Competitive Forces

Competitive Forces


Who’s your competition?

This time of year, that seems a logical question to revisit. As all retailers head into the same prime selling season, they’re after the same discretionary dollars. And with imaging products — think cameras, photobooks, digital photo frames as great gifts — riding a wave of popular appeal, expect a range of retailers to stalk some share the imaging marketplace in Q4.

But there’s a long-term rationale for periodically sizing up the competition. Digital imaging’s success has also caught the eyes of retail channels that never before seriously gained any presence in the “photo” business. In the services arena, especially, the shift from printing to picture publishing or repurposing plays to the strengths and equipment lineup of some who are already in the document imaging business, as well as online retailers.

Before looking at who you’re competing with, this year’s assessment also entails taking into account larger forces shaping the competitive atmosphere. However, economists and prognosticators want to cast it, the fact is most American consumers have less disposable income to spread around this year. The downturn in the housing market, the surge in the price of gas and every product or service it impacts have all combined to rattle confidence and take some money out of consumers’ holiday budgets.

For imaging retailers, though, that shouldn’t be too much of a problem. People love taking and sharing pictures, and that’s never more evident than during the holidays. Prices, new features and ease-of-use continue to attract camera owners back into the market. Household penetration may be pushing toward the saturation point but we’ve still got a way to go before we near household member saturation.

Of course, the opportunities with imaging aren’t lost on any retail channel eager to sell products with a guaranteed market. Digital’s appeal has helped other channels increase their presence in the digital camera market, potentially encroaching on what should be the specialty dealer’s turf with some surprising success. Although sales growth of consumer electronics may slow, consumer electronics/video retailers could be big winners in digital camera sales if this year plays out like 2007.

Grouping digital cameras with camcorders, Dimitrios Delis, Market Research Director for the PMA, reports CE retailers dominated the image capture hardware market last year. They grabbed 29 percent of the total dollar volume for the combined categories. Next up, discounters and mass merchandisers, with a 23 percent share, followed by camera specialty stores with a 17 percent share of dollar volume in the imaging hardware. Nearly as much a share of dollars—14 percent—went to Internet retailers, of every description.

The strength of the CE sores in the imaging marketplace cannot be overstated. In fact, their success might suggest consumers now truly regard the digital camera as a consumer electronics product, and head for those dealers as a result. Delis reports the channel also sold the most DSLRs when measured in unit sales, and that’s a camera category which plays to all the strengths of the camera specialty dealers. CE/video stores again came out on top with a 25 percent share in units sold. Discount stores were on their heels with 24 percent followed by Web-based retailers of all stripes with 17 percent of the market. Camera specialty dealers ranked fourth, moving nine percent of DSLRs. Office supply stores — a channel most might not associate with cameras at all — did surprisingly well with a seven percent share.

New Print Players

Larger retailers dominate the market for print services, carrying their long-standing success with photography into the imaging marketplace, as well. Delis’ research gives mass merchants a 75 percent share of print services in 2007, with all other type of retailers carving up the remaining 25 percent. For some of the new specialty services deemed critical to the future of the imaging aftermarket, online ordering is a force to offer or reckon with. Take photobooks, for instance. Delis reports 60 percent were ordered on the Web, a third of those orders for in-store pickup.

For photo greeting cards, another increasingly popular use of captured images, 55 percent were ordered online, 45 percent in-store. More than half of photo greeting cards ordered online—60 percent—were destined for in-store pickup. From these trends one could infer some form of Web-based creation and ordering system will be as critical to success.

“Consumers don’t want to choose which retailer to go to for their prints, cards, photo books or plaque orders,” notes Delis, “They want all these options available from the same source.” For that reason, retailers that had no presence in the standard 4×6 photo printing biz are making overtures to the photo publishing market.

“Office supply stores and print shops are starting to expand into printing products featuring photos,” notes Allen Bullock, Associate Director for Internet Imaging Trends service at InfoTrends. “They see it primarily as additional opportunity to use the equipment they’ve already purchased and installed.” Some examples: large format printers for photo enlargements or poster sized prints; digital presses and document print systems for photobooks, calendars, or to add photos to such standard fare as business cards and invitations.

“A Web connection is very important for these services,” notes Bullock. “Some retailers have found success with photo cafes in their store, but I think most people would rather create and submit their orders from home for in-store pickup.”

As demand for these services grow, specialty dealers can ramp up and invest in new equipment and online ordering systems; turn to wholesale providers to supplement what services they don’t want to provide onsite; focus on those aspects of the imaging business where others simply can’t compete—their proven strength.

“People expect the specialty dealer to be the one with all the answers,” notes Stephen Baker, NPD Techworld. “There will still be a core group of consumers who always turn to them. The imaging specialists just have to make sure their definition of the business they are in expands along with consumer expectations.”