The fourth quarter, it all comes down to this: three months of sales capped by what all hope will be a buying frenzy for the holidays.
Products are in the pipeline, the media campaigns ready to roll, the only real variables remain John, Jane, or Jen Consumer. Will they show up in the numbers, and bring their wallets, to make 2007 a great year at retail?
At this point it’s anyone’s guess, signals are mixed, expectations shaped by where you live, what you take as an indicator of where we’re headed this fourth quarter. There’s certainly ample cause for optimism. “It’s shaping up to be a good year,” reports Liz Cutting, digital imaging market analyst with NPD Techworld. “There’s been more repeat buyers this year and more buying cameras as gifts.”
A Good Year For Cameras
Indeed, camera sales, the core product in this business, were up as much as 20 percent for the first half of 2007 by Cutting’s reckoning. NPD’s retail tracking for the first half of the year gives repeat or step up buyers 53 percent of sales while those buying cameras as gifts represent another 20 percent. Cutting points to Mothers Day, the second biggest gift-giving occasion outside the holidays for insight on some seasonal opportunities. “Ultra-compact represented the biggest single proportion of all cameras sold, 49 percent.”
“The pricing and utility of today’s cameras continue to attract digital camera owners back in the market,” observes Gary Pageau, group executive, content development and strategic initiatives for the Photo Marketing Association. He sees the emergence of multi-camera households as something dealers can capitalize on this year. “Back in the day of analog, it was more one camera per household. Now, people replace their cameras and pass the old camera along to someone else in the family or their children, or buy new cameras for them, as well.” Seasonal Opportunities
Troy Tomlinson, store supervisor for Biggs Cameras in Charlotte, NC, expects compacts to shine this Christmas, especially in the $300 to $400 range. “People want to see something small or they are looking for the most zoom. The slower recovery time of older cameras is one reason a lot of people are back in for a new camera,” he notes.
Pricing and performance will also help broaden the appeal of digital SLRs. “We don’t have to do a lot of work stepping someone up to a digital SLR,” Tomlinson notes. “Those customers already know what they want by the time they come to the store and are looking for the best price.”
There’s promising trends in print services, as well. PMA’s tracking through June registered a 30 percent increase in total digital prints made over the prior 12 months. Home printing remains the most popular solution, but retail claimed 47.2 percent of prints during that period.
“This could be another big year for output services and custom products like books and calendars,” suggests Pageau, “Get these profitable higher margin products out there for people to see. Retailers shouldn’t assume customers know about everything they can do with their digital pictures.”
Concerns and Challenges
It could also be wishful thinking to assume everything is rosy from here out, however. For those who operate in an area which has taken a hit from the mortgage crisis, and there’s more houses on the market then there are buyers, retail sales could also be tempered by concerns about the economic outlook.
“This industry doesn’t exist in a vacuum,” notes Mark Roth, president of distributor Argraph Corp. “Like everyone else we’re hearing all these reports so there’s still some questions hanging over it all.” He believes specialty dealers will profit over the next few months, if they look beyond the basics. “It hasn’t been a stellar year because of the price erosion seen with some of the most popular products like memory cards, where even though the volume is up, sales dollars are down.”
In Milwaukee, Mike Wilbur, general manager of the three-store Mike Crivello’s Cameras and Imaging Centers chain, believes concerns about the mortgage crisis could shape some consumers’ fourth quarter spending. “It may be good but not great season,” in his estimation “People here have been watching the developments in the housing market and that’s going to have a trickle down effect, whichever way it goes.”
Shoppers could wait longer, and spend less. Each year the Christmas rush seems to come a little later. Consequently, Wilbur says specialty dealers are challenged to micro-manage stock so not to be overwhelmed by vendors’ successive waves of new products with short shelf life. “We try to do our best to control inventory so we don’t get stuck with dead items,” he says. “It’s not in our interest to place big orders for products way ahead.”
Tomlinson, also embraces that approach. “We’ve learned to stock less and work with our distributor so we can order and get deliveries on a short term,” he says.
That’s now part of the survival strategy for many specialty retailers. “Just-in time marketing has been with us 10 years or so now, making our job as a distributor more difficult,” agrees Roth, at Argraph, “But that also makes us, as a distributor, more important to the retailer, as the source who can deliver what they need, in the quantities they want, only when they need it.”
Adding Profits
Again this year, many will be turning to their distributors for the add-on items which can infuse real profits into holiday sales. “Whenever everyone is selling cameras the profits are in the accessories,” notes Roth. “That’s where the specialty dealer can compete head on this year and do better than any other retail channel.”
Cutting concurs, saying, “People who shop specialty dealers feel they are getting a competitive price on cameras, and that’s a message that should be communicated. They also need to be reminded the specialty dealer is their best source for accessories.”
Extended warranties, which spiff the sale and give consumer confidence in their purchase, are one lucrative add-on. Another: digital photo frames which were popular at Mothers Day, and should do just as well this Christmas—for as long as supplies last. “Growth in the category has been phenomenal and they tend to be highly gifted items,” she notes.
Roth says the standards—extra film cards, batteries, cases, etc.— should be bundled with every camera. But for real margins, dealers need to be thinking beyond such basics. “The real profits come with some of the other accessories, which people aren’t going to find in other stores selling cameras,” he says. They include accessory lens and filters as well as new concept products which require the skills of the specialist to be explained and sold. Examples include the variety of calibration/color management solutions currently on the market. Explaining this process, and discussing digital workflow issues in general, is a major advantage the specialty dealer holds over other retail locations.
As the base of serious amateurs continues to grow, Wilbur will be courting opportunities with solutions that address specific challenges of digital photography. “A lot of people are starting to want more than just a snapshot. We’ve already been doing a good job selling them lighting equipment and will continue to promote that.
“We’re also seeing more interest in sports photography and people looking for better pictures from their digital camera at indoor events. They’re becoming good customers for lens filters, external flashes and things like that.”
Pushing Prints
The chain aims to turn new camera buyers into repeat customers with holiday print promotions. “We’re thinking of offering free prints with each camera sold, but in such a way the offer is spread out over several months so they keep coming back to the store,” Wilbur added.
Calendars and cards will get the seasonal push along with standard prints at Biggs Cameras, notes Tomlinson. On the hardware side, the focus will fall on those better compacts and digital SLRs, and all that can be sold with them.
“The most important thing to know is who your customers are, then speak directly to them this holiday season,” advises Pageau. “You can’t be everything to everybody. If most of your customers are middle-aged baby boomers, generation Xers or moms with kids, they all use digital cameras in different ways. There’s some real opportunities in putting together the packages and bundles which address their specific needs.”
So here comes the fourth quarter—Thanksgiving, Hanukah, Christmas, getting together with family and friends and letting them know how much they are appreciated. Picture taking is a big part of all that, no one will be striking shopping from their holiday list, and all things imaging make great gifts.
Time to turn up the music, put up the lights, and get those holiday shoppers in a festive, giving mood. yy
