ASSOCIATED WHOLESALERS IS FOCUSING ON PHOTOS

JOEL ELSON

YORK, Pa. -- Photo volume for 114 Associated Wholesalers' retailers is up 21%, according to Charles Yahn, vice president of Associated's general merchandise warehouse here.

The increase in volume is being attributed to a revamped photoprocessing program with Konica that stresses lower developing prices and aggressive promotions, like free film and color enlargements, said Yahn.

"We wanted shoppers to think of our retailers as a destination stop for film and processing," said Yahn.

The new photo program was launched in March after Associated negotiated a lower cost contract with Konica, its new supplier. As a result, retailers shaved their photoprocessing pricing by $1.44 from $4.32 for a 24-exposure roll of 3.5-inch single prints to $2.88.

Retailers also saw their Shurfine controlled-label film volume almost tripled after reducing the everyday shelf price on 100 and 200 speed 24-exposure film from $2.79 to $1.99. In doing so they shaved profit margins from 30% to 20%.

"With the new sourcing and lower priced controlled-label film from Konica, sales grew rapidly" explained Yahn.

A store-brand film choice is an important part of the film rack, "since it offers the price shopper another option," he stressed.

Branded film now accounts for about 70% of film display space while Shurfine has 30% of the rack at retailers using the revamped photo program.

According to Yahn, a steady stream of promotions keeps customers aware of and attracted to film- and photo-finishing specials.

Since the new program kicked in, retailers have begun to feature a photo special every week, ranging from free second prints to a free roll of private-label film or a digital color enlargement with a developing order. The specials last for two weeks at a time.

In a move to snap up new photo customers, retailers are offering a rock-bottom processing price of a 24-exposure roll of film for $1.99. The special will run a few times a year.

"Photo specials have wide appeal, especially private-label film, which is very popular with cost-conscious shoppers. And once shoppers try it they will buy it the next time," said Yahn.

Moreover, digital imaging services like enlarging photos are doing quite well for operators involved in Associated's photo program, he said. "Digital imaging is here to stay, although growth is slow," he added.

About 10 Associated retailers are equipped with Kodak digital imaging systems. The equipment's footprint comprises just 3 to 4 feet of space. "They [the retailers] are very happy. Margins are in the 60% range," said Yahn.

Most of these retailers have purchased their equipment at about $18,000 to $20,000. The majority of the volume is coming from customers who want enlarged baby pictures. Retail for this service is from $7.99 to $10.99. "About 10 more retailers will add this system during the next year," Yahn added.

Window signs and banners hung from the ceiling alert customers about the new lower developing prices, and customers have the option of depositing their film for developing at two locations.

"Shoppers who prefer some interaction with a store employee can bring their film to the courtesy counter. Others can use the 3- or 4-foot wide 3-D photo drop box located at a grocery front endcap if they're in a hurry instead," said the wholesaler.

This summer, in a bid to spark interest in digital photo services, retailers began offering free photo enlargements up to an 8-inch by 10-inch size with new developing orders. For the back-to-school season they plan to repeat the free film with photo-finishing special and the $1.99 processing specials.