Photo Merchandise Taking Off Despite Downturn

By Greg Scoblete On Feb 23 2009 - 8:00am

The recession may take a bite out of the compact digital camera market, but it's not expected to slow growth in photo merchandise, as vendors hit PMA with new solutions for creating photo novelties.

The market for photo merchandise is predicted to grow both in store and online. Of the $1.5 billion market for online photo ordering expected by 2012, close to 70 percent will consist of photo merchandise orders, according to the research firm InfoTrends. The market for photo books alone will hit $1.2 billion in 2013, while total revenue for the category is projected to hit $2.5 billion.

For its part, Kodak sold 500,000 photo books since the second half of 2008, said Nicki Zongrone, retail systems solutions GM.

The market is slowly shifting from novelties to heirlooms and sophisticated publishing, suppliers say. “We used to have screen printed blankets, now we're using digital looms” to weave the photo directly into the fabric, said Bing Liem imaging division senior sales VP, Fujifilm.

Hewlett-Packard is integrating licensed content with consumer's personal photos, making the experience less about photography and more publishing, said Kalle Marsal, director of marketing, HP retail publishing solutions. The products could include personalized travel guides, cook books, or children's books that blend personal images with licensed scenes.

While awareness of photo merchandise is fairly high, consumer interest is still lagging partly due to the high prices, said David Haueter, associate director, photo printing trends, InfoTrends.

The business is also highly seasonal, with 80 percent of the activity occurring in the fourth quarter as people create gifts for family and friends, Liem said. So retailers are looking for “adjacencies” to display photo merchandise outside their photo centers, he added.

What the market needs is savvier promotions, Haueter said. The research firm completed an omnibus study on the photo merchandise market in late 2008 and found that once consumers create a photo book or piece of photo merchandise, there is nearly an 80 percent chance they will come back for more, Haueter said.

Unlike traditional prints, photo merchandise doesn't respond as well to promotional pricing, Marsal said. “You have to look at overall positioning and messaging.”

As the market matures, vendors will need to begin to address the archival qualities of the ink and paper used in photo books, Haueter said. “No one knows how long the photos will last, or the glue and binding.”

What's less clear is whether the growth in photo merchandise will eat into the market for traditional prints. Both categories are expected to grow in tandem, at least over the short term, Zongrone said.