Chains raise photofinishing share, lift performance despite sluggish economy

Drug Store News, April 5, 1993

Drug stores beefed up photo departments in 1992 and won more market-share points than last year. Single-use cameras were high-scoring stars, although the category was handicapped by a slow economy.

Photo processing means double exposure - the good kind, when customers make two trips to the drug store. Or when they shop longer while a mini- or micro lab makes prints.

Drug chain won a heftier piece of the film processing market in 1992. Against other trade channels in the fourth quarter, drug stores rose to a 26.9 percent share from 25.6 percent in the same period last year, according to the Photo Marketing Association (PMA).

The reason is bigger, better photo departments - more visibility, more in-store labs to show professional commitment and more customer-pleasing promotions. As drug chain focus on core categories and cut out the fat, photo makes marketing sense. Customers want to deliver their film into trusted hands and no mass market channel beats drug chains for convenience and professional image.

Future position

In a better economy, 1992 would have reaped larger rewards in the photo category for drug chains. Considering the pressures on discretionary spending by consumers, the photo/video/audio department grew reasonably, a 2.6 percent gain to $2.03 billion at drug chains in 1992.

The total photo category is still reeling from the recession especially in California and the Northeast. Vacations and long-distance family reunions are down, and travel has a major impact on consumer photography.

PMA's research director Barry Harrand reports that in the fourth quarter, according to the assciation's latest study of 20,000 consumer households, in photo processing, "drug stores performed better than the total market in the fourth quarter, although the total market was down." Harrand notes that drug stores were down 1.3 percent (units) in rolls.

To keep dollars up, drug chains offered more value-added promotions rather than make deep cuts in processing prices. In-store labs also boosted photo processing revenue.

Film, camera sales

Total rolls purchased were down about 1.8 percent in units. But 35mm print color and black and white were up about 1.9 percent. "All of the decline is in cartridge and slide film," says Harrand. The good news was that higher-price-point 35mm film continues its upswing, adding dollars to the category despite weak unit figures.

To add excitement, manufacturers are devising new 35mm film types - like Konica's new Super XG, Polaroid's 35mm HD, Fuji's SuperG, Kodacolor Gold Plus - for finer grain, more saturated color, or with Konica's new Baby Film, a specially calibrated film speed designed to photograph children.

One-time or single-use camera continues to soar as consumers find more ways to use them and manufacturers create new products for curious consumers to try. More than 20 million single-use cameras sold in 1992 in the United States, and when final figures are in, the number could reach as high as 22 million.

More drug chain customers are discovering that the Kodak FunSaver line, Fuji's QuickSnap and Konica's Film-In are not just for outdoor use to avoid damage to an expensive camera. Single-uses are becoming as necessary as a nuptial cake at weddings, where multiple cameras are provided for guests to join in the photo fun. To better reach this market, Kodak is working on a wedding "kit" and is also introducing a single-use with a portrait lens.

The growth in single-use cameras leads to more enlargement and reprints and also boosts sales of 35mm cameras - especially in the under $100 range. Since customers make two trips to the drug store for film roll processing, that's double exposure to a core camera selection. Add a knowledgeable sales associate and up go camera sales.

Long Drug Stores introduced a core camera set in all stores this year to catch the uptrend. At Walgreens, the photo buyer recently called 35mm cameras "the key to the camera business."

This year, manufacturers are rousing new-product excitement, with such cameras as Polaroid's new Captiva instant cameras scheduled to ship in late summer. In 35mm cameras, the trend is toward greater miniaturization and more fool-proof features.

New technology is just reaching drug chains with outlets in high-tech markets.

Eastman Kodak's Photo CD service is available (through Kodalux labs) in selected Longs, Perry, Arbor and Walgreens locations, while Walgreens is one of the chains testing Kodak's consumer photo-imaging center, Create-a-Print, where negatives can be manipulated on site.

Competition is a compelling reason for drug chains to add a lab and keep the business. Mass merchants are opening new stores with photo labs, while the new super combos also feature one-hour labs.

Smaller micro labs serve lower volume stores; in many chains, when processing grows, the micro is moved to another location and is replaced with a larger mini-lab.

But the marketing advantage of a drug store - professional atmosphere and customer convenience - is paying off in market share.