DISPOSABLE INCOME 2001

MARK HAMSTRA

Soon it may be cheaper to buy a camera than it is to buy a roll of film. As consumers increasingly turn to one-time-use cameras as an everyday solution for picture taking, they are becoming more and more price-sensitive, according to industry insiders.

The devices still command rings of $10 or more as impulse purchases, although the latest data reveal that average prices are declining.

With prices driven down to the $5 to $6 range for 27-exposure cameras and cropped even further by aggressive sale promotions, retailers said they have seen their per-unit margins squeezed as well, down below 10% in some cases.

Supermarket specialists pointed to Wal-Mart as a major influence on the category's pricing and profitability.

"They have driven the margins down," said Thomas Shively, general merchandise manager, Supervalu, Northeast Division, Easton, Pa.

Wal-Mart, Bentonville, Ark., recently lowered the price on its Wal-Mart.com, one-time-use flash camera to $4.94, which includes developing the pictures into digital images posted on the retailer's Web site. The cameras originally carried a price of $6.84. The cameras are made by Fuji Photo Film USA, Elmsford, N.Y., which also supplies the chain's in-store photo processing labs.

Wal-Mart also offers 27-exposure, one-time use cameras bearing the Easy Shot brand -- which are not made by Fuji -- that carry a preprinted price of two for $7.88, according to sources.

Supermarket retailers also have been turning to private-label, one-time-use cameras, which are generally offered in the $6 to $7 range. On a recent visit to A&P and ShopRite stores in New Jersey, SN observed that both were carrying private-label, 27-exposure, single-use cameras for $6.99, while brand-name cameras were priced $2 to $3 higher.

"Private label just seems to be the best deal around for everybody," said one general merchandise specialist at a large retailer in the Southeast, pointing out that margins are better on the private-label items. "There's less markup on the branded cameras."

He said his chain's private-label cameras outsell branded cameras by about a 2-to-1 ratio, but other retailers said branded cameras perform much better.

"We do have a private-label camera, but on something like that they usually go for the name brand," said Roger Kerr, buyer, nonfood and grocery, Goodings, Orlando, Fla.

He said Goodings, a three-unit chain that does a lot of tourist business because of its proximity to Disney World, offers Marquis-brand cameras from its distributor, Fleming, as well as cameras from Kodak and Fuji. The stores also offer in-store processing, which he said helps drive sales.

James Miner Jr., vice president and secretary, Miner's, a regional operator based in Hermantown, Minn., also said that branded, one-time-use cameras outsell his Marquis-brand, private-label products.

"I can tell you that Kodak is the most popular brand," he said, although he declined to provide specific sales data.

Shively said that Supervalu offers its Home Best brand cameras with everyday value pricing of $4.99 for daylight cameras and $5.99 for cameras with a flash.

He said the ratio of private-label sales to national-brand sales of single-use cameras is probably higher than the ratio is for other general merchandise items.

Overall, private-label sales of one-time-use cameras are up to almost 20% of total sales, according to Garry Briddon, general manager and vice president, business development, Kodak, Rochester, N.Y.

That figure has increased a few percentage points during the past five years, he said, while the percentage of private-label sales of traditional film has decreased.

"It seems that people are willing to compromise more in one-time-use cameras than they are in traditional film," he said.

He said total sales of private-label film products, both one-time-use cameras and traditional film, are about 12.4% of the total category sales in U.S. supermarkets.

Retailers also pointed out that the branded cameras sometimes offer aggressive price promotions, making their products even cheaper than private-label offerings.

Shively of Supervalu said a recent combination promotion for a Fuji one-time-use camera drove the retail price of the items down to $3.99, for what previously had been a $9.99 camera.

"If you sell them at $3.99, you've got to have three rings to make what you used to make with one," he said.

He said consumers increasingly are looking for bargains.

"You have to be competitive," he said. "Yes, you will put some out and sell them at $9.99, because you'll pick up the tourists and some people who want something at the last minute, but there are some pretty intelligent shoppers out there."

According to ACNielsen, Schaumberg, Ill., sales of single-use cameras in food, drug and mass retail outlets totaled $936.1 million in the 52-week period ended Oct. 6, an increase of 12.1% over the sales in the year-ago period. Unit sales for the recent 52-week period were 127.4 million, a gain of 17.3 percent over the preceding 52-week span.

In supermarkets, dollar sales for the 52 weeks ended Oct. 6 were $218.2 million, an increase of 8.4% over the preceding year. Unit sales for the recent period were about 25 million, a 10.5% gain over the year-ago time frame.

The data revealed the price disparity at mass merchandisers, whose dollar sales were less than double those of supermarkets, while unit sales were nearly triple.

Briddon of Kodak estimated that the growth of one-time-use camera sales would be 9.8% this year, after several years of double-digit growth. He said the growth was in the teens earlier this year, but October sales growth fell sharply, to about 4%.

He estimated that about 35% to 50% of the growth in one-time-use camera sales was incremental to traditional film sales, while the rest was cannibalization.

Steve Lund, senior brand manager, one-time-use cameras, said it is difficult to gauge the impact of one-time-use camera sales on traditional film sales because of the growth of digital cameras.

"There's no doubt there is cannibalization going on, but it's driving the life of the whole category," he said.

"[Single-use cameras are] certainly replacing the use of film in a lot of places," said Gary Pageau, associate publisher, editorial, Photo Marketing Association, Jackson, Mich. "Not all single-use camera sales are incremental."

He said manufacturers have increased the quality of the products during the past few years, adding improved lenses and 800-speed film, which Pageau said offers consumers "a lot more latitude" to take good pictures.

"I think it's definitely a case where the single-use camera has kept the market going, and everyone's benefited by it," he said.