate of growth in online photofinishing even further,” he says.
“Although technological advances have been transformational and remarkable, what hasn’t changed is our dedication to customer service. We are proud of our products, our people and our position in the industry.”
What spurred Bob Hanson to extend and broaden his company’s already deep roots in photofinishing and make it Harold’s signature mission—the core of its business model? “It all goes back to the basic idea of selling things you make rather than things you buy,” says Hanson. “When you are, in effect, a manufacturer that can sell what you produce at retail, you eliminate the middle man and the profit potential is enormous. This is a particularly important concept when you’re operating in a relatively small market like ours. Photofinishing is analogous to selling software as hardware.
“My mentor on this was David Bowen, a PMA consultant I ran into many years ago,” recalls Hanson. “He was very hot on the idea of gross margin rate of return on inventory investment. If you use this concept as an analytical tool it becomes very clear that making and selling prints has a far greater upside potential than selling hardware—the trick is to sell print products like 8×10 and larger enlargements in matted frames, photo books, cards and gift items, not just 4×6 prints. Sure, 4x6s are popular and you have to offer them online, over the counter and at your kiosks, but you’ll never build a successful photofinishing business just on 4x6s. That’s why we advertise our full range of print products and services using mass e-mailings, billboards and point-of-sale displays. One of our most successful promotions is our Harold’s Mega Pics Reward Card, which gives our customers a small percentage off on print orders. The first line on the sign-up form asks for the customer’s e-mail address, and that’s allowed us to assemble an impressive promotional database that has proven to be very effective.”
Creating and producing innovative print products requires creativity, hard work and punctilious attention to detail, and it is clear that these virtues are very much a part of Harold’s corporate culture. Equally impressive was a meeting we had with Erin von Holdt, Harold’s director of Marketing. An accomplished graphic designer and computer programming whiz, she is a Photoshop expert who heads up the team that creates Harold’s extensive line of greeting cards and all of the catalogs that promote them. “I track what sells, what colors and designs are current, and monitor the trendy sites to see where things are going,” she says, “but I also work with our other designers to create Christmas, holiday and other high-quality cards with localized and specialized themes—graduation, sports, you name it. In marketing our strength in providing a full range of printout products, the subliminal message I am sending is that we are the source: we offer it all in one location and we put quality and creativity behind every item.” van Holt even writes the computer code for placing the images, text and design elements on each type of card—a painstaking task indeed. No wonder Bob Hanson calls her a “treasure” and says “she does the work of at least three normal people.”
At the end of the day it is committed, caring people who have made Harold’s Photo Centers a successful business focused not only on making better pictures but also on continually expanding and nurturing all aspects of the photofinishing sector.
“We’re all making a decent living, and we are able to pay our 150 full- and part-time employees well,” notes Davis Hanson, “but we’re not rich. That’s because we continually invest in the business and prioritize growth. The good thing is that when we need something new for the studio or more kiosks or photo book production machinery, we simply buy it. We don’t stint or postpone any purchases that can increase the quality or output of what we do.”
The Hansons are clearly a dedicated, talented, creative, hardworking, detail-oriented family that exemplifies the very best traditions of our consumer-centric industry. We extend them our hearty congratulations for attaining the remarkable milestone of 100 years in business, and our heartfelt best wishes for another happy, healthy and prosperous 100 years.
So What about the Next 100 Years?
Bob Hanson’s three kids—Davis, 37, Andrew, 32 and Emily, 29—represent the next generation of Hansons that will lead Harold’s Photo Centers after Bob retires.
Davis is in charge of retail operations; Andrew is the Pro Lab manager, taking on the photofinishing and gifting duties; Emily is a marketing coordinator, saying she “shifts around to where I’m needed.”
I asked the kids about their experience, and their future.
“After college at Nebraska, I became interested in the business,” said older brother Davis. “I did pretty well in the store and became a supervisor right away. It was kind of natural that we would end up in the business at some point.”
Andrew also graduated from Nebraska, in 2001, returned home and went to work the next day. “We always worked, even in the old downtown stores,” remarked Andrew. “We were always working in the warehouse, trying to earn money for toys. We all worked in high school in some of the smaller stores, especially during the summer.” Andrew operated the first digital printer in the lab. “The whole time I’m here it’s been the end of film and the beginning of the digital revolution.”
Emily has become somewhat of a jack-of-all-trades, working primarily in the marketing department and also helping out with displays. “I went to college in town and earned a degree in business with an emphasis on marketing. So it’s really what I enjoy doing.”
So why has Harold’s lasted 100 years, where many businesses close up after only a few years? “Film kept us in business for a long time,” said Andrew. “Film is all gone, so the next 100 years will be a new chapter.”
“We’re very concerned about quality and service,” chimed in Emily. “Especially in this town, these are two very important concerns of our business.”
You also have to continue to innovate,” said Davis. “We learned a lot from our dad, and he deserves a ton of credit. We had the first minilabs, processing film for the local drugstores. Christmas cards are huge for us, and we’re always thinking of the next new thing, and always treating the customers right.”
So what about the family dynamic?
“All family businesses are pretty challenging,” said Andrew. “Lots of ups and downs, but we’ve all learned incredible amounts from the generations before us. There’s a lot of stuff you don’t learn in college—things like managing people and running a business. It’s also a lot more stressful than we’d like with the challenges in the industry right now, but we all enjoy working together.”
“Also, there’s a real sense of ownership,” said Emily. “We’re all in this together and we know that.”
“We do a really good job of not bringing it home with us,” said Davis. “Regardless of what happened during the day, we try not to make it affect us on the weekends.”
Andrew continued: “When you have a father who is also your boss, it’s a pretty unique situation. You all want to make the company succeed, and not be the generation that couldn’t keep it going. It’s a bit of an added pressure, but I guess he felt that also. It comes with the territory.”
So, how do you keep it going?
“We have to keep reinventing ourselves,” said Andrew. “It kind of feels like we’ve gone out of business and started a new business at the same time. The business is totally different today than it was even a few years ago. We were a photo lab, and now we’re kind of a print shop.”
“When we were doing rolls of film, it kept us busy,” added Davis. “When that went away, we tried to do a good job on everything else. When I got back we were just making photo mouse pads, mugs and T-shirts. Now we have over 100 different photo gift products, and we’re able to compete with online, Walmart and Walgreens.”
Archiving has also become a great part of Harold’s business, being able to turn old photos into images their customers can use. “People bring in boxes of slides constantly. It’s usually one family member trying to keep the family history alive. They make great presents,” said Emily.
So when is it time to kick Bob out of the business?
“Great question. He’s keeping busy with other interests,” said Andrew. “He’s on the board of a bank, and he’s been getting more involved with PMA, PRO and IPI—and he enjoys talking with other people in the industry as well. But he’s here for as long as he wants to be. After all, he’s still the boss!”
“Harold’s has always been run by one person,” said Emily, “but we’re almost too big for that; it’s hard for people to realize it’s just not one guy anymore. There’s a certain amount of comfort knowing you’re all in this together.” haroldsphoto.com