Robbo Pt 2: Assessing the suppliers

September 15, 2011: We continue our two-part interview with recently-retired managing director of Ted’s Cameras and chairman of PMA Australia, Richard Robertson.

How do you rate the recent performance of market leader Canon?

That’s a hard question to answer. I think Canon has done an excellent job for Canon. And they’ve bought some fantastic products to market and built a fantastic network of retailers and sub-distributors. So why would you then go and muck it up by having a direct online sales program?

What they said to me was they didn’t think they were well-represented enough online and that’s where the customers want to shop, and that’s what Jason McLean said in his interview with you – that he felt their distribution channels weren’t up to the mark.

So for 40 years we haven’t been up to the mark and all of a sudden now we have to compete with our suppliers. What part of the current offering from all channels – specialty, CE, mass merchants and online – isn’t being delivered now?

‘Why do they want to go direct online? They want to double their margin. End of story.’

They’ve been heard to say that their issue is retail staff switching preferences from Canon to other brands. Well that’s been going on since Adam was a pup. It’s the worst excuse I’ve ever heard to justify going direct online.

They’ve stated they perceive it [the Canon online store] to be one or two percent of their business. No one makes that sort of investment for one or two percent of business turnover. Why do they want to go direct online? They want to double their margin. End of story.

And Fujifilm?

I think it’s fair to say Fujifilm has gained its position in the marketplace at the expense of the independents, who had been the cornerstone of Fujifilm’s success. The initially rose to success on the back of minilabs and wholesale labs.

They’ve encouraged a low price strategy through CE and mass merchants with low cost of supplies which independents can’t compete with. While it increases foot traffic and holds people in the store while the order is being processed, the only people who really win with low retail prices are the manufacturers – in this case Fujifilm. It burns paper and chemistry sales and drives their hardware and software and servicing business.

Anything with high churn is going to the big chains to prop up their business – books, flowers, magazines…But definitely only as a traffic flow generator.

And all the major manufacturers – Fujifilm, Kodak, Agfa, now HP – have jumped on the mass merchant bandwagon at the expense of small owner-operated stores at some stage.

‘…Fujifilm has gained its position in the marketplace at the expense of the independents, who had been the cornerstone of Fujifilm’s success.’

Anyway, let’s re-visit this after we hear what Canon and Fuji have to say at the PMA meeting up in Sydney.

How would you rate HP so far?

I think that their product – once all the bugs were ironed out – is an excellent product, though not with the quality of silver halide.

They need to be more responsive to the local market, Someone in Australia who can make decisions in a timely fashion. Their business structure is so convoluted any decisions take six months. It’s usually the right decision, but sometimes you need an answer today.

Servicing is an issue because of all the different components. When it was just an [Agfa] MCS 2 the serviceman had been working on the the same machine for 10 years and could fix it in his sleep.

Final thoughts?

Stand back, take the emotion out of your view of your business, and have the balls to stand aside if that’s what’s best.

Peter De Janko comes to mind – he said, ‘I don’t want to do it, I don’t want to put my head in the landlord’s noose for another five years. I want to get out..’

Peter was in the one store for 31 years serving the same customers day in day out, dealing with the same landlord who ripped him off mercilessly for most of those years. There comes a point in time when you’ve got to say, ‘I can keep going’ (and he could have as he had a wonderful business) ‘but there’s other things in life to do.’

And there’s other things in life I want to do .

Am I going to come back to retailing? No – especially not photographic retailing. I might find something to do, but if the first two weeks retired have been any indication, there’s enough to stimulate me and I’m sure I can find people to talk to about business if I want to.

If anybody wanted to contact me about how their business is going and what they should do I can always give free advice. But only on Thursday mornings between 9 and 10!

Or they can email me at bmwm5rrr@gmail.com

In closing, I’ll say that the future will be as bright as the world allows us to make it. We are not in control of the economy and the politicians certainly aren’t or it wouldn’t be in the shit it is in. So whatever is going to be will be.

What people have to do is stand back and take an honest look at what they are doing and see if there’s a better or a cheaper way to do it. Look at their costs

In general we [photo retailers] are very good buyers and very poor stock managers Good employers, but we can’t find it in our hearts to let people go or we replace them without considering if we could live without that person for 6 months and see how it goes.

You end up being top heavy in staff, top heavy in administration and top heavy in stock. On falling sales and falling margins.

Prepare for the good times because the good times are probably only one or two years away. Have you repositioned your business to take advantage of the good times?

Maybe those businesses who are in bricks and mortar now would be better to transfer to just a straight online business. So you might end up with, say, Parramatta Camera Store instead of being in Parramatta being online. Take the business out of Westfield and put it in the garage – what’s to stop them doing that?

The views expressed in this and last week’s interview are those of Richard Robertson, and do not represent those of the current management of Ted’s Cameras.