Retailing Dynamics

TWICE: What's going on at retail?

Scott: I think the retailers that have become successful understand their place in the category or in the marketplace. They're focusing on the consumers, and Best Buy is among the best at doing this. They understand their place. They understand what consumers have.

Most people don't realize this, but we have a tripod socket underneath our dock. Now you don't need to mount a dock on a tripod. They are solely for the purpose of execution at retail. Things like internal memory have provided a better experience, so consumers can stand in a store and take a picture. But the successful retailers will understand their place in the market and understand their consumers and deliver on the needs of those consumers.

Desmond: I think that right now, there's probably close to 30 percent of the industry business done with two retailers. There are segments where those two major players maybe aren't the strongest. So the challenge is to focus your product and your distribution correctly so that you're able to get the message of your features/benefits to the consumer. In a lot of environments, that's very difficult to do. So as we undertake the launch of an SLR next year, I think that we're going to focus a lot on independent camera shops who are able to point out the feature/benefits of a product that we might be able to bring to market that differentiates us from others. From our perspective, the SLR business needs a concentration in independent specialty camera shops to meet our goals.

Westfall: In our experience so far with the digital SLR, what we've really discovered is that we've been able to spread the business out quite a bit across our dealer networks. Essentially, we have customers chasing product around the country, trying to find it at different dealers. And in order for us to be fair to our dealers, basically we have to put everything on allocation to make sure that everybody's getting their fair share.

TWICE: Any issues of short supply?

Westfall: We are pretty much on target to be able to meet the expected demand.

Muller: The first couple of years were a little rocky, figuring out you don't want to be too long on inventory. It just drives the pricing down. You don't want to be short. I think we've all collectively gotten a lot better at that, so I don't see any major shortages. And I certainly see us being able to keep up with the growth in the industry.

TWICE: And this includes digital SLRs?

Muller: Yes.

Scott: I know at Kodak we will be managing [inventory] very carefully. We're not on an allocation across the board but we're on the tight supply situation through the year-end. And we're addressing that from a manufacturing perspective.