‘DigiDirect Camera House’ takes over Camera Action site

In a dramatic turn of events one of Australia’s leading photo specialist retailers, Camera Action, closed its doors last week, with the outlet scheduled for a re-opening under new management as DigiDirect Camera House in the next few days.

Paul Vartelas of Camera Action liquidators BK Taylor told Photo Counter the debt to creditors amounts to at least $2.5 million and could reach $3 million. The main secured creditor is also the main supplier to Camera Action, the buying/marketing group Camera House (Raleru).

Paul and Sina Clayton have had a close association with Camera House over the years, with Paul Clayton chairman of the Buying Committee from 1991 until July last year and Sina Clayton a director until January last year.

They had built the Elizabeth Street business over 32 years, but called in liquidators last week after Raleru stopped supply.

With restricted supply following the Raleru decision, Camera Action took the view that it was not feasible to continue its attempt to trade its way out of debt in what industry veterans are characterising as the toughest trading conditions ever for photo specialty.

‘Trading terms were in place between Raleru and Camera Action Camera House; however when these terms were unable to be met, the owners took the action they did,’ said Raleru general manager, Paul Shearer.

‘Raleru did everything it could to assist the owners over a long period. Raleru did not initiate this situation. The action taken was totally in the hands of the owners of CACH.

‘ I believe the company did everything it could to assist. Camera House has a very successful early intervention program which has proven to be successful.’

Commenting on potential damage to the Camera House brand Mr Shearer said:

‘Raleru is taking all the necessary steps that are required to ensure that there are no negative effects on the brand; steps taken will be advised in due time. Our members understand and are aware of the strength of the company.’

– But how did one of Australia’s iconic photo specialty businesses, run by experienced and astute business partners in one of the top locations in the country, find itself in such dire straits?

In the early days of the ‘digital revolution’ Camera Action opened a second store several hundred metres away from the Elizabeth Street ‘hub’, to specialise in digital photo services. It was a ‘store of the future’ with multiple Fujifilm kiosks and expert staff to assist customers.

The cost to fit out the store with expensive equipment and a sleek, modern design was far higher than a conventional photo specialty outlet. Whether it was a concept whose time had not yet come, the wrong concept, or simply located in the wrong place (on the outside of the QV shopping complex, in Lonsdale Street), or a combination of all these factors (and Fujifilm 10 cents prints also should also be factored in) it was not a success, even though the Claytons persevered for five years or so. There were then extra costs associated with closing it down. This ill-fated initiative is probably the key factor in Camera Action’s ensuing financial difficulties.

– This, anyway, is is the initial assessment of liquidator, Paul Vartelas. ‘The new business cost a lot of money to set up and there was not as much passing foot traffic. It then cost them a lot of money to get out of it,’ he explained.

In March last year the Claytons sold their luxury home and put the proceeds towards repaying their business debts. However, this was not enough to get back into the black, and arrangements were then made with supplier/creditors to repay what was still outstanding, over an 18-month period.

After six months, according to one key supplier, Camera Action had ‘more or less’ been meeting its monthly obligations, and appeared to have the confidence of credit insurer, QBE. Several suppliers told Photo Counter that as far as they were aware, all creditors other than Raleru were willing to continue with the debt repayment program.

‘If one can believe the rumours, they were holding up their end of the bargain, unless there are other serious issues we are not privy to,’ said Richard Robertson, the well-connected ex-managing director of Elizabeth Street competitor, Ted’s Cameras.

The demise of Camera Action has attracted considerable sympathy for Paul and Sina Clayton from almost everyone Photo Counter has spoken to in preparing this story, including suppliers who will be adversely effected, along with competitors.

‘It’s sad to see anyone – especially a husband and wife team – sacrifice everything after 32 years slaving away,’ said Mr Robertson.

‘I’m always saddened when one of the industry’s innovators meets hard times,’ said John Swainston, managing director of leading accessories distributor, Maxwell International.

Another supplier we spoke to said that ‘Camera House has ‘behaved very badly’ in relation to Camera Action and ‘not in the best interests of the industry.’

Olympus Imaging managing director Marc Raddatt concurred that Camera Action was doing what it needed, from his company’s point of view.

‘Yes they were fulfilling their obligations,’ he said. ‘We would have continued to supply them.’ He added that most Olympus stock was coming to Camera Action via Raleru, so there was not a large direct account with the retailer.

Another supplier said that Camera Action was making regular payments to everybody and QBE was ‘more than happy’ for the business to continue trading.

‘They did everything ethically and practically they could do – but when there is no stock to sell – what can you do?’

It needs to be noted that while it appears other suppliers were happy to continue to allow Camera Action to trade on, the exposure of Camera House was considerably larger than these other suppliers.

DigiDirect has moved remarkably fast to secure the lease of the Camera Action site. According to sources close to the story, young managing director, Shant Kradjian (right), beat other interested parties, including at least one leading Camera House member, in securing the lease.

Camera House doesn’t have any other Melbourne CBD outlets. Camera House managing director, Paul Shearer said that there were no plans to secure the site directly.

‘We do not have company-owned stores and have no intention to do this in the long term,’ he said.

DigiDirect is a Camera House associate member with three Sydney stores and a strong online business, established in 2006 by Mr Kradjian.

Some, but not all, of Camera Action’s 25 staff members were summoned to a meeting at the store yesterday (March 6) with Mr Shearer and Mr Kradjian, and informed of the new DigiDirect Camera House initiative. They were told that stock was being shipped down from Sydney (most stock from Camera Action besides some accessory lines has already been returned) and the aim was to re-open within days.

‘DigiDirect will probably re-employ some of the people employed by Camera Action, which is a good result, as they have been faithful and loyal to the business,’ said Mr Vartelas.

Staff then set to work preparing for the re-opening, removing Camera Action signage and clearing shelves. They aim to open by either tomorrow (March 8) or next Tuesday (Monday being a public holiday in Victoria) provided some legal hurdles are cleared with the liquidator.

‘Elizabeth Street will be shocked and rocked by the new retailer,’ said Mr Shearer. ‘We are looking forward to it.’

‘Hopefully any new arrangements will enable multiple stores and plenty of consumer choice on Elizabeth Street and keep up the visibility of the category,’ said Mr Swainston;. ‘There is strength in diversity and with multiple good competitors, we all win.’

Comment from PMA: 
Elizabeth St, Melbourne has undoubtedly become the hub of the retail photo industry in Australia. ‘Blood alley’,  as it is affectionately called, boasted Ted’s, Michaels, Kodak Express,JB HIFi and Camera Action, all within close proximity.

To see one of those majors fail, in Paul and Sina’s business, was to everyone a big shock. Yes, we had heard the rumours, however most expected them to pull through. The increasing competition on hardware via the internet, the reduction in margins and turnover on photofinishing, the severe competiveness from major CE retailers and the overall downturn in discretionary retail sales in the last year must all have been contributing factors.

I know I speak for all PMA members in wishing Sina and Paul all the very best in their future endeavours. They have both been unselfish contributors to Camera House and to the trade in general. Things will not be the same without them.

We understand DigiDirect will be moving into the store. That is good news, as the photo specialty channel needs retailers who understand and specialise in imaging.

The consumer also needs to see that the service, knowledge and an understanding of categories such as DSLR are all good reasons to shop locally in specialty stores.

– Peter Rose, PMA Australia