Plunging revenue from printed photos, the rise of smartphone cameras and the emergence of technology that makes it cheaper to put images in bound books and wall hangings has radically changed the photography retail sector over the past decade.
“Rather than use the word ‘photo,’ we’re really focused on memories – trying to build a business that helps people do more with their memories,” said Black Photo Corp. senior vice-president of sales, Peter Scully.
The newest Vancouver location of the chain’s 113 outlets is at the corner of Seymour and Robson streets.
Scully’s company, which Telus Corp. (TSX:T) bought for $28 million in September 2009, released BlackBerry and iPhone apps last week. It also launched a program that allows anyone to store photos in a free 20-gigabyte data cloud.
The strategy is designed to simplify printing photos and draw people to Black’s website, which is fast adopting elements of social media by allowing customers to create profiles and share high-resolution photos using different privacy settings.
This contrasts with Facebook, which reduces photo resolution. But London Drugs president Wynne Powell was not impressed with Black’s new initiatives.
“This has been available for eons [at London Drugs],” Powell said of Black’s new data clouds.
He returned last week from Germany’s Photokina, the world’s largest photography trade show, convinced that smartphone “applets” are a fad.
“We think the applet is going to be a short-term way to [upload photos to be printed],” Powell said. “We’re working on an alternative to an applet to make that easier.”
London Drugs’ camera sales have rebounded from a slump during the economic downturn, but the chain’s photo finishing revenue continues to shrink.
Powell tried to put a brave face on that sector by saying that print orders from digital sources are growing. But print orders from film sources have essentially fallen off a cliff.
InfoTrends Inc. data shows that annual U.S. photo print revenue has dropped to about US$3.7 billion in 2010 from more than US$8 billion in 2000. The Massachusetts-based research organization expects U.S. photo print revenue to hit US$3.2 billion by 2014.
Retail profits are increasingly coming from selling photo merchandise, even though that revenue stream is still comparatively small.
David Haueter, InfoTrends’ associate director in charge of photo finishing and merchandising, told BIV that he expects photo-emblazoned merchandise, such as bound photo books and coffee cups, to grow 27% to US$1.4 billion in 2010 from US$1.1 billion in 2009.
Haueter expects that market to grow a further 57% to US$2.2 billion by 2014.
Executives at Black Photo and London Drugs agree that bound photo books are their most popular merchandise offering and that their sales are growing because the price has dropped significantly over the past decade.
Scully estimated that the 20-page bound photo book, which Black’s customers can create with digital files and customized text, would have cost more than $60 in the 1990s. Today, it sells for $16.99.
Haueter said photo books are enjoying a similar renaissance in the U.S., and he expects the trend to continue because the product’s price is falling and people are realizing that printed photos are the most reliable way to pass memories to the next generation.
“About 50% of people [wrongly] believe that when they put photos on Facebook, they’re stored in high resolution. They also [wrongly] believe that CDs don’t have a shelf life.”
Haueter added that data clouds at photo retailers are a good way to store photos. But he warned that companies can change data cloud policies or go out of business, severing customer access to their photos.
“We’ve been really surprised that the market hasn’t taken off more for external hard drives,” Haueter said. “We were thinking five or six years ago that the external hard drive market will explode because people will need them to store photos.”