ONE-HOUR PHOTOS DEVELOPING SALES

JOEL ELSON

Supermarkets are successfully developing further business opportunities by investing in one-hour photo services. Not only does one-hour photo become an additional customer draw, some retailers see it as a way to develop ancillary sales in the lucrative business community where lawyers and real estate professionals often require instant photo development.

John Susich, vice president of general merchandise at Hy-Vee Food Stores, Chariton, Iowa, envisions developing unrealized marketing opportunities from real estate and title companies, lawyers and other professional and business customers.

"A key in running a successful one-hour program is reaching out to the business and professional communities, including mortgage and title companies, attorneys and others who don't mind paying the premium price. That is another select audience you must go after with one-hour. We'll be moving toward that goal," said Susich.

Some retailers are using their one-hour labs to improve the efficiencies of their photo-development services by processing orders for 24-hour service through their one-hour labs.

In addition, one-hour photo processing gives retailers a competitive edge against mass merchandisers and drug discounters without one-hour developing, according to an SN poll of retailers.

One-hour processing also appears to meet with no consumer price resistance against the higher cost for speedy development. Gus Bergstrom, director of marketing for the 109-store Winn-Dixie division based in Montgomery, Ala., said, "the fact that a customer can get the prints back that afternoon seems to be more important than the higher price of one-hour work. People usually want their pictures back faster, especially for important occasions."

One-hour photo-processing centers went into five Winn-Dixie stores in the division last year.

"They are doing very well and some have really taken off. It's due as much to personnel running it as the demographics at those stores," said Bergstrom.

He added the division plans another half-dozen one-hour labs in the 15 new stores planned to open this year, and other, existing stores may also begin one-hour processing, "if we get the equipment and include it in the marketing mix that we offer our customers."

The Winn-Dixie executive explained a major element in a successful one-hour photo center "is having employees knowledgeable, involved and very customer-oriented and trained to really speak to customers as they come by, and make them aware that it's [one-hour service] there."

Bergstrom said store demographics can figure prominently in placing a one-hour processing lab. "It does better at middle- to upper-income areas. You certainly have to look at disposable income, which is also a factor in placing one-hour photo processing."

The division's photo centers are in the front lobby along with shipping and fax services.

At Hy-Vee, one-hour photo services represent untapped nonfood sales and profit potential, said Susich.

Hy-Vee has had one-hour processing at 18 stores, using Qualex Express Stop on-site processing centers at some locations, which combines the faster processing with over-night service and sales of film, cameras and accessories.

Hy-Vee, however, "is fine-tuning our one-hour with retraining of store personnel and using stronger promotions to get more people into using the faster processing," said Susich.

The retailer has offered one-hour processing at one store for three years, and the rest have been set up within the past nine months. While one-hour processing has worked out well at Hy-Vee, the retailer wants to grow the program beyond its current performance.

"We continue to evaluate our one-hour program and want to make it more of an overall part of our photo processing rather than as a separate entity. We're at the point where the business is good, but we want it to be great, and we're still figuring out how to get it there."

According to Susich, "building one hour is a gradual process that also requires a certain mentality in the people at store level working at the one-hour area. Shoppers have to see the value in the faster service or special orders that carry slightly higher retails, and see the value in paying the added cost."

In the months ahead, the Hy-Vee general merchandise executive will be "trying to highlight one-hour, which is a whole different product than traditional overnight processing. We'll highlight this better to involve more customers in using it, and make them more aware of the faster service and its value."

The chain will introduce more local promotions at stores, "reaching out to a wider market base by offering a complete photo package that includes one-hour processing along with the other services," Susich added.

"One hour is also something our employees have to get used to selling. It's [a service] for $8.99, instead of $3.99 or $4.99, which makes it a whole different product."

Ken Johnson, vice president of general merchandise at Hannaford Bros., Scarborough, Maine, said some of his stores have had minilabs for the last several years. "We've put them into about 10 stores in that period of time. We got into photo minilabs because we felt there was a marketing opportunity, and that there were customers out there who wanted one-hour photo."

Johnson added that another reason for installing on-premises photo processing was "it also would enhance the selling of film and overnight processing."

Pay Less Supermarkets, Anderson, Ind., is planning on expanding its one-hour photo processing beyond one store to two more units.

"Hopefully, we'll be expanding one-hour to another Anderson store, and also at a new store being built at Lafayette set to open early next year," said Dick Sizemore, nonfood merchandiser.

"We're hoping with these two stores we'll be able to offer one-hour photo finishing in a one-hour photo center on each side of town. Also, we're planning to run photo-developing orders from our other stores into one of those one-hour stores."

Sizemore has found one-hour processing "helps our overall photo-finishing image. For those people who want to pay a little more, they can pick them up in 30 to 60 minutes, and it enhances our regular photo finishing."

According to the retailer, a one-hour processing section is best planned from a store's inception rather than just trying to work it into an existing store. "It takes up some room and is hard to work in later," said Sizemore.

Pay Less customers can bring their film in for developing in one hour or overnight to the video department, as before, or to the one-hour department, which is set up as a separate area and profit center.

Pay Less also manages to generate extra productivity out of its one-hour department, which is open 8 a.m to 7 p.m., by accepting film for overnight processing from its other stores.

"We pick up overnight film developing orders from the other stores and run them through the one-hour department. We then either deliver them back to the store that evening or early the next morning, in a 24-hour turnaround." After it set up its first one-hour on-site photo-processing center at its Philadelphia store in the upscale Main Line section of the city, Genuardi Super Markets, Norristown, Pa., saw its one-hour photo volume double its projections.

Introducing faster film developing service with an in-store minilab "is one of the key non-traditional services of the St. Davids' store," said Mike Kilgallon, nonfood specialist.

"Like our other 26 stores, the St. Davids' outlet specializes in quality service, great selection and low prices, but with its location on the Main Line, we felt that it was a good opportunity to add some new products and services," added the nonfood executive.

Kilgallon added that the one-hour photo center is "at the cutting edge of photo processing. It's been very successful."

Kilgallon said one-hour developing "certainly appeals to our customers and gives them another reason to do most of their shopping there. Businesses, particularly law offices and real estate agencies, as well as consumers use the service instead of taking their film to camera shops or traditional stand-alone photo minilabs in the area."

Genuardi's one-hour photo section is at the courtesy counter and shares an area of about 620 square feet with video rental, check cashing, cigarette sales and other customer services. The chain is planning on expanding the program at all new stores, according to trade observers.