Lately in the Nonfood Strategies section, we've been writing more about digital products. But I'm not sure they've been fully embraced by supermarkets. There's still a hesitancy -- whether it's unfamiliarity, a concern with shrink or, in the case of digital photo processing, waiting for lower prices on in-store equipment.
Digital photography and DVD are at the forefront for supermarkets, with cellular phones and music on compact discs being a smaller part of the picture. In the last two years, even audio books have broken into the digital arena on CDs and legal online downloads.
In the photo category, there is still a huge market for film products and processing, although it is declining, with single-use cameras remaining a growth area. But digital cameras are now being enthusiastically embraced by U.S. consumers; that is where the photo-processing future lies for supermarkets.
At this month's Las Vegas show of the Photo Marketing Association International, Jackson, Mich., the mainstreaming of digital photography was a key trend. Michelle Slaughter, director, Digital Photography Trends Service, InfoTrends Research Group, Norwell, Mass., reported that U.S. digital camera sales in units surpassed film camera sales for the first time last year. Household penetration of digital cameras is now 30%, and will be more than 40% by the end of the year, she said.
Like all owners of new technology products, these people will likely be more active users. While there is a vast backlog of digital photo images sitting on home computers, retailer and industry promotional efforts should result in more in-store processing, continuing a trend already under way. PMAI reported the digital photo-processing share of all retailers more than doubled for the period ending November 2003, from 6.1% to 12.7%.
Meanwhile, new less-expensive digital camera memory cards from SanDisk, Sunnyvale, Calif., are being tested by Kroger, Cincinnati, and Rite Aid, Camp Hill, Pa.; the sales of paper and ink cartridges for home printing hold potential for supermarkets; online uploading services can make printing more available to consumers; and soon, cell phone cameras will be sufficient enough to be a photo-printing opportunity.
On the DVD front, I've heard from many retailers that VHS tapes remain in demand, and I believe them. However, I also believe the industry numbers showing DVD eclipsing VHS at a rapid clip, and I believe my eyes when I go into supermarkets and see DVDs fly off the shelves while their VHS counterparts remain. I sense that consumers owning both a VCR and a DVD player will settle for the VHS when their preferred DVD is out of stock, artificially propping up sales of the old format. Retailers need to pay close attention to developments in this area.
While all this technology takes hold in the nonfood sections of supermarkets, retailers should note another trend identified by Pam Danziger, president, Unity Marketing, Stevens, Pa. She observed that, as consumers weary of computer-generated communications, sales of high-end specialty papers and writing instruments are increasing.
The digital era is in full swing, but there is a backlash to it. Supermarkets need to monitor both movements in order to maximize their sales and customer satisfaction.