Photo specialists who do on-site processing were never really tuned in to film sales. They pretty much accept the fact that the sale of a box of film was the province of the mass merchants and drug store who were selling film cheaper than many specialists could buy it. So long as the customers who bought film at the drug store brought it in for processing the order of life was stable. The few boxes sold by the specialist were just a plus.
(According to Liz Cutting, senior account manager of The NPD Group, its online consumer panel shows that photo specialty dealers grab only 8% of 35mm film revenue and 1% on single-use camera revenue.)
Only when the rolls for processing started coming in smaller numbers each day did the photo specialist really comprehend the very simple equation of photo economics: When a roll of film is sold it will eventually be brought in for processing. The corollary: No film sale, no processing business.
The continuing downward trend of film sales should sound the alarm to the on-site folks: The rolls for processing will continue to decrease; if you're not set up for digital already, then when?
New data on film sales was released on April 29 th by Matthew Troy, imaging analyst for Smith Barney, who must wear night vision goggles to stay on top of the industry the way he does. According to Matthew, "EK roll film unit sales fell 40% in the latest four week period (ended 4/16), steeper than both the 28% decline at Fuji and 15% pullback in private label. This was the sharpest decline in sales since the secular decline in film began."
Matthew continued: "EK single-use camera unit sales fell 11%, slightly better than Fuji's decline of 12.5%."Interestingly, he reported that sales of private label single-use cameras for the period were up 24%.
We all know what has been happening to film. Matthew's numbers just puts some reality to it. For the small photo specialist the impact is seen primarily on the processing end, not in film sales. He just orders one brick less next time.
For the big guys, however, the mass merchant, supermarket, drug retailers, these are times for decision making. Film has always been a strong segment and was counted upon for volume and profit in these stores. Shelf space, always at a premium in such retailing, was made available to the category manager for film, so long as it was producing expected revenues.
But the sands are shifting for the mass retailers. With film declining at such a rapid rate, their game plan must be altered to reflect the changing environment. All of a sudden shelf space is not so available. Smaller face area for display means the number of SKUs (stock keeping units) has to be re-evaluated. Do we cut down the number of SKUs for each brand we carry, or do we simply drop one of the brands?
Strong rumor has it that Walgreens has made such a decision: The firm will drop Fuji brand film and will concentrate on Kodak and its private label Studio 35 brand--made by Agfa.
I went to each player in this event for comment on the rumor. Tom Shay, Fuji's director of Corporate Communication, said, "We do not comment on relations with our customers."A spokesman for Walgreens said, "We can't confirm any changes in our film offering."Kodak refused to comment. However, I've spoken to informed sources who regard the rumor as true and who said the change could be made as early as this summer.
How important is Walgreens to a film supplier? Consider: Walgreens had 4,761 stores as of last August; 4,689 stores have one-hour labs; they forecast 7,000 stores in 2010.
Such a decision is not made lightly, of course. The Walgreens and Fuji relationship goes back many years. I'm told that Walgreens helped get Fuji 's film established in the U.S. in the 80's when they awarded the firm the contract to make its private label film. Their relationship was "a special one"according to one source. But, over the years relationships change as people move on and business conditions modify. The realities of the business climate demand difficult, if unpopular, decisions.
Why choose Kodak over Fuji ? Maybe Walgreens' management felt the Kodak brand was just too popular to drop, though on the West coast, I'm told, Fuji is more of a demand brand than Kodak. Maybe, with three price levels of film, Studio 35, Fuji and Kodak, there was no room for the middle brand, Fuji. Maybe there were some promotional incentives offered. Only those who were involved really know.