Worst times behind photo retailing?

While Raleru Limited experienced what the business media calls ‘negative growth’ in the 2012/13 financial year, with sales falling 19 percent and pre-tax net profit down 47 percent, the following six months to last December indicate an upturn for Camera House – and hopefully the photo specialist channel as a whole.

In 2012/13 Raleru sales fell from from $65.3 million to $52.8 million, while net profit before tax went from $1.1 million to $560,000.

The decline in sales is partially explained in the company annual report as stemming from more Camera House retailers sourcing products direct from suppliers, rather than through the Raleru warehouse, so the extent of the decline does not necessarily reflect the situation at the store level.

The profit figure does not include an additional $300,000 in ‘distributions’ – dividends to shareholders, a ‘Super Warehouse Distribution’ and a new rebate to stores for the ProMaster line of accessories Raleru now distributes to Camera House stores.

In his Chairman’s Report Mark Alderson describes the first six months – July-December 2012 –  as even with the previous year, with a ‘dramatic change in the retail climate’ in the second six months to June 30, 2013.

However, as he wrote in September; ‘The situation seems to have changed more recently; we have seen a gradual return of confidence in the retailers and the consumers. We have also seen a number of retailers in the CE industry move away from digital cameras and printing.’

Going on reports from Camera House and affiliated stores reported last week, the change for the positive continued from September through to Christmas.

General manager Paul Shearer said that although sales were slightly down – by one or two percent – in the critical last quarter of the year, this was partially due to DigiDirect withdrawing from the Camera House associate program midway through the year. DigiDirect acquired the high volume former Camera House store in Elizabeth Street earlier in 2013.

And although sales were down slightly, gross profit was maintained at least year’s level for the combined group. Stores that didn’t properly exploit their status as specialists couldn’t maintain GPs.

‘Stores that sold on price only – not product range, service and advice – did suffer a fall in gross profit, although not necessarily turnover,’ he noted. ‘That’s a section of our group.’

He said that Camera House was ‘not in the business of Boxing Day sales’ as it alienated customers to find what they had purchased a few days before was being discounted 15 percent. Nonetheless, he said, ‘January sales have been generally pretty strong.

He said the stand-out story in the last quarter was the DSLR/mirrorless interchangeable market.

‘The new Sony A7 camera had strong consumer demand along with the new Olympus (EM-1).

‘Sports action cameras – not just GoPro alone but Sony, ION and GoPro, plus accessories, were also strong for the group.’

For the year the market for digital cameras was down a potentially devastating 36 percent in volume and 14 percent in value. Average selling price increased to $301.

‘But as we always concentrate on the high end of the market we were partially excused from the massive downturn which occurred.’

Mr Shearer said in a dynamic marketplace, there were signs that the pendulum was swinging back in favour of local ,specialist retailers.

‘It’s been a congested market, with bricks-and-mortar store competing with local online retailers and the overseas online retailers like DWI that operate in the country.’ [And Mr Shearer might have added Canon to this list of competitors.] ‘However whether this continues is yet to be seen. As the Australian dollar falls the Australian market returned because the price variation wasn’t as great. The dollar has now fallen 21 percent since last March. So the Australian offshore online buyer, purely on exchange rate, will be paying 21 percent more now.

He praised local suppliers as being ‘very supportive of activities to catch up with losses.’
With the cooperation of local suppliers, and using its warehouse facility, Raleru was able to put together unique bundles of brand-name accessories with cameras.
‘That worked very well for our group. Others can’t do that because they don’t have a warehouse.’

Caringbah not over
Mr Shearer also cast some light on the shuttering of the iconic southern Sydney Caringbah Camera House store, explaining that due to family issues, owners Craig and Robin McKenzie were seeking an extended break from retailing, and that coincided with the expiry of their lease. He said they intended to re-establish a store at another location on their return from the break, and that the business had been trading ‘very profitably’ prior to its closure.