The 2013 State of Retail: Managing Trends in Technology and Online Retailing...

The 2013 State of Retail: Managing Trends in Technology and Online Retailing Provides Challenges

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It’s early in the year, but 2013 is already shaping up to be a game-changing year in retail news. As the year 2012 came to a close, the headlines provided some insight into the ongoing trends affecting the photo-imaging trade. Here’s a rundown of what to look forward to.

 

The Virtual Becomes Real

Just as retailers have extended their brick-and-mortar presence online with storefronts, watch as pure online sites move to the real world. It all started with Apple stores; finicky Apple Inc. realized it could do a better job of presenting its products than now-defunct Circuit City could. So, in addition to offering direct sales via its website and a few third parties, the company began opening its own stores and found a gold mine of profits. 

 

In fact, the opening of Apple stores meant the company no longer deemed it necessary to appear at shows like Macworld; instead, there was a “show” every day in their own stores. Other brands have copied this with some success, from Victoria Secret to Nike, while others have faded, like Disney stores.

 

The next step, however, will be for purely online entities to establish real-world pickup points. Online giant Amazon already plans to offer pickup points at Staples and at RadioShack stores (these stores being grateful for the traffic Amazon will bring them). What other online retailers could offer this service? Few have the scope of an Amazon, but there are vertical markets that could partner with brick-and-mortar counterparts, like running stores with online shoe sites.

 

Another trend: temporary or seasonal stores and kiosks—known as “pop-up” stores—fill tenant-starved malls at key shopping times. A specific example would be Halloween costume stores, but this technique has been used by brands that include Target, eBay, Ford and McDonald’s to create a splash at a specific time. Freed from the restraints of year-round retailing, the brand can focus on the message and promotions. Typically, this is a promotional activity, not yielding great sales, but it does divert resources from dealer promotions.

 

Would a camera maker roll out pop-up stores? It’s possible, but the trend we’ve seen in major markets is for manufacturers to partner with photo specialty stores or even upscale department stores (like Pentax’s recent partnership with Bloomingdale’s).


It’s All Good

One of the truths about consumer electronics—and digital cameras, in particular—is that it’s a buyer’s market. There are very few “dogs” in any maker’s lineup, with incredible offerings across all price points. Pick any major brand of camera and, across the line, there are high-quality products there. There are also several niche camera makers, specializing in action or outdoor activities.

 

This does, however, create some challenges for retailers and for manufacturers. For retailers, models change very quickly with only incremental changes, and there is very little margin among them. This forces them to bet on a few winners, rather than carrying every model in the line. This is where a retail buyer has to be on its “A” game, and where photo specialty has a distinct advantage.

 

For manufacturers, this trend means constantly revising products, even if the raw pace of technological change has slowed down. What do I mean, slowed down? Ten years ago, specifications on digital cameras—driven by the pixel wars—were constantly being upgraded. Today, advances are more incremental, as the practical limit for megapixels and optical zooms have been reached. Look for further improvements to come in styling, like retro-flavored cameras, and in software features. 

 

Connectivity is vital to cameras and, like the new Samsung Galaxy camera and the Eye-Fi card, wireless will be table stakes in the coming months. The challenge will be with manufacturers finding the best solution; there have been many misfires in this race to a wireless camera. 

 

As HD video has become the default entry-level offering for compacts, DSLRs, CSCs and even smartphones, its impact on imaging has never been stronger. Interestingly, other than posting videos to YouTube, Vimeo and Facebook, the consumer doesn’t do much with their videos. Perhaps there is still an opportunity for postproduction as a service.

 

The Size Is the Limit

As we’ve seen over the past few years, large chains in a variety of categories continue to struggle under their own weight. Where there was once an advantage to enormous showrooms and buying power, this has been offset by the Internet. A broadband connection has provided the everyday consumer access to the world’s showrooms, and their smartphone is now a handheld scanner. The power has shifted from manufacturers and big chains, who could lock up exclusives, to the consumer, who can choose from any number of options.

 

As such, once-formidable powerhouses like Best Buy struggle; this is happening for many reasons, including thousands of too-large stores and a declining number of profitable SKUs. A considerable amount of Best Buy retail space was dedicated to packaged software and CDs, both categories in decline.

 

In the photo specialty channel, the collapse of the Ritz Camera chain is an opportunity for many. Some retailers, like Mike’s Camera in Boulder, Colorado, and Cardinal Camera, in Lansdale, Pennsylvania, have taken on failed Ritz/Wolf locations as their own. This is an opportune time for well-financed and well-operated specialty stores to expand. 

 

As we’ve written in PIR previously, without the deep profits from analog photofinishing, it’s unlikely there will be another national retail photo chain. That’s not to say, however, there won’t be powerful regional players, as shown by the above announcements. Responsive retailers can always serve markets they are connected to.

 

The Online Space Gets Weirder

In the past 12 months, pioneers of the online photo-printing space began to wither and die. Kodak Gallery and Fujifilm’s SeeHere.com were among the casualties. Snapfish and Shutterfly are the last major players in the game, but there are some interesting developments afoot. One is the proliferation of dozens upon dozens of niche photo printings sites that focus on one aspect of the photo personalization market. With low start-up costs made possible by efficient turnkey solutions and vendors, a photo start-up can be launched quickly.

 

Much of the venture capital market has moved on, away from photo services that generate actual products. This benefits traditional digital photo printers because, without deep-pocketed investors looking to generate buzz to cash out, sites operating as a rational business, providing good service at a reasonable price, will continue to gain steam. 

 

The other major trend is pickup at retail. With many mass merchandisers and chain stores devolving their commitment to the photo category—because per-foot sales are not what they were in the boom years—they will continue to emphasize order online/pick up in-store as a solution to driving traffic.

 

Lastly, it will be only a matter of time before the tablet becomes the dominant picture-viewing and manipulation device. Currently, there are few apps geared toward output, compared to those just dedicated to viewing and sharing. But in 2013, look for a big influx of tablet-based storytelling apps, where one of the sharing options will be a photo book. 

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