Magazine Article


Target Sets Its Sights on On-Site Processing-- Finally

I spoke to folks at Agfa, Konica Minolta, Photo-Me, Fuji and Noritsu. All have equipment packages that would fit the Target needs. All apparently met with Target at one point or other but only two of them, Fuji and Noritsu, have the experience to deal with an account like Target. As much as Agfa would want, and needs, an account like Target, they couldn't bring to the table the résumé, or dollars, that either Fuji or Noritsu would offer. A longshot.

Fuji serves clients such as Wal-Mart and Walgreens, having pried this choice account from the Kodak family about two years ago. They have a strong track record that would appeal to a Target. Fuji offers a full line of equipment along with a package of consumables, film and cameras that would benefit a full brand merchandising program. Noritsu works closely with Kodak to present essentially the same package. Both Fuji and Kodak offer wholesale lab services.

One element unique to Fuji is its "Get The Picture Online" web program. Ritz, Wal-Mart and more recently Microsoft have made it an important merchandising tool by offering one-hour store delivery of images uploaded to a store's website. Kodak offers a retail tie-in being used by its CVS partner, but it involves overnight fulfillment by Qualex, no competition against the Fuji one-hour turnaround. This, of course, could change.

Target was interested enough in the Fuji program to place about 50 Fuji Frontiers, mostly model 340, in Target locations earlier this year. I heard of installations in San Diego, Texas and Minneapolis and there were probably others. They wanted to get a feel of what a Fuji program would be like.

Speaking to folks around the industry who knew of the Fuji trial, it was generally conceded that Fuji had the inside track and would get the deal.

But Kodak was not about to lose another major account to Fuji. The Walgreens account was a bitter pill for them. Holding hands with Noritsu, they came up with a strong package: Noritsu supplies the equipment; Kodak, the consumables, film, cameras and a merchandising package—presumably a bag full of money. I understand the price of paper may have been a significant piece of the decision tree and that it may have gotten down to under ten cents a square foot.

Whatever, I am told that Kodak-Noritsu won the day and that a deal for about 750 units, mostly with a new Noritsu model to be introduced at PMA next month, would be signed. The units will apparently be purchased outright. So, Kodak, having to leave Target via the back door, is now re-entering through the front door with a new program that is more closely aligned to its business model of providing services, not running a retail department.

What Undid Fuji?

A Fuji spokesperson wouldn't respond to any Target questions. No doubt the lost opportunity was crushing. Dollars, of course, are always an important element to the equation. But Kodak may have laid another card on the table: Hey, Target folks, do you really want to be dealing with Fuji, the same company that is the supplier to your major competition, Wal-Mart? Don't you want to offer something different—not the same?

In other words, Fuji's résumé of success with others could have been its failure with Target.

Assuming Target is going ahead with its own on-site program, and that the Kodak-Noritsu package will be its partner, what will Target have to do to get the category into gear? It is felt that once Target has its own money invested in photo it will focus more of its attention on making it work. Its track record in other departments would indicate that it would be only a matter of time before it would be a major player if it chooses to be so.

People become an important ingredient. So long as Kodak had the responsibility to run the operation, Target didn't have to devote management talent to the task. According to industry folks I've spoken with, Target's soft underbelly right now is that they have no "professional" photo people at the management level to develop and run a program. As one sage noted: "If Dave Rogers [Wal-Mart's photo man] were at Target—look out."

Target's Eric Peterson, whose card says he is Manager of Photo/Special Projects, Electric, was the man the manufacturers spoke with. "Very bright and knew all the right questions to ask," I was told. However, he's not a photo veteran, but rather part of Target's successful management team. I understand that Target has contacted some photo execs within the industry to fill key posts for the new program. Update your résumés folks.

A new deal between Kodak and Target would put about 750 Noritsu minilabs into Targets around the country, sources say. Most of the Noritsu labs are new models that will be released at PMA next month.

Unanswered Questions

One question that I've been unable to get answered: If Target goes the Noritsu route, what happens to the 50 or so Frontiers that Target has on trade trial? Do they buy them outright and keep them where they are, or will Fuji have to take them back and resell them as reconditioned labs? Used digital labs are scarce and they could fetch some good bucks in the used marketplace.