Specialty, E-Commerce Channel Driving Business At High End

By Greg Scoblete On Aug 18 2008 - 6:00am

TWICE: Photo specialty has rebounded as a competitive channel. Can this last as the price point on digital SLRs drops?

Lee: We certainly think so.

Peck: There's no question. Going back to the late 1970s, and I know most of you are not that old, but you have to go back to the 1970s to understand the dynamics of what happened in the marketplace. When the AE-1 came along in 1976 it opened up a new market for SLRs that peaked around 1984. Then the market for SLRs fell off the face of the earth because point-and-shoots became high quality and affordable.

You almost have the reverse happening today. First you saw the point-and-shoots, now the SLRs are growing.

Lubell: I think no matter what industry you look at that there is survival of the fittest, but photo specialty is not going anywhere. In fact they still have a significant part of their business — certainly at the higher end but also in point-and-shoot. Recent sell through reports have shown that they actually are increasing their point-and-shoot business.

Henderson: I agree with Phil. It is absolutely survival of the fittest. They can provide something to the consumer that the big boys can't. That is the personalized service, the knowledge base, one-on-one service, the training.

Cutting: We have seen photo specialty grow more than average this year in an era when the big boxes and e-commerce were growing. Even in this situation they are still outpacing the market.

Lee: Most big boxes don't want to carry five or seven colors in stock whereas the photo specialty is willing to do that.

TWICE: How significant is e-commerce for you in terms of a distribution channel?

Pepple: It is very important for us. If you look at smaller photo stores, for example, 19 percent of the purchases made at those stores were placed online. For the growth of printing, online is huge. It is one of our biggest success stories. Roughly 31 percent of the people who are making prints are doing so online.

Lubell: More research is done online year after year. But some retailers have adapted well to that. Some of the larger accounts and some regional accounts have figured out a way to allow consumers to shop online and pick up in-store really quickly.

Peck: One of the first places a consumer goes is usually a company Web site. They may do the research and then they may jump to Price Grabber or they may jump to a retailer's Web site and it is probably not uncommon to see four or five or eight or 10 different Web site visits. This is a very important dynamic and it is very hard to say how that customer makes the decision.

Cutting: You might expect those who do buy online to be buying on price, but they're not. What you see is a sophisticated — or what we perceive as a more sophisticated buyer. They're spending more when they're buying online. If you look at the mix of, say, cameras and lenses, etc., the e-commerce channel tends to mirror the photo-specialty channel more closely than any other channel.

Magee: Getting the highest number of quality and quantity reviews is critical. That helps the retailers, it helps our sales, and it helps consumer awareness. We have put a lot of effort into that and it is very valuable to us.

TWICE: Are consumer reviews posted online more powerful than professional reviews?

Lee: I think a lot of it depends on who the end user is. I think that the younger generation tends to like personal reviews.

Pepple: To echo what David said, social networking is certainly impacting everyone. The younger generation definitely uses that as their source of information. I think as an industry we need to be cognizant of that.

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