Ever since their first date a few years ago, when an acquaintance took a candid photo of the couple on a digital camera and forwarded it by e-mail, Amy and James Wilde wanted a digital camera.
Married in May, the Wrigleyville couple used their 2-year-old digital camera to create everything from wedding table cards to thank-you notes.
“We don’t go to Hallmark anymore,” said James Wilde. “That’s an industry we’re replacing within our home.”
That do-it-yourself ability is one reason photographers, from beginners to serious hobbyists, are buying digital cameras in record numbers. Last holiday season, digital cameras, along with DVD players and new video game consoles, were among the best-selling consumer electronic gifts.
Unlike a traditional camera, a digital camera doesn’t use film, storing images instead on a memory card. The photos stored on the card are in pixels, or points in an image. The more pixels in the image, the higher the resolution of the picture; the greater the number of pixels available, the more expensive the camera.
The rush to digital pictures has retailers from Wal-Mart to Walgreens scurrying to protect their bread-and-butter photo processing departments and trying to woo back customers to do what they’ve always done–order prints.
Last year, retailers lost 1.7 percent of film processing sales because of photographers who now own both digital and traditional cameras. These camera-users are developing fewer photos, crimping retailers’ revenue, according to the Photo Marketing Association International, a national trade group in Jackson, Mich.
“The digital camera paradigm is one that’s scary for retailers,” said Chad Munce, director of digital imaging markets at the PMA. Unlike with traditional cameras, “you don’t take 24 pictures and get them all processed even if there are only three real keepers,” he said.
“Now you shoot all day long but only process a small percentage. The future for retailers is that they are going to get less processing business from digital camera users.”
David Jordan is typical of the digital photo converts. Jordan, 27, rarely used his traditional 35mm camera. But a new digital camera transformed him.
Recently Jordan snapped photos of snow-covered seats at Wrigley Field from his rooftop apartment across the street and then uploaded the images to his laptop computer.
“Most people don’t get to see Wrigley Field in the winter,” said Jordan, who e-mailed the ballpark images to friends.
“The biggest advantage [of digital cameras] is that you get to see your pictures instantly,” he said. “You can get rid of the images you don’t want and not waste the money on film development.”
The ability to easily e-mail photos is another reason why more people are snapping up digital cameras.
When Annie Boustead’s parents dropped her off at the University of Chicago to start her freshman year, they handed her a digital camera to “show them pictures of her friends,” said the 18-year-old from White Plains, N.Y. “I can send pictures of what my dorm room looks like.”
Boustead hasn’t made any prints yet. “It never occurred to me. E-mail is a quicker way to exchange them,” she said. “Maybe eventually I’ll find my favorites and get them printed in an album.”
On average, consumers take 208 images with a digital camera and only print 54, according to PMA’s 2001 U.S. Consumer Photo Buying Report.
Digital camera ownership reached roughly 12 percent of U.S. households last year , up from 9.3 percent in 2000 and 4.4 percent in 1999, according to PMA.
The group estimates the number of digital units sold in 2002 may reach 7.9 million.
The gains will continue as the cameras become more affordable and offer higher photo resolution. Digital camera factory-to-dealer prices have dropped on average from $572 in 1999 to $362 as of October, noted Sean Wargo, an industry analyst at the Consumer Electronics Association in Arlington, Va.
The biggest challenge for retailers remains consumer awareness.
“People don’t understand that you can treat a memory card like a roll of film and develop pictures the same way. Most of the new cameras will deliver prints of the same quality,” said Paul Schutt, president of Helix Camera & Video, which has 12 Chicago-area locations.
Helix offers everything from prints and CDs to software for digital uploads from home directly to its store.
“We’re nervous where the learning curve will cross the downward trend of film sales. Our hope is that the use of digital cameras and prints will catch up,” Schutt said.
Offsetting falling film sales
Film sales have declined 3.9 percent since 2000. Reasons vary, from postponed vacation travel after the Sept. 11 terrorist attacks to a sharp increase in the number of digital cameras purchased, according to PMA.
To combat the downward trend and to better compete with online photo services like Ofoto, owned by Eastman Kodak Co., and Shutterfly, retailers are starting to upgrade photo labs and offer digital services. Many retailers already offer picture CDs or disks, and some offer uploads to a Web site for a few extra dollars tacked onto the price of the double-prints processing fee.
In-store kiosks by Kodak and Fuji let customers use media cards to make prints, charging the same price for reprints online and off, though buyers should beware that processing a 24-image roll of film is far less expensive than processing 24 individually selected reprints.
“There are tremendous revenue opportunities in the service of being an all-in-one provider selling the accessories and the services the photography consumer needs to manage their content,” Wargo said.
At drugstore chain CVS Corp., partnerships with Kodak and AOL’s “You’ve Got Pictures” service has given the chain the lion’s share of Kodak’s digital business, and provided co-branding rewards through AOL and CVS.com.
“More than 44 million digital images have been introduced since our partnership with AOL,” said Helena Foulkes, CVS’ vice president of marketing.
At CVS customers don’t even need to own a digital camera to take advantage of the technology. When customers drop off traditional film for printing, they can use the Kodak Picture Center kiosk, order picture CDs, and have photos uploaded to either AOL or directly to CVS’ Web site. At CVS.com, customers can create online albums, edit photos, or order reprints or novelty items like photo T-shirts and mugs.
At Wal-Mart Stores Inc., which now sells more than 20 types of digital cameras–about the same as the number of traditional film cameras it sells–the company offers picturemaker kiosks, CD and upload options and photo reprints. A 4-by-6-inch reprint costs 26 cents.
Wal-Mart allows customers to upload images directly to the Walmart.com Photo Center and order prints that can be mailed for $1.38, regardless of the size and quantity. The prints can be picked up at the local store, too.
Walmart.com offers a digital photography tutorial for new camera buyers, shareware and editing tools. Since last fall, Walmart.com has been offering more than 60 kinds of Hallmark cards online for various occasions, from weddings to birth announcements, that can be customized and then directly printed onto each $2.48 card.
“We made a commitment to be in the digital developing business two years ago,” said Dave Rogers, Wal-Mart’s vice president of photo operations. “We’re not running away from it, but running toward it.”
Walgreen moving cautiously
On the other hand, Deerfield-based Walgreen Co. has been slow to adapt to the digital trend. So far, it only offers standard picture CDs and in-store Kodak Picture Center kiosks.
“Walgreens is known as a crawl, walk, run company,” said spokeswoman Carol Hively. “We carefully research, plan and test before we roll out anything new.”
Walgreen is testing in-store digital processing in 50 of its Southern California stores, which offers four choices of photo CDs at various price points and allows digital-camera users to get prints in an hour.
Walgreen is also testing a digital processing lab, which offers more flexibility than an optical lab primarily used to process traditional print film. But digital labs aren’t cheap: Each one costs about $250,000 versus an optical lab which costs between $50,000 and $100,000.
“My guess is that it’s going to be a controlled roll-out on a market-by-market basis,” said Ted Fox, PMA’s chief operating officer.
Large retailers aren’t the only ones adapting. Small players like family-owned Triangle Photo, which has two locations in Chicago and earns most of its revenue from processing, put in its digital lab last summer.
“The volume is increasing daily,” said Mike Ogata, the founder’s son. “We can put a digital file, zip disk, or smart media card right into the machine and the photo quality is the same as a negative. What we are trying to be is all things to all people who work with their digital or 35mm camera.”
What sets Triangle apart from the big-name retailers is its personalized customer service and in-store classes. Triangle provides photo classes that range from one to five sessions and cost from $29 to $125. And Triangle realizes that print lovers, one of its core customer groups, can be digital through scanners, software, CDs and disks.
Enid Chesler, a teacher at Jacqueline B. Vaughn Occupational High School in Chicago, doesn’t own a digital camera.
“It just seems to be too much trouble and I don’t have the time to sit and print these off my computer,” she said.
Instead, Chesler uses her $99 point-and-shoot film camera to get her shots, which Triangle develops and then provides a digital file for her to use. Chesler now is transforming a picture of a family heirloom into a photo collage in Triangle’s digital retouching class.
The end result will be photos of family members through the generations superimposed around an enlarged photo of an antique jewelry box given to Chesler by her grandmother.
Once complete, she’ll make prints and give them out as gifts.
“It’s an intergenerational family photo and something I couldn’t do with a digital camera.”
Online photo processing is slow to grow
The online photo processing trend has been slow to catch on with consumers, many of whom don’t realize they can order prints without leaving home.
Online photo services such as PhotoWorks Inc., Shutterfly and Ofoto Inc. offer 4-by-6-inch prints for less than 50 cents per print. These online sites also offer customized slide shows and photo albums that can be e-mailed to friends for free.
As the ability to share photos online grows, the word about these sites is spreading virally. A November Info Trends survey found that 36 percent of online photo-service users learned about the sites through an online photo album a friend sent them via e-mail, up 21 percent from the year before. Of those users, 17 percent posted a photo online and 30 percent ordered prints.
Still, only 13.9 percent of total U.S. households with Internet access said they had used an Internet photo service, up from 7 percent in 1999, according to research by the Digital Imaging Marketing Association and Photo Marketing Association International.
That trend may gain momentum, online processors hope, as consumers recognize the convenience of outsourcing the process.
–Maria Atanasov
Printing digital photos easy, but pricey
Printing digital photos at home has never been easier.
Buy a Epson Color Printer for about $150, add $55 for black and color inkjet cartridges and another $15 for a 20-pack of glossy photo paper, and you are ready to create custom calendars, cards and photos for your friends.
Yet do-it-yourself printers may be surprised to find having prints professionally developed can be a faster and cheaper option.
After ink, photo paper and waste are accounted for (i.e., the first print wasn’t perfect), home printing can get pricey.
A 4-by-6-inch photo printed at home costs 58 cents on average, more than twice Wal-Mart’s 26 cents, according to a recent study comparing the costs of home inkjet printers with drop-off film processing by Uxbridge, Mass.-based Blackstone Research Associates, a consulting and market research firm for the computer industry.
Some experts predict home printing will remain popular only with hobbyists, similar to those who develop 35mm film in a darkroom.
“The mass market is not going to get mass photos from inkjet printing,” says Chad Munce, director of digital imaging markets at the Photo Marketing Association International.
“Women, known in the industry as soccer moms, are two-thirds of the people processing film,” Munce said.
“We believe these are the same folks that are going to use digital cameras in the [near] future. These moms are not going to want to spend the time and effort to print out 100 vacation prints at home,” he said.
“They’ll want to get their prints just like they are used to getting them.”
–Maria Atanasov
