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Best Buy Evaluates Photo Processing Effort

In a field dominated by Wal-Mart and other mass merchant, drug store and supermarket chains, Best Buy has begun to edge into the photographic printing market, seeking to leverage its brisk business in digital imaging hardware as an entry into the world of photo services.

At the end of September, the retailer rolled out an online service that lets consumers upload their digital images to Best Buy’s Image Lab Web site and have them printed by Best Buy. The prints can be picked up in-store in three days or mailed back to the customer for a shipping fee.

“Our goal is to try to establish Best Buy as a processing destination,” said Brian Stone, program manager, Best Buy.

The online effort is running parallel to in-store printing via Noritsu minilabs and Kodak Picture Maker kiosks placed in select stores. According to Stone, the company is evaluating printing strategy along “two roadmaps” — in-store printing and online services.

The company began testing the processing waters in May 2003. The retailer has since expanded its in-store printing to 18 stores in several major markets, including Phoenix, Denver, Boston, Dallas, Los Angeles and Washington. It has the Kodak photo kiosks in a “slightly higher” number of stores — some of which also feature minilabs, in addition to some where the kiosk is the only available printing machine.

Best Buy’s online service is run by its Siberra subsidiary (TWICE, June 7, p. 45 ), which was acquired by the company’s Canadian arm to offer in-house digital printing expertise. Siberra processes orders at a central fulfillment lab and mails them to local Best Buys. The 18 stores with in-house photofinishing can process the online orders directly.

The overall percentage of prints being made at retail has increased significantly year-over-year, thanks in part to heavy advertising by major chains and a widening user base of digital camera owners, according to Kerry Flately, a consultant from Infotrends, a market research firm. In addition, 6.6 percent of all digital-camera owners who make prints of their images do so using an online-to-store service similar to Best Buy’s new offering.

A number of retailers have taken a similar click-and-mortar service approach. Ritz Camera is offering a four-hour turnaround and Wal-Mart recently announced a one-hour turn in select markets.

“We’re bullish about the prospect” of people making prints of their digital images at retail, Stone said.

The company also gleaned an early insight into customer’s kiosk usage.

“We found that in our stores that had both minilabs and kiosks, the kiosks did well. In stores with just a kiosk, the usage was disappointing.” Stone added that kiosk-based printing, unmoored from any larger service offering, didn’t “offer the customer any value. A better use of a kiosk is around a service to tie in customer interaction.”

According to Stone, while Best Buy can handle both analog and digital sources, the majority of its business is digital.

While the traditional film processing market is dominated by drug store, food store and mass merchant chains, Stone said that thanks to the volume of digital-imaging hardware moved through Best Buy, his chain was well positioned to court the expanding customer base of digital-camera owners.

“Consumers see us as an authority,” Stone said. He added that while the store will offer competitive pricing compared with its mass-merchant competition, it is looking to differentiate itself in quality of output and service.