Magazine Article


PTN's 2008 State of the Industry
Industry leaders offer their perspective on how the photo industry is doing, and where it's going.

Each year we ask industry pundits and veterans for their thoughts on the current state of the industry and for their outlook on the upcoming year. It seems that the economy is always one of the topics that arise--which makes sense, because if consumers aren't spending money, then stores won't be bringing in the sales they expect, which sets off the unit sales of the manufacturer shipping product. An overwhelming theme among this year's responses is the focus on solid business tactics, not necessarily photo per se, but general business ideals. Another growing trend which we expect to blossom is the "greening" of business, whether in manufacturing or at retail. This is not only good PR, but it's good for the environment--a win-win for everyone involved.

"Of the nearly 23 million households expected to buy digital cameras this year, 7 in 10 will be repeat buyers looking for more megapixels and new features," says Gary Shapiro, CEO, CEA. "Innovation drives the CE industry, and educating consumers about new, ground-breaking features...can increase sales. Being a source of knowledge for the consumer can put you in the best possible position to receive their business."

"NPD's 'Household Penetration Study: Ownership Landscape 2008' revealed that just 10% of U.S. households own a DSLR, compared to 75% that own a P&S digital camera," says Liz Cutting, senior imaging analyst, The NPD Group. "DSLRs are poised for growth as most consumers are either upgrading or purchasing additional digital cameras, and the specialty dealer must focus on growing and retaining its base of these lucrative consumers. DSLR households were not only more likely to own multiple cameras (82% also own a P&S, and nearly half own at least three digital cameras), but they're also more likely to own other imaging devices such as digital picture frames.

"Other channels such as e-commerce are nipping at photo specialty's heels in both DSLRs and related accessories," adds Cutting. "There are at least two keys to specialty retailers unlocking more sales in the imaging market: attractively display and have sales staff talk about the entire imaging suite, including hardware, printing, and soft viewing devices during a camera sale; and position yourselves as a friendly, go-to destination for all the accessories and service consumers didn't get if they bought elsewhere."

"High-definition video represents another growing market where consumers are eager to upgrade their existing camcorders and accessories in order to produce home video that complements their new HDTVs," says Eliot Peck, VP and GM, sales, Consumer Imaging Group, Canon U.S.A., Inc. Along with the shift to HD, customers have also expressed a strong desire for tapeless recording in a variety of formats, primarily hard-disk drives and flash memory. These powerful trends are already resulting in excellent sales opportunities.

"As important as compact digital cameras, DSLRs, and HD camcorders are to our industry, they only comprise the image-capturing portion of the market," he adds. "Another key segment is output, represented by photo-quality printers with high-end inks and fine-art papers. Our industry needs to convey the message that photo printing continues to be the best way to preserve special moments in life and to share our memories with generations to come."

Digital Cameras As A Commodity

Bill Heuer, VP, Digital Imaging Division, Casio America Inc., notes that price erosion only hurts the industry as a whole. "Following Black Friday last year, it seemed that price became the 'compelling reason' to buy a new camera," he says. "Retailers have been enamored with promoting $99.99 digital cameras to attract new customers. The reality is that many of these consumers would most likely buy a $149.99, $199.99, or a higher-priced camera if they understood the benefit of buying a better-quality camera. Do these retailers really think they can grow their unit volume the necessary 33%50% just to maintain their revenue? Low price isn't the answer. We can't deny the concerns about the economy; clearly people want to save money. The reality is that consumers are looking for good value, which is different than just a lower price. Good value is a functional product with an understanding of its benefits.

"Photo retailers need to take advantage of this opportunity and need to build on their strengths," adds Heuer. He explains that there are several ways to do this, including providing better hands-on experience and a better assortment of product, as well as showing consumers how they can enjoy the features of their new cameras. "The good news is that the digital camera business is not going away, so there's no reason to panic and drop prices," he says. "The key is helping consumers understand how much fun it is to own a new-generation digital camera. One really enthusiastic consumer will generate more sales than a consumer who might have saved $50 by buying a lesser camera."

"The converging forces of rapid technology change, the introduction of more multifunction image-capture devices, and a weak economy will continue to challenge retailers in the upcoming year," says Matt Knickerbocker, president, PMDA. "But times like these also present opportunities that smart, aggressive retailers can use to their advantage."

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