May 27, 2010: Presto Photographics in Ashmore on the Queensland Gold Coast is bookended by a Harvey Norman store in neighbouring Bundall with an 8 cent Fujifilm print offer and, a few clicks up the road, a Clive Anthony store with a 10 cent ‘everyday low price’.
Competing against these prices – not arguably but prove-ably among the lowest in the world – it’s little wonder that the 20 or more independent labs which once operated on the Gold Coast have been whittled down to three or four (depending on where you draw the boundaries) over the past few years.
Presto, which has been run by owner Don Shawyer for the past 18 years, has boldly responded to the dramatic loss of revenue from 4×6-inch prints by investing big bucks into a move to larger premises to add a portrait studio and wide format canvas printing as replacement revenue streams.
They have also beefed up the photo restoration side of their business. (Don Shawyer noted in passing that there was now a steady stream of work coming in for restoration of early dye-sub photo prints which have faded and turned pink over the past 10 years – but that’s another story!)
Presto charges 29 cents for orders of 11 prints or more and 25 cents for orders above 200. (Harvey Norman’s 8 cent offer is also for orders of 200 or more.) He said that in 2007/8 Presto would average around 1500 prints per day, and 2000 on a good day.
‘Now it’s a very good day if we do 1000,’ he said, reading from a list of recent days’ print throughput – all around 500 to 700 mark.
Shawyer says that if he goes through the mathematical exercise of dividing a roll of paper into 4×6-inch segments, each one of those segments costs him 9 cents. That’s just the paper – not the chemistry, nor the labour, lease cost, electricity, rental, etc. He is confounded as to how his larger competitors can compete profitably with their rock-bottom offers.
‘If the Harvey Norman photo department had to stand on its own two feet it wouldn’t survive – unless Fujifilm is giving them the paper or something.’
‘I would challenge them to show you figures that the photo department could survive without subsidisation from other departments in the store.
‘It’s market power, market dominance which allows him to price as he does. If that’s not predatory pricing then I don’t know what is.’
So with a conviction that the playing field is far from level in his Gold Coast marketplace, Shawyer took a complaint about Harvey Norman pricing to the ACCC around 18 months ago.
The ACCC responded that ‘the temporary use of below cost pricing is seen as normal marketing practice and does not constitute predatory pricing…’
However, following the introduction of the new 8 cent print offer a month ago (probably in response to the Clive Anthony 10 cent offer) an anonymous call from Presto to the Harvey Norman Bundall photo department confirmed that, ‘We do not have an end date at this point of time for our 8c print offer..’
‘So we thought that necessitated a second call to the ACCC,’ explained Shawyer. ‘The criterion for rejecting our first complaint has been blown out of the water.’
Photo Counter also called the Harvey Norman Bundall photo department, and it was readily confirmed that the 8 cent offer was not a temporary special, but ongoing: ‘We are the cheapest. We will stay the cheapest unless someone goes to seven cents. Then we might drop to 6,’ we were told.
Shawyer say that this time the ACCC hasn’t rejected the complaint out of hand, which gives him some hope that the competitive situation might be scrutinized a little closer.
He has received notification that the issue was under review and he would get a response within the next 28 days.
A call to Clive Anthony in Helensvale also confirmed that their 10 cent pricing was here to stay: ‘It will always be this price. Always.’
It has already been in the market for over 12 months, according to Shawyer.
The Clive Anthony 10 cent price is with next day pick-up – 15 cents for same-day.