It’s still very evident that digital is changing the way consumers continue to view/process their images. As digital processing becomes more accessible, photofinishers look to a variety of new products and services they can offer their customers to grow their businesses. Although sales of photo kiosks and digital minilabs were down slightly in 2004, the number of people printing at retail is up, driving further growth in retail digital print volumes. 2004 represented a gap year in terms of equipment sales, as the market absorbed the heavy installations in 2003 when major chain photofinishers sought to equip all their stores with digital labs and photo kiosks. Nevertheless, growth is up again in 2005, as many of the mid- and low-volume retailers that were not quite ready to invest in new hardware during 2004 are now coming on board.
According to InfoTrends/CAP Ventures’ new forecast report, sales of photo kiosks are projected to grow by 9% in 2005. Some retailers are beginning to outfit their stores with more than one kiosk to avoid lines and long waits for customers. Meanwhile, digital minilab sales are also expected to demonstrate growth over the five-year forecast period, fueled by replacement sales, decreased prices, and new innovations.
Consumers are clearly responding to advertising ventures that are designed to drive them back to the store for prints. According to InfoTrends/CAP Ventures’ studies, only 14% of digital camera owners who printed photos had ever made prints at a retail location in 2003. This figure increased to 33% in 2004. InfoTrends/CAP Ventures forecasts that 26% of total digital photo prints will be produced at retail in 2005, up from 19% in 2004.
In order to keep this trend growing it is imperative that we continue to embrace and invest in digital technology, and develop adequate retail output solutions for consumers. To help sort it all out and see where the industry stands on digital output at retail, we brought in a panel of experts for our Minilabs Roundtable. Making up this year’s roundtable are: Todd O. Tereshkow, VP Technical Service & On Site Marketing, Konica Minolta Photo Imaging USA; Rick Maurer, VP of sales, AgfaPhoto, Tom Curley director of marketing- Lab Solutions Photofinishing and Web Services Division, Photo Imaging Group, Fuji Photo Film U.S.A., Inc.; Chris Sliva, general manager, Kiosk Business, Americas at Eastman Kodak Company and Mr. Shiro Kazuta, president, Noritsu America Corporation. Due to space limitations we had to edit down some of the responses.
What role do you see the digital minilab playing in the retail market in 2005-06?
Tereshkow: As the volume of digital prints being printed at retail continues to grow, we expect the number of units sold to keep growing. Retailers have been utilizing lower cost kiosk solutions but this will only be able to accommodate limited volumes. In addition, as the consumer becomes more aware of their printing options at retail there will be increased demand for the services that they have enjoyed with analog cameras.
Maurer: Retail digital photofinishing is becoming an increasingly important segment of the consumer digital printing market. The Digital Minilabs as well as photo kiosks will continue to play an important role in the retail marketplace. The digital photofinishing industry is still growing and retail print volumes will continue to rise. This is the case among both the traditional photofinishers as well as the emerging alternative channels. As a result of increased advertising and promotion, awareness of retail digital printing services has been steadily increasing. This increased awareness along with enhanced service offerings have been positive steps towards the increased adoption of printing at retail.
Curley: While the conversion from analog to digital lab systems has been accomplished by a large portion of the market in the USA , there are still some major retailers who are planning to deploy digital labs, either as replacements of analog systems or through expansion in the next year. As well, there are a significant number of independent photo imagers who still operate analog systems and need to upgrade to digital. With digital camera workflow, it’s essential to have a digital workflow, and the best way to accomplish this is with a complete end to end digital workflow. Fujifilm offers a range of full service solutions from kiosks with integrated digital color printers to high capacity lab systems capable of both film and digital input.
Sliva: We see digital minilabs having significantly less of a role at retail as total prints (film and digital) continue to decline and the market continues to fragment, offering consumers choices such as on line, at home, and at retail. Retailers will need to rationalize and reduce their capital investment and labor investment in the production of prints to sustain profitability.
Kazuta: Photofinishers face many challenges in today’s market. For those with vision there is an opportunity to not only survive but to thrive. The arrival of the new digital standard has brought the promise of increased production efficiencies such as software-enhanced workflow and reduced human resource requirements with customer service kiosks. Now more than ever, choosing a hardware and software platform that will accommodate future growth is critical. The digital minilab will continue to be a critical element in this mix and photofinishing will continue to be a profitable venue for retailers.
What does the retailer need to do to promote outputting digital at retail?
Tereshkow: Promotion. It is that simple. Between in store signage, advertising or offering free prints with the purchase of a digital camera it comes down to promotion. In many cases, the consumer still does not understand that they can make quality prints from their digital cameras.
Maurer: Retailers must do everything they can to provide the most convenient and compelling print solutions so that consumers fully embrace printing their digital images at retail. Consumers are becoming more sophisticated and demanding and, armed with greater knowledge, they expect more value. For retailers, doing business as usual can mean doing no business at all. But the right strategy for successes is not always clear. Communicating the right value proposition--which doesn’t necessarily mean the lowest price but might mean the best deal for the precise mix of features the buyer wants--is crucial. By becoming more knowledgeable of their target customer and by stressing service and the individuality of their offerings, retailers can grow their imaging business and market share in the fast-changing marketplace.
Sliva: The key is to make digital printing both easy to use and accessible for consumers. Retailers need to recognize that different consumer situations have different needs based on print size, number of prints, time (how quickly the consumer needs the prints), etc. Retailers need to identify solutions for these different needs and promote them to consumers to create trial for the broadest range of situations.
Kazuta: Retailers could employ a variety of tactics, but any strategy should focus on building a relationship with their customers. Ongoing communication about photo printing services to customers is important. Some retailers are producing booklets for their customers that talk about the benefits of professional photofinishing and how to take better digital pictures. If digital cameras are part of their inventory, retailers could include a coupon for digital prints with every camera purchased in order to have customers return.
What is your company doing to help support the retailer?
Tereshkow: Konica Minolta provides a POP Kit for each Photo Link unit that is sold. In addition, we have designed the free standing fixture along with signage to be distinctly different from the competition.