PICTURE-PERFECT HOLIDAYS

JOEL ELSON

When it comes to photo and film sales during the holidays, supermarkets can reap heavy volume but face fierce price competition.

Both retailers and suppliers say that during this period between 35% and 40% of their annual category sales are generated. Yukihiko Matsumoto, director of marketing research at the Photo Marketing Association, Jackson, Mich., said about 40% of annual film and camera purchases are made during the holidays. According to a household survey by the association, about 32% of respondents said they processed their film in the fourth quarter last year.

This gives retailers a big window of opportunity to push volume further at a time when shoppers are in a gift-giving mood and are highly prone to purchase and process their film.

Genuardi's Family Markets, Norristown, Pa., illustrates what many chains face in the photo-film category, especially during this time of the year. Drug chains like CVS and Eckerd and other retailers are strongly emphasizing photoprocessing in Genuardi's trading area, according to John Stahl, the chain's nonfood director. "In the Philadelphia market, photoprocessing has become more price-oriented, with heavy weekly promotions by drug chains.

"In the fourth quarter, I think you'll see more of an aggressive approach being taken in the category by retailers, especially in photoprocessing," said Stahl. Area drug chains offer different finishing specials and coupons for enlargements and film features in their weekly ads, he noted.

To compete, Genuardi's plans to continue giving free second-set prints with incoming photo-developing orders during the holidays, an incentive launched in the spring to bolster its photoprocessing program.

Other nonfood buyers interviewed by SN said they are planning aggressive promotions centered around assorted film-pack sizes and rock-bottom pricing on photoprocessing in an end-of-the-year effort to pump up category sales.

For the 52 weeks ended June 21, 1998, film sales reached $1.7 billion, up 2.2% from the prior year, according to Chicago-based Information Resources Inc.'s Info Scan data. Sales at supermarkets rose 3.2% to $335.2 million. Film sales at drug chains declined 1.4% to $587.5 million. Mass merchandisers generated the largest volume at $770.3 million, an increase of 4.7%. Much of the fourth-quarter sales action will revolve around popularly priced cameras, single and multiple film packs in buy-one-get-one-free offers, free second sets of prints with developing, and processing for as little as 10 cents a print.

Price-oriented promotions on film, photofinishing and cameras in the fourth quarter "is the name of the game," said Paul Gordon, advertising manager at Konica U.S.A., Englewood Cliffs, N.J.

The supplier's fourth-quarter supermarket promotions will be mostly price-driven offers of single-use cameras and photoprocessing specials.

The number of fourth-quarter food-chain photo and film ad specials, especially for film developing, is expected to increase significantly during the holiday season, Gordon added. Food stores generally "push photofinishing to the forefront of their ads at that time," he said.

However, he advised that "retailers shouldn't be as quick to cut [margins] to the bone. It's still a convenience-driven [category]. People are more prone to drop off film while shopping at a supermarket."

That film manufacturers have aggressively promoted multipacks of 100- and 200-speed films and faster film emulsions during the first part of the year "could mean higher pricing on some premium films at the holiday period. But these can also be expected to be priced aggressively as film suppliers look to gain market share by continuing to hammer Kodak," said Genuardi's Stahl.

Genuardi's plans to merchandise Kodak and Fuji four-roll multipacks, which total 96 exposures. These will be promoted as a buy-one-get-one-free offer or as a half-price special.

The chain will also display two Kodak Advanced Photo System flash cameras, priced at $39 and $49, on floor stands during the holidays. These items sold well when they were promoted during the graduation and back-to-school periods, said Stahl.

Another supermarket chain that will allocate extra space to film, using floor stands and shippers to give the category added exposure and trigger impulse sales, is Grand Union Co., Wayne, N.J.

"We'll also be competitive in price," said Chester White, health and beauty care category manager, who noted "film and photoprocessing competition is stiffening, but supermarkets tend not to give film as much prominence as drug stores."

When it comes to film developing, Grand Union will feature manufacturer-driven holiday film promotions and whatever programs its photoprocessing lab has to offer, White said.

The retailer anticipates playing up in its ads digital transfers available with incoming film developing.

"It's a new segment that's starting to drive film processing, and we want to get the message out for the holidays that we can provide digital printouts and transfers. It's part of the modernization of film processing that our customers can get a computer photo disc along with their conventional prints," said White.

At Harding's Friendly Markets in Plainwell, Mich., holiday film and developing specials will be priced close to cost to build category traffic at store level.

"Pretty much any time we advertise film we are certainly at rock-bottom ad prices," and this fourth quarter will be no different, said Dave Lynam, the chain's nonfood buyer.

Harding's will cut margins and use marketing allowances to "basically stay slightly above our cost on the most popular 100- and 200-speed films," when holiday demand for photo products and developing runs on the high side, Lynam said. Manufacturers' floor stands will feature the film specials, he noted.

The chain has found loss-leader photo-finishing promotions are effective traffic generators during the fourth quarter. November and December ads will promote 24- and 36-frame film rolls developed and processed at 10 cents a print. Harding's will run the promotion for a week at a time. Harding's promotes photo finishing several times a year, Lynam said. "It's very popular and attracts customers."

Eastman Kodak, Rochester, N.Y., will be aggressive with fourth-quarter film, photo-finishing and camera promotions. Lori Manning, vice president and general manager for consumer imaging, food channel, noted that 34% of film is bought and 30% of processing is done during the fourth-quarter period. The company will come out with "very aggressive multipack prices too," Manning said.

During October and November, Kodak will distribute 50-cents-off coupons for single rolls and $2-off coupons for a four-roll multipack through freestanding inserts. Moreover, all Kodak film multipacks will carry a $4 on-pack coupon good toward either Kodak premium processing or retailer finishing. The four-roll multipacks will be promoted as "buy three rolls and get the fourth free."

Boosting secondary film displays with shippers or power wings is critical "at this high-impulse period, or else you drive [shoppers] into the mass merchandisers for larger multipacks," Manning said.

Kodak also will promote its Picture Maker kiosks through a radio and print campaign that will break around Thanksgiving. Three-dollars-off coupons will be used to boost photo duplications made on the machines. About 2,500 of the 10,000 machines in retail stores are now in supermarkets, Manning said.

Before Halloween, the manufacturer will also herald its new single-use APS camera, featuring switchable 6-inch and panoramic formats, with an instant on-pack rebate and $2 FSI coupon.