Created following the collapse of Agfa Photo almost 10 years ago, Photo Direct has been characterised from the get-go by a willingness to adapt its business to the market.
It was established in 2005 by Steuart Meers, Tracy Lints and Chris Howell in the Melbourne eastern suburb of Blackburn, initially supplying former Agfa Photo customers and others with consumables after parent company Agfa Gevaert’s sudden and ignominious closure of its photo paper, chemistry and minilab business.
‘Photo Direct has changed a lot in nine years,’ said Steuart Meers. ‘We started out in traditional photo paper and photo chemistry, then we moved into digital photo frames, and then we moved into other things such as KIS wetlabs, the early days of canvas…
‘We’ve always been photo output-based, but it’s just shifted with the times.’
One of the major changes around five years ago was Photo Direct’s appointment as HP’s partner supplying equipment and consumables for its new Retail Printing Solutions business, launched with great fanfare by the printing and IT behemoth and (with considerably less noise) now in the process of being withdrawn from the market. (But, it has to be said, withdrawing in a far more orderly way than Agfa before it.)
‘…Then we moved into HP with RPS,’ Steuart continued, ‘and now HP has decided RPS won’t be around any longer. So that’s a big chunk of the business in revenue terms, not necessarily in total business terms.
HP RPS will officially end supply of consumables, maintenance and spare parts supply on April 2015, but Photo Direct will continue to supply RPS customers beyond that date if required.
‘We are working with all the customers – spare parts still continues, service still continues at least until then, and we are working with customers on what to do beyond that date.
‘If they need supplies of paper and ink beyond that date that’s fine – we will store them up and we will supply them, but there will be an eventual end where it’s not available.’
‘So far the only real change is that HP is not investing in new equipment and marketing, added Tracy Lints. ‘They are not renewing service contracts when they expire, but we have an alternative service arrangement anyway.’
– The real real change is happening out in the marketplace, where major HP customers like KMart and Ted’s Cameras are casting around for new systems to replace their HP equipment. There are around 100 Camera House and other independent outlets with HP equipment as well…
(The new LifePics/DNP system Photo Direct announced in Photo Counter last week is partly a response to that new demand.)
Big opportunity in wide format
‘But with our eyes wide open, RPS is not our future,’ Steuart concedes.
He might have added it’s not really a helluva lot of their present, neither, which is increasingly in supplying wide-format printers, inks and media.
Photo Direct is a distributor into the photo specialist channel for HP and Epson wide format equipment, as well as the Epson Surelab inkjet minilab. It supplies a range of canvas-related products including framing systems and an impressively broad array of inkjet substrates, including most recently the Fotospeed fine art and photo range.
‘Wide format is a good business for us and it’s good business for our customers who are doing it because it’s still quite a profitable area. There’s a little price pressure, but nothing like silver halide.’
– And because it’s not just a choice of gloss or matte or lustre there are more products for retailers to offer – metallic-look substrates for instance, or the various canvasses – and so more media to supply, Tracy noted.
‘There’s not so much pressure day in, day out, and so life’s not so tough.,’ said Steuart. Where there’s profit for everyone it’s a nice bit of business to do. So wide format is a large part of our life now, and we are doing quite well with it.
And as well as the inks and range of media, there are the products which enable retailers to increase both the sale and the margin.
‘We are always looking for any sorts of items that add value to those wide-format products, typically things that don’t require tools or equipment in the store. Block mounting, stretcher bars and gallery wrap for canvas and prints, framing…
‘You might get $20 for an 11×14-inch canvas print. Wrap it and it might be $30 – 40. Then put it in a frame and you might get $100. So if you don’t have to put a lot of effort into adding those increments on, if we make it easy to have those pieces available – well that’s really what we do.
‘And it’s the same with taking a standard image and making it into a coaster or a mouse pad or an iPhone cover. If you can make the same raw ingredient into a $20 job well that’s where you put your focus. The 4×6 business for us is not that interesting because there’s no margin in it – we make the freight companies rich!
He added that Photo Direct was totally out of the silver halide paper and chemistry business now, and there were no plans to re-enter it.
Photo Direct has also not moved into the prolab/pro studio channel (in which IPS is a major player), but it has picked up customers who specialise in picture framing, and some commercial graphic house type businesses.
In fact. Steuart uses the term ‘Photo-Graphics’ to describe the range of businesses providing what might loosely be called ‘imaging services’. There are numerous manifestations of this change in the marketplace which photo specialists perhaps aren’t sufficiently aware of: big printing companies like Vistaprint offering photo cards, calendars, photo books and even mugs direct to consumers; a business like PMI Imageworks moving from its base in commercial printing to set up a new and international-scale business in wholesale fulfillment of photo products, starting at 4×6-inch prints; any number of printers moving into canvas printing services; even at the top end of the market, the replacement of Frontier minilabs with Indigo digital presses by a successful prolab.
‘It’s the crossover into those graphic guys where we (Photo Direct) are seeing the growth,’ Steuart noted.
‘It runs through my mind – who are we, who are our customers, what do we stand for…?’
Visiting the Visual Impact trade show for the graphics/signwriting laser engraving industry in Brisbane recently, he saw equipment which would, for instance deep etch an image which was then mounted onto a piece of 4ml board and made into wall decor.
‘Is that our industry or is that their industry?’ he asked.
‘Now add all these other substrates – adhesive things you can stick on a wall, vinyls, wallpapers. Are we we moving into the graphics industry or are they moving into ours?’
‘If you talk to people who you would put in that graphics area, they now looking into what we would consider to be the photographics industry because they’ve got to keep themselves busy. They’ve got a $6 million investment….so the want to reach across fence and grab hold of something else.’
– If all this sounds alarming, there is a positive in that the operators moving into these services largely aren’t doing it at a consumer level, and Steuart sees an opportunity for the hundreds of photo stores around the country to provide the shop fronts the graphics/printing houses lack.
‘The consumer doesn’t know whether it came from a graphic house or a photo house. If you look at all those Scoupon/Groupon canvas and photo book offers there are very few produced from photo industry,’ he said.
It may build more business if operators on both sides of the fence to work together.
The next step for Photo Direct is in launching a replacement system for all that mid-blue HP RPS gear, which is happening right about now.
‘In the retail photo area we are still working with Lifepics in their online photo solution and Lifepics is now turning that into a kiosk solution.
‘It will be the same if you are online or offline you will be in the same account. You can start a job at home, and home finish at the shop.’
The missing piece of the jigsaw, the photo printer for work up to 8×12-inch, will come in the shape of DNP dye-sub equipment for some outlets, and the Epson Surelab for others. (See separate story.)
But what’s the point if, as some people say, the photo printing business is on its last legs?
‘Photo is not dead,’ he said. ‘People are still printing. People are printing bucketloads. And anyone in the photographic industry who thinks we are not printing bucketloads has got it very wrong.
We still encounter retailers who think canvas isn’t that big, noting Tracy, adding that those were retailers who hadn’t made the move to wide-format printing.
– So perhaps it’s not a case of consumers giving up on photos, but some sections of the photo industry giving up on consumers?
‘The industry is doing it to itself. It’s not the consumer doing it to the industry,’ said Steuart. ‘We have to show people it’s fun.’