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How To Cope With Roll Erosion



What a great headline (below) to reflect the condition of the minilab business today.

But, note that the headline and sub-head are within quote marks. Somewhat unusual, but necessary since it appeared with a story that was not published in PTN. I can't claim credit for having written this headline; nor can the editors of PTN. This exact headline was written for my column by Bill Clark, current executive director of PMDA, when he was editor of a publication called Photo Business—since defunct. The date: November, 1991.

Amazing how time marches on and how a headline written 13 years ago can still mirror the situation facing today's minilab operators—large and small.

The "tips" that accompanied the article advised on such matters as: reducing paper waste; pressing suppliers for cash discounts; opening a portrait studio; joining a buying group for better pricing; converting to a washless system (I won't take the time to explain that to minilab newbies); becoming an outlab for neighboring minilabs; re-negotiating your store lease. Come to think of it, most of these still apply.

A recent InfoTrends-Fuji survey shows just how much the industry has changed in three years as digital cameras have replaced traditional models. As expected, film use has been on the decline since the study was first
conducted in 2001.

The market was a lot different in 1991. According to PMA: there were 7,135 free-standing minilabs compared to 3,855 in 2002 (probably less today); there were 2,685 mass merchant-drug-supermarket installations in 1991 compared with 23,464 in 2002 (probably more today); the numbers for camera stores with minilabs remained about the same at 3,000—but, you can bet they are not the same 3,000. Bottom line: there were about 12,900 minilabs at retail in 1991 compared to over 30,000 in 2002.

Every year since 1994, the percentage of rolls processed on minilab equipment at retail, as opposed to overnight processing, has increased, moving from 29.9% to 48.8% in 2002. Obviously, the independent lab and camera store, the entrepreneurs that made it happen, have not shared in this growth as the big box merchants prospered serving the mass of shooters by delivering essentially the same product at half the price.

There is no question that, as an industry, the on-site minilab business is giving the film shooting public what it wants, at the right price and at convenient locations. A great marketing success when you consider that we are all young enough to remember that sending out film through the local drug store to a wholesale lab and getting the prints back in 7-10 days was once the norm.

And the pie was getting bigger. In 1992, according to PMA, there were 614 million rolls of film processed. This grew to a peak of 781 million rolls in 2000, a 27% increase. Everyone profited.

In 2001, along with 9/11, the worm turned digital and the backslide began with PMA now reporting that rolls processed in 2003 were 686 million, a 12% drop in three years.

But the biggest jolt to those invested in on-site processing came with a recent PMA report stating that for the 12 months ending January 2004, the number of rolls processed was down a whopping 16% from the same 12 months of 2003. The nibbling away of roll counts over the last few years, the "roll erosion" in my 1991 story, is approaching avalanche status.

This figure is somewhat consistent with the most recent Kodak annual report stating that U.S. film sales for the company were down by 18% in 2003 vs. 2002 and that Qualex photofinishing sales were down 19% for the period. These are major numbers for an industry leader and have resulted in company layoffs and re-organization and such marketing re-positioning as to shut down all 35mm camera production.

The future of film is no longer in doubt. Only the timetable.

The images are still being captured, no doubt of that. And in greater numbers than ever as digital shooters freely click away to their flash memory media with their newly acquired digital cameras. Add to that the yet-to-be-felt impact of camera phones expected to be counted in millions by the end of this year and the tens of millions beyond. The number of images to be taken digitally could dwarf what we have become used to in the film world.

The big challenge, of course, is how many of these captured images will ever be printed and, if they are, where will the printing be done?

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