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Call it gall, grit, entrepreneurial spirit or that just plain bull-by-the-horns quality, the photo specialty retailers who’ve managed to stay afloat throughout the American public’s film-to-digital transition this century have done it by employing some audaciously creative sales and marketing tactics. They’ve had to flex, barter and risk their limited capital on new equipment, partnerships, store designs and business models—or else join ranks of the thousands (over a third of the country’s camera shops) who’ve tanked in the last five years.

Five years ago, Mike Woodland and Kevin Harayda were two managers at a plucky independent camera shop set all alone in a residential neighborhood of Allentown, Pa., a city not known for economic progress. Dan’s Camera City had been started over twenty years earlier by their boss, owner Dan Poresky, who’s goal had always been to help “everyday people” have a great time shooting and printing film. Film rolls were still coming in, but change was in the forecast, and Poresky, frankly, was more inclined to sell the business and retire than to enlist in the digital revolution. Woodland and Harayda knew their boss wanted several million for the operation. They had no where near that kind of cash, but they did have great relationships with some affluent customers … and a sort of brazen nerve. As Olympus regional sales manager Peter Ewen observed, “Here are two people who’ll always say, ‘Let’s try it.’ They do crazy things!”

At the time, Harayda and Woodland convinced four customer-investors to join them in a buyout attempt. The investors agreed, as long as they didn’t have to have a hands-on role in running the business. By June of 2003, the handoff was complete, just in time for Harayda and Woodland to shoulder the stress of having to recreate themselves as the owners of a digital imaging retail operation. “It was scary,” remembers Harayda. “But it’s still scary. Technology changes so rapidly, there’s simply no blueprint for what three years from now will look like. I’m a worrier, but to stay ahead of the curve, you can’t be too conservative.”

Since acquiring Dan’s Camera City, Harayda (the “numbers man” as he’s known around the office) and Woodland (the one who’s always suggesting new directions) have, as partners, taken many risks and still built up a digital imaging retail operation that’s not only one of the top-performing stores in the country, but is lauded by industry professionals as an example of unusually intuitive customer service, creative revenue streaming and tenacious hard work. “I’ve encouraged a lot of people to make a pilgrimage to Dan’s and see what’s there,” says Bill McCurry, an advisor to the PRO buying group (of which Dan’s is a member) and frequent speaker at PMA (Photo Marketing Association) conferences. “There’s a lot to be learned from these guys.”

The Show-me Store

The lessons of retail success aren’t necessarily obvious right when you walk through the front door of Dan’s, partly because Woodland and Harayda are just as likely to be making money through “back door” efforts like wholesale services, but also because the company has a service-over-flash philosophy.

They aren’t trying to look or feel like a modern discount manufacturer, but rather, a center for high-quality photo-imaging products and lessons, the sort of place you’re as likely to learn something as buy something.

“The business runs based on something we call ‘IQQPBE,’” explains Woodland. “Dan made this up. It stands for Increase Quantity and Quality of Positive Buying Experiences. In other words, our focus is not on how much we can sell a widget for. Our focus is on helping people feel happy when they leave. If people have a positive experiences, they’ll come back for more and we’ll continue to grow.”

At first pass, the layout and displays in the store feel somehow akin to an elementary school. There are posters and bulletin boards up with large, visual messages about taking better pictures. The posters, reminiscent of a science project, are made by the store’s staff and are illustrated with blown-up prints of shots that turned out badly due to insufficient lighting or the wrong camera setting. One demonstrates the full range of a powerful zoom lens with example shots from wide to super close-up. Another, the equipment needed to take a professional-style studio portrait. “We rotate all these samples seasonally,” says Woodland. “We want them to be very clear and educational so that with just one glance, the novice can understand a concept.”

Back by the sales counter, an entire wall is reserved for customer contests, which, with themes like “Things That Make Me Smile” or “Up Close and Personal,” happen three times a year. Hundreds of amateurs regularly submit their best shots, hoping to win photo equipment or gift certificates, but also enjoying the opportunity to have their work exhibited in a public place. Dan’s caters to professional photographers looking for more exposure as well, with a “Pro’s On Display” program that rents out a few square feet of wall space behind the cash registers. “We’ll charge them just $30 for sixty days, but they get a pack of promo cards and a link on our Web site too,” says Woodland. “It’s a great way for them to get more business. We’re always sold out.”

Just as a school library may have “learning centers” with comfortable places for kids to read or play educational games on the computer, Dan’s retail space is also outfitted with an intricately-designed “Digiprint Lounge”, a room set-apart within the store where customers can sit down, get a drink, sign in at their own computer station, and work on editing their images and ordering prints. Lighting is subdued in the lounge, there’s a purse hook by each of 13 ordering stations, and a corner area is set aside with a train table for the children. There are even a couple of Todd Oldham La-Z-Boy chairs in there. “One guy did fall asleep while his wife was ordering,” says Woodland.

On a weekday afternoon in late August, the DigiPrint lounge was presided over by 59-year-old Bonnie Seifert, a retired nurse and long-time Dan’s customer who was hired two years ago to work as, essentially, a high-tech hostess. “Oh, we have fun in the Lounge,” says Seifert. “People show me their photos, and I help them with their orders. We talk and have coffee. People sometimes say to me, ‘What time is lunch?’”

Seifert’s clientele that day cut across a variety of demographics. Nicole Peteron, age 19, and her boyfriend Aaron Nash were in ordering some prints for Peteron to take with her to college. “The quality’s better here than most places,” said Nash. “And it’s easy. I just bring my memory card in. I took 400 pictures a couple of weeks ago on a trip to Scotland, and I’ll be choosing which of those I want to print.” Down the bar a few seats, Joanne Smith, age 37, was putting in her order for fifty pictures of her own vacation, most of those featuring the bright smile of her 7-year-old daughter. “I like to scrapbook. In fact, I even give scrapbooks as gifts now, so I spend a lot of money on pictures and materials, probably hundreds a year,” said Smith.

The scrapbook enthusiast is of major interest to Woodland right now. In fact, he’s just carved out another section of his sales floor (he calls this corner the “Memory Suite”) to showcase scrapbooking products and two digital editing work stations with album templates. Scrapbookers who’ve learned to design on the computer often order large format prints, up to 12×12 inches, which are radically more profitable than typical 4×6 prints. (Dan’s charges $9.99 for a 12×12 on photo paper, $20 for fine art paper.) Woodland is also experimenting with alternate presentation products, encouraging scrapbookers to purchase a 12×12 frame (he’s currently displaying “treasure box” frames by the Dennis Daniels Company) and display some of their most elaborate scrapbook pages around the house instead of just binding the pages in a book.

Woodland keeps an eye out for products which will make new and inventive uses of digital images. One of the most successful “momentos” as of late is a photo-blanket, a 54- x 60-inch actual throw blanket whose yarns are vividly printed with the image of a customer’s choice. A photoblanket featuring a charming, wide-eyed young girl wearing a bandana hangs on one of the Memory Suite walls. “We’ve done several times the volume we expected on these so far,” says Woodland, who is currently charging $100 per blanket.

Adjacent to the Memory Suite are two new kiosks from Hewlett-Packard called “HP Photosmart Studios,” which allow customers to design and photo-collage posters, greeting cards, and bound books. HP has offered these kiosks to only a few pilot locations around the country. Woodland says there are still some kinks in the products (the bound books’ pages don’t have the same high print quality as the posters yet), but he’s pleased to be working with HP on the development side. “If you’re looking at twelve different new services or products, you don’t know which one the customer will favor,” he says. “You better hope the ones you choose are the winners because they are expensive.”

Back Door Business

One of the most unusual ways Woodland and Harayda have found to hedge their technology bets is by turning themselves into partners of businesses that are also their competition, a strategy McCurry calls “cooperatition.” They’ve done it by providing wholesale services and teaming up on promotions with other stores and imaging services, even mass merchandisers.

“Think of it like a marriage,” says McCurry. “If you look at the small picture and call the deal off the one time a partner hurts you or leaves the cap off the toothpaste, you’ll never make it. But if you ask yourself, ‘What’s the big picture here?’ and take the long view, you’ll find a win-win.”

Here’s the win-win Woodland found: Dan’s has, over the years, built a film and digital processing lab, managed by an experienced technician named Julie Strauser. On a typical weekday, Strauser says, close to 300 rolls of film and 10,000 digital images come in for printing. Though Dan’s lab staff is known for checking, and when necessary, correcting each image, they are equipped to handle many more. Just like a factory in China that’s at its most profitable when it’s running full capacity, even if that means working as an OEM source, Dan’s lab has the horsepower to make the store more money by printing photographs and specialty items for anyone who needs them. So Woodland has, over time, found smaller camera stores who will use his lab as an “imaging fulfillment partner.”

“We set the smaller stores up with a Web-based ordering system. It’s all branded through them, we just become a printing factory,” says Woodland, who is still open to adding more fulfillment partners. In addition to signing up other camera shops, he’s recently begun approaching software and Internet-based companies as well. “There’s a scrapbook software company called MemoryMixer which allows people to create customized scrapbook pages very quickly on the computer. I called them too.”

That call led to a deal allowing Dan’s to do all the printing (including those profitable 12×12’s) for MemoryMixer customers. So, when scrapbookers go to the MemoryMixer Web site, www.memorymixer.com/printservice, they’ll find a system that allows them to upload their customized files and a print order page that links, unbeknownst to them, to Dan’s lab. “Simply … watch your mailbox,” says the site. Dan’s sends the prints right to the homes of MemoryMixer customers all over the country.

Other “cooperatition” deals involve businesses closer to Dan’s Lehigh Valley home. The Allentown area has, in recent years, become a bedroom community for New York and northern New Jersey professionals, affluent customers who are so technically sophisticated that they are actually hard to reach with traditional marketing tactics like local newspaper ads or even local radio and TV spots (the newcomers tend to subscribe to satellite radio and TV instead). So Woodland has been looking for ways to reach them where they live, and often that’s in shopping centers.

“We really wanted to get the word out to these new families, so we worked out a good deal with the local Babies “R” Us,” says Woodland. “We conduct photography classes there which draws customers into their store. Then, we set up a table there showing birth announcements, picture puzzles and the photo blankets—things new mom’s like.”

Similar deals have worked with area dry cleaners, pharmacies and craft stores, which allow Dan’s to install digital print kiosks that serve as “drop off” sites and print “pick up” sites, as well. The small businesses get a little more foot-traffic and Dan’s gets the chance to expand its presence beyond it’s one location, thus giving customers in Bethlehem, Catasauqua, Coopersburg, Kutztown, and nearly ten other sites.

“That’s partnership,” says McCurry. “Dan’s theory is that as long as we’re convenient, customers will stay in our family. Dan’s would rather trade that foot traffic volume but keep customers who otherwise would have just dropped off their pictures at Wal-Mart.”

Peter Ewen, the Regional Sales Manager for Olympus, says he’s seen Dan’s take other creative approaches to potential business threats. “There’s a company across town called the Banana Factory. It’s like an artists’ colony that sponsors a big music festival and does a lot of classes,” says Ewen.

“Well, all of a sudden, they’re having digital photography classes. Dan’s has its own classes, but rather than fight or view them as a competitor, Dan’s viewed them as a partner. They gave each of those Banana Factory students a coupon for $10 or $20 toward a purchase of an Olympus camera at Dan’s. There seems to be no ego whatsoever there, and it pays off. They’ve clearly tackled their market.”

This “photoblanket” is one of many new digital imaging products on display in Dan’s “Memory Suite.”

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