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TWICE:As the market for digital cameras broadens, what's the retail landscape look like?
Young: The good thing is that it's growing at such a pace that every retail category will continue to grow. It's a matter for most retailers of figuring out who their particular audience is. For example, it's a very different audience that shops at an office superstore than one who shops at a big national CE chain, or at an A/V specialist or a photo specialist. These are all very different kinds of consumers with different expectations about the amount of guidance they'll get and of the amount of money they're going to spend and what they're looking for in a camera. So the good thing is as it continues to broaden, all of those avenues will have opportunities.
And I think we'll also see over the next year the emergence of other categories. Discount stores have done well, and I think they're going to do better because of pricing. For around $300, you get 3-megapixels and a 3x zoom lens from a quality manufacturer, which you couldn't do a year ago.
Arnette: Clearly distribution follows demographics and we're not that far away from getting a free digital camera with a tank of gas! For the first time we saw the digital camera moving out of the photo specialist into the big consumer electronic retailers, and into the mass merchandisers, and that trend will continue as prices go down and as ease of use goes up.
Peck: One of the most dramatic changes that we've seen this year is the dramatic penetration of point-and-shoot type digital cameras in the consumer electronics channel. And another change we've seen, particularly the first half of this year, is with the digital SLR. It wasn't more than just a couple of years ago that the only people who could afford or would use a digital SLR camera would be the professional willing to spend upwards of $5,000 or $6,000 to get a camera that was suitable quality.
Today for $1,500 you can buy a 6-megapixel body that is really quite remarkable in that it taps into a new segment of the business that right now has traditionally been the hobbyist. This would be the person who would was willing to spend $600 for a film SLR camera but is now taking a serious look at a digital SLR camera. What's interesting is when you add the $1,500 for the body and then add lenses and accessories, the average ring at the cash registers is going to be upwards of $3,000. That's dramatically increased the revenue possibilities at many of our accounts. We see the digital SLR becoming almost a mainstream product this year, which should add dramatic growth and revenue to most channels.
Young: We've actually seen the sale prices tend to go up over the last few months, which is absolutely remarkable in a category that's growing 50 percent in volume. I can't think of another category where that's happened.
Peck: What's great for the retail business is, it's great to sell a body, but along with it comes lenses, filters, the flashes, the gadget bags and a list of accessories that are very profitable for the retail business and that are great for the hobbyist. So it's a tremendous rebirth as Jerry mentioned before, of a business that was becoming very stagnant just a few years ago.
Sienkiewicz: I would add that intellectually we acknowledge how important the Internet is, but I think we're still misunderstanding and underestimating it. It has such an influence on our consumers, whether they actually consummate the purchase there, or if they just go there for information. Unfortunately, the retailers who are successful with brick-and-mortar stores are not necessarily translating that success to the Internet. Probably the most disturbing thing is that, despite a fairly stable marketplace, we're bombarded with complaints from consumers and retailers about how some of these Internet pricing schemes work. [The Internet] is something that we as an industry have to get a handle on, because it is potentially a wonderful, powerful tool, but like a thunderstorm we can all get struck by lightening.
Grossman: I think that where the retailers really have the opportunity is when people walk into a store and they're asking a question. You can't really do that on the Internet. As more and more of these products become a little bit more intimidating or difficult as they move into more and more features, retailers should concentrate on training. They really need to make sure that the people at the counter know the answers.
Now certainly in photo specialty, that's their lifeblood and that's why the photo specialty channel continue to be strong. On the mass market level or consumer electronics level, you have to make sure that people understand the products and they know the questions that they're going to be asked how to answer them. I think that added value is going to continue to drive people into retail locations where they're going to look for information, they're going to look for some comfort and they're going to look to understand the differences in the products.
Young: If you look over the last year, based upon both our interpretation and looking at [The NPD Group's retail sales figures], large CE retailers have seen the biggest growth. However, that's in units. The emergence of digital SLRs has kept the dollars at the photo specialty channel actually growing as fast or faster than at CE.
Schaffer: Because there's such a wide range of products and a wide range of consumers, the numbers will definitely change according to the type of consumer and the type of products that are offered in the store. I think you see the growth very differently if you're talking about 5-megapixel cameras, or if you're talking about an entry price point 2-megapixel model.
Grossman: I don't even think it should be viewed as a horse race, because in such an expanding category, everyone's growing. The mass merchants, the CE channel, photo specialty, office superstores, they're all growing. It's good for everybody.
Carr: The women in the family take and share the pictures. And today, she's really at a disadvantage, because she's out of the driver's seat. It's the tech people in the family that are taking over the picture taking. But if you look five years out, that's all going to be solved and it's going to go back to the woman taking those pictures. So I tell all of the retailers that we talk to to address her because she is intimidated today. She is afraid to go into a store, she doesn't understand megapixels, she doesn't understand any of the technology that we're talking about. She doesn't even want to deal with the computer.
Young: I just saw a statistic yesterday that the majority of women said they would rather have a digital camera than a diamond ring as their next gift, which makes shopping for my wife more pleasant because I know how to get one of those.
Arnette: I gave that survey to my wife and she disputed it.
Carr: In the film world, the ratio of the camera buyers and users is 70 percent female, 30 percent male. In the digital world, it's the complete opposite. But that's going change and we're working with the retailers to help them be able to talk to her, because it's not about the technology.
TWICE:Are we looking at further segmentation of product lines to target both the tech-savvy and the 'soccer mom'?
Arnette: I think the challenge for the industry is to address the ease of use and to sub-segment the product so that it meets different needs. It's just like in other consumer electronics products, different people are going to buy a different launch based upon features and price.
Maciag: I agree with Nancy, we'll see a shift towards the female purchaser in the marketplace. Image quality will still be a key. Styling is also going to be very important and finally, ease of use. So I think when you combine the three of those, you'll be addressing that consumer.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.