To celebrate its 10th anniversary this year, enthusiast magazine Photo Review gathered its usual suspects together and asked them to pen ‘something interesting’ about the last 10 years. As the long-time sub-editor and a regular contributor, I was asked to write on changes in the way we retail photography.
There’s nothing here that will not be known by photo retailing insiders (and regular readers of Photo Counter will be reminded that my particular hobby horses don’t wear the green silks!) but the end of the year seems an appropriate time to wax refective. So here we go…
…Photo retailing has changed dramatically over the past 10 years, in part as a response to the digital imaging revolution, and in part due to the peculiar dynamics of the the Australian retailing marketplace.
There’s been another profound and interconnected change in how we see photos, and the assumptions about why we take them – covered in the second half of this feature.
When the first issue of Photo Review came out 10 years ago there were around 2000 specialty photo stores around Australia, almost all of which ran a minilab primarily processing rolls of colour film and knocking out millions of 6×4 prints.
While some ran the lab with albums and frames for sale out the front and maybe offered a few compact cameras at most, many of them were also Aladdin’s Caves for keen photographers, a place to check out the latest models, chat about photography, get advice from knowledgeable and sometimes pasionate sales staff, find accessories like filters, tripods and camera bags and pick up dark room supplies.
Now there are maybe 500 stores left standing (No one in the industry seems to have the heart to make an exact count!) The rest have been squeezed out of the market first by technological change, but more recently by the ruthless exercise of market power.
Digital photography made most of the old analog minilab equipment obsolete. The new equipment cost a bomb, incorporating as it did sophisticated and expensive laser units to expose the image onto photosensitive paper. This used to be the role of a light and an enlarging lens in the minilab. The first models were upwards of $400,000. Even today a silver halide photo printer, less the now-obsolete film processor, is at least $150,000.
Not long after the digital labs came photo kiosks and kiosk software, automating the print ordering process. These too added to the cost of equipping the modern photo store.
The first wave of photo retailers to close their doors looked at the lease costs on a digital lab and kiosks usually to be paid off over a three- or five-year period, and decided not to take the risk. Film consumption was falling as consumers switched over to digital cameras, but prints from digital cameras were not filling the gap. So the technological imperative – to switch over to digital equipment – in no way guaranteed success. This was not like a record store switching from vinyl to CDs.
But that was just the first wave. It would be easy to assume that the change in the way photography is retailed in Australia was all caused by technological change. It is as much a case study in changing business loyalties and changing alliances. Like dairy farmers and corner shops, service stations and record stores, photo retailers have been victims of the consolidation of retailing market power among a small number of large players.
Beyond the digital imaging revolution, the last decade has also seen the rise of Fujifilm as the clear market leader when it comes to the output end of photography: supply of the printing equipment, the paper and the chemicals. While Fujifilm was perfecting automated digital minilab equipment with its Frontier range, two rivals in Konica and Agfa went belly up, and Kodak lost its way, crucially abandoning a critical long-standing alliance with minilab equipment manufacturer Noritsu. It also stopped manufacturing photographic paper in Australia. (Kodak now literally has what money it has left riding on relatively expensive and qualitatively questionable dye-transfer technology for prints. It has dealt itself out of the big game, but continues to manufacture highly-regarded silver halide paper and chemistry. )
While Kodak was shrinking over the decade, Fujifilm was filling the breach. It also acquired market-leading, Australian-based photo kiosk/retailing software developer Whitech Solutions.
With Kodak in decline and the other competitors out of the picture, Fujifilm made grand vertical alliances first with Harvey Norman and then Big W. But first it moved out of retail itself by closing its successful, company-owned Rabbit chain, many of whose stores inconventiently competed in the same shopping centres as its larger customers. It also slashed support for the Fuji Image Plaza chain of independent stores supporting the Fujifilm brand.
While the little guys, who in the previous decade had been Fujifilm’s best and most loyal customers, were struggling with their monthly lease on their Fujifilm Frontier minlab, and paying top dollar for the paper and chemistry their lease agreement dictated they had to source from Fujifilm, Fujfilm was installing brand new, top-of-the-line equipment in each and every Harvey and BigW outlet.
Naturally, buying power would enable the big retailers to negotiate a better deal with Fujifilm than the mums and dads scattered around the country, but just how much better a deal is very much commercial-in-confidence, and a source of bitter speculation in the industry.
– A good enough deal, however, to enable both Big W and Harvey Norman to offer 6×4 prints at under the cost of the raw materials the paper and chemistry supplied to the independents by their mutual supplier, Fujifilm.
Taken as a stand-alone product, there was no good reason to offer prints at 15 and 10 cents. Certainly not using branded Fujifilm paper that specialist retailers were presenting as a premium product. The market wasn’t crying out for price relief. In 2001, the lowest price for developing and processing a 24-exposure roll of film was $7.99 or 33 cents a print. That was cheap 10 years ago! But now 10 or at most 15 cents is what the customer has been groomed to expect at the low end (which, as I’ve noted previously, represents the lowest-priced printing in the western world – but not necessarily the lowest cost printing!)
This has been devastating to independents; the bread and butter product, the 6×4 print, has to earn some kind of margin or the whole thing doesn’t work. Adding salt to the wound, customers are inclined to suspect that the local photo store is a rip-off merchant for seeking 25 or 30 cents for a print – when that is in reality a fair price. The disparity is in the terms and conditions by which Fujifilm offers its products to its large customers compared to how its treats dedicated photo retailers.
The silly thing is that no-one really knows whether Australians get more prints made because they are so cheap than they would otherwise! If they do, they haven’t bothered to tell the rest of us.
But the value to the big retailers, particularly Harvey Norman, as its outlets are usually in relatively far-flung destinations – has been that it draws the customer into the store. And then they then have to wait around for their order to be completed.
‘Now what do to for 30 minutes of so while I’m in Harveys? Buy something, perhaps?’
So the competition has become tough indeed for the specialist, with far higher costs overall and no other category of product with which to amortize the cost of the photo counter. (How smaller tenants are gouged in Australia’s shopping centres is another story.)
So specialist photo retailers have had a perfect storm of technological change, followed up by a pretty brutal change of allegiance by the dominant supplier to the industry. Why Fujifilm would stand by and watch its premium brand trashed by cut-price prints from its new retail partners is hard to fathom.
Photo books, which were to be the great saviour of photo services retailing, have not exactly captured Australia’s imagination. And once again, tooling up to produce new products like photo books and calendars demands extra costs.
The latest ‘must-have’ for photo retailing is a website and the capability to take online orders. Fujifilm actually runs the online operations on behalf of Harvey Norman Photo Centres and Big W Photos, using its Whitech Imagine software platform and its own website infrastructure.
It’s no wonder smaller retailers feel their supplier is working hand in glove with their larger competitors at their expense.
As a result, across the country many hundreds of photo stores have quietly closed their doors over the past three or four years. Some have been sold to a new owner, but more often they’ve been lost to photo retailing.
Many independents have approached the ACCC over the years to lodge complaints about what they perceive as predatory pricing by Big W and Harvey Norman, but the law as it stands doesn’t protect them: low pricing – even under-cost pricing – from a large retailer with market power has to be proven to be aimed specifically at harming a small competitor before it falls into the legally ‘predatory’ category.
The same principle held true recently with big retailers and milk: the ACCC regarded cheap milk prices as healthy, robust competition between Woolworths and Coles. That they were decimating the business of corner shops in the same marketplace was irrelevant to the ACCC. They were just collateral damage – and what’s not to like about milk at $1, or photo prints at 10 cents, or 4 cents off a litre of petrol anyway?
Thanks for the memories
Ten years ago, Australians consumed around 35 millions rolls of film per year and each and every one was useless until it was taken to one of those 2000 photo shops then plying their trade. In a way the families and photo enthusiasts of Australia were something of a captive audience; if you wanted to see the pictures you had to pay – even for the dud pictures on the roll!
Most of those print and negative wallets have, it’s reasonable to suppose, gone into shoe-box type storage, with the ‘keepers’ sometimes making it into photo albums or more rarely behind a picture frame.
How things have changed. Using a digital camera, a ‘keeper’ has to make it past a phalanx of camera and PC ‘Delete’ buttons and other technological hazards – from a second or two after its initial capture through to the all-too-frequent failure or abandonment of a computer hard disk drive some years down the track. Most of our pictures end up nothing more than an ephemeral and vulnerable collection of virtual ones and zeros.
In 2010, 85 percent of consumers surveyed by the Photo Marketing Association said they stored their images primarily on a computer hard drive, followed by external hard drives. Printing comes in a lowly fifth as a means of long-term storage (27 percent) with 9 percent nominating photo books.
Only 36 percent of households ever make hard copies of their images for reasons of long-term storage. The photo industry has a whole has done an appalling job of educating people about the value of a print as an archival record. The associations charged with developing the industry have done their members and Australian photo consumers a grave disservice.
I worked at Kodak through the 1990s and if there was one corporate certainty it was that ‘Kodak is in the memories business’. But it appears we were not at all in the memories business. It’s clear that, given the choice they now have, people don’t get their photos printed thinking ‘this will make a great memory of a happy time/good friend/ special occasion in 20 years’ time’. Most of us just aren’t that forward-thinking! We have them printed because we want to see what they look like, and share them as soon as possible with people we think will be interested. Printing is no longer necessary to achieve that.
I recently moved house, which brought many hundreds of old photos to the surface. As a family we had initially made up albums, but after many years of good behaviour fell behind. Here were the raw materials after all that time! The furniture moving was held up for a couple of hours as I became more and more engrossed in the cavalcade of old faces and places and the resulting memories. The whole lot had become keepers – even while they lay in the dark unloved and almost forgotten.
Inertia rules, OK!
The thing is, I didn’t come to have this treasure by any particular virtue or good habits. All I did was take some photos and then not throw them out. I guess it’s one of those small, rare consolation prizes for getting older. But sadly no longer, simply because you no longer have to get photos printed to see them.
It’s ironic that one of the great benefits of digital photography – the immediacy of the image – works against the arguably greater benefit of possessing a permanent, immediately viewable copy of the image.
There’s a close parallel in the music industry, with song file downloads replacing CDs. And once again, something is lost in the gain. Digital music files are just as ephemeral as image files. There is no artefact the CD cover, lyric sheet, the physical CD itself.
I wonder what will happen to people’s personal collections of images in the future? If we look at current practice and technology it appears the majority of us are destined to lose our photographic memories. While digital technology has delivered tremendous convenience, it has taken away the mostly-overlooked benefit of permanence. In my experience, that benefit takes a while to become apparent, and grows over time. The present is not usually a good indicator of the future. Perhaps therefore, it will take a while for people to realise what they are missing, and for some bright spark to come up with some gadget or service which answers that need. Here’s hoping.
One thing of which I am more confident is that your photographic prints – whether you pay 10 or 20 or 50 cents a print – will repay you many times as the years pass by. And we will miss our photo stores if the last 500 or so of them are seen off by big retailers.