Whatever led to the decision, Kodak would come out the winner in this one. But, managements of other large chains are faced with the same conditions as Walgreens. They, too, have a picture of declining sales and the practical need to cut back on SKUs. Most chains carry both Fuji and Kodak film: Wal-Mart, Target, CVS, Eckerd, to name just a few. Some have private label, as well.
If the rumor is true and Walgreens does cut Fuji , does this mean that all historical alliances could now be in play? Will there be a domino effect? Both Fuji and Kodak have major film manufacturing facilities in the U.S. The film pie is shrinking and each has the need to retain volume. Store management may eventually be forced to choose one vendor as the need and ability to carry multiple film brands diminish. Walgreens may have fired the opening shot. But there are still many other battles to be fought. It won't be pretty.
Sources estimate that Kodak is still the leader in market share here with about 50% to Fuji's 30%. As they battle to keep their brands moving there will be a real squeeze on Agfa and Konica brands, though these firms are players in the private label business, as well--Agfa with major accounts like Wal-Mart (Polaroid brand) and Walgreens (Studio 35); Konica, supplier to CVS. Ferrania, the private label specialist, will also feel the heat.
It would appear that Walgreens could already be scaling back its Fuji activity. Checking it's website on May 2 revealed:
• There were nine Fuji film SKUs on the Walgreens website but every one of them had a notation that read "out of stock"; there were six Fuji QuickSnap single-use SKUs shown, all indicating out of stock.
• In the case of Kodak, there were 11 film SKUs in stock and 12 out of stock; however, almost all of the no-stocks were either slide film, professional film, and B&W APS; for single-use, there were a total of 11 SKUs, three of which were no-stock.
• For the Walgreens Studio 35 private label, there were 18 SKUs, all but one shown to be in stock; all three single-use SKUs were no-stock.
Fuji film was definitely a no-show on Walgreens' website.
A visit to a local Walgreens store in mid-April showed all three of its film brands, Fuji, Kodak and Studio 35 in prominent display though there was no measure by which I could tell whether there had been any shifts in the brand balance of the display or planogram changes.
Fuji is a supplier of its Frontier digital minilabs to about 3,000 Walgreens locations, having taken this business away from Kodak about three years ago. There is no indication that this relationship is endangered though I understand Walgreens may be testing other brands at this time.
Other segments of the film business are also suffering--but to different degrees.
Private label film, in decline but at a slower rate, has fared better than branded roll film. According to Matthew Troy, while the sales of conventional film for Kodak and Fuji was down 28.2% and 32.8%, respectively, for the year 2004, sales of private label film dropped only 19.2%.
These figures support the feeling of Don Cacciola, U.S. marketing manager for Ferrania, the premier private label film producer for as many as 40-50 accounts on these shores and many more worldwide. He feels that private label will continue to decline, but at a slower rate than branded film, as store management generally promotes all store brands more heavily for their greater margins and as consumers perceive private brands to be a better value with no loss in quality.
Don anticipates that 100-speed film will soon be a rarity to be followed by 36-exposure packaging. He sees a store's planogram shrinking along with film sales but that today's line should include 200, 400 and 800-speeds. Ferrania still offers private label APS, though he said it is declining at a faster rate than 35mm, and, believe it or not, 110 film. "110 does fairly well in dollar stores," he said.
The single-use camera category continues to have legs although the trend line of unit sales has definitely flattened out. Once only a small part of the total film and processing business, it has taken on significant proportions as it watches roll film sink into the sunset.
Statistics reported by PMA reflect the staying power of single-use. In 1999, the peak year for roll film with about 800 million rolls being sold in the U.S., single-use sales were about 138 million, a ratio of about 86% to 14% of total sales. For the on-site processor it was not unusual to see a customer dump on the counter a brown bag filled with the bulky plastic containers.