The effect of digital photography on the traditional 35mm photo-film business is inevitable, but not in the near future. Nonfood buyers, therefore, are more worried about mass-merchandiser competition than they are about digital-camera sales, at least for now, they sold SN.
Although still in the early adopter phase, digital is probably moving faster into the mass market than many supermarket retailers realize, observers noted.
Yukihiko Matsumato, director of marketing research for Photo Marketing Association International, Jackson, Mich., projects 1.6 million digital cameras will be sold this year. That figure is expected to jump to 2 million cameras next year.
As manufacturing and chip costs come down, this will stimulate wider use and development of digital cameras for the mass market, with corresponding lower price points, said Matsumato.
Digital cameras now run between $400 and $900 but the quality is much better in the higher-end models. Digital cameras could drop to the $50 to $100 range in a year or two, but the quality may not be too good, he pointed out.
It will take three to four years before the industry develops a digital camera that can take quality images with a low enough price point for the mass market. Such a camera would probably sell for about $200.
Projections are that by about 2005, if the current level of digital-camera sales growth continues, 35mm film sales may start flattening out. Projections this year are that some 3.8 million digital cameras will be in use, compared with about 150 million other camera types. It will take some time for that digital number to grow to where it will start to erode 35mm and APS camera and film sales.
Two-thirds of all camera users now are women. That means that digital cameras have to be simple to use for the market to grow. Digital cameras are quite complicated and, therefore, most digital-camera users today are male, Matsumato pointed out.
"I don't expect digital cameras to cut into our film sales until the cameras drop down to the $50 to $60 range," stated Ray Wallace, director of nonfood at Cub Foods Georgia division, Lithia Springs, Ga. "That will take time, but with lower prices digital cameras will be right for the grocery industry."
"Until the cost of digital cameras undergoes a major drop and the image quality gets better, there will always be two [photo] markets," he said.
In a bid to grow photo-finishing volume, Georgia Cub stores earlier this year started to process any size roll of 35mm film for $2.99 for 3.5-inch prints, and $3.99 for double prints. By the end of last month, developing volume had increased 36% to 38%, Wallace said.
"Until digital cameras are priced lower, they aren't a real threat to our 35mm film sales," said Barb Zugmier, nonfood director at B&R Stores, Lincoln, Neb.
Despite how easy it can be to order cameras and photo gear on the Internet, B&R has seen its single-use camera volume climb during the past year or so.
"We sell a lot more 35mm disposable cameras than ever as consumers look for lower cost [cameras]," Zugmier said.
B&R tries to devote more display space to its disposable cameras because of the demand for lower priced product, she added. The chain also keeps its film and photo business from deteriorating by matching mass merchandisers' retails.
"If a mass merchandiser runs 200-speed 35mm color film at $1.99 on its front-page circular, we match that. We may lose [profit] on that sale but we're keeping customers in our store," Zugmier asserted.
Although B&R's photo processing "is profitable, we now treat about 70% of our film as a loss leader," she added.
In general, buyers said they don't see traditional film going the way of black and white as digital cameras and e-commerce continue to expand in the market.
As digital-camera prices fall they present new sales possibilities to supermarkets, said Jim McCaffrey, president of McCaffrey's Market, Yardley, Pa.
"Digital cameras were astronomical at the start," he said, "but sales will start to grow slowly as prices begin to come down closer to the level of regular cameras."
But supermarkets, he contended, can enhance their photo category by moving into the age of digital photography with photo kiosks that allow customers to download, print or enlarge images from a digital camera, photo discs and picture CDs.
