October 04, 2005

Research - Photo Market Heats Up

Nice background article on photo market and the segments (online) that are heating up. Uploading images and printing for 12 cents for a 4x6 is becoming more common.

Noted on SelfServiceWorld

By Michelle Jarboe
Staff Writer

GREENSBORO -- Wednesday was a typical day at the Target photo counter.

A mother tugged her young child by the hand through the parking lot of the Bridford Parkway store.

"Come on. We're going to get our pictures," she said.

Behind the photo counter, Greensboro resident Tina Martell answered questions about pricing and let customers know about four printing options: instant, one- to four-hour kiosk printing, over-the-counter and photos.yahoo.com.

"I don't think Yahoo has really caught on yet, but I think when it catches on, it'll be really good," Martell said.

The mainstream movement toward digital photography has spurred retailers to provide an array of choices for the consumer to convert images from memory card to paper. Target is just one of many retailers fighting for a slice of this market by offering photo printing through the Internet.

Internet-to-retail allows users to upload their photos to an online photo album and have them printed at an area store. And industry experts say it's growing at a monthly rate of more than 100 percent.

This technology isn't anywhere near as popular as printing at kiosks -- the stands where customers can input their digital media to produce prints instantaneously or in a few hours. But it could grab a significant chunk of the market within the next few years.

Kiosks account for 17 percent of the total prints made in the country, said Dimitrios Delis, director of marketing research for the Photo Marketing Association, a trade group.

For now, about 3 percent of prints made in the United States come to retailers through Web sites such as Snapfish.com, he said.

But Delis said retailers who offer online printing get about 18 percent of what they print through various Web sites.

"In bigger chain situations like Wal-Mart, Walgreens, Costco, those places where getting the customer moving is key, they have an extra incentive to suggest to the customers to place their orders online," he said.

It comes down to convenience, yes. But it's also about competition.

At the beginning of this year, 41 percent of U.S. households had digital cameras, Delis said. In 2004 alone, consumers made about 8 billion 4-inch by 6-inch prints -- 66 percent of those at home, said Ed Lee, an analyst for market research firm InfoTrends.

Retailers are battling to snag these consumers and garner printing revenues by offering every imaginable option at the lowest possible price.

Target customer, Flora Price, Greensboro, selects pictures of her grand children at a self serve kiosk at a Greensboro Target. (KELLY PACE)
Target customer, Flora Price, Greensboro, selects pictures of her grand children at a self serve kiosk at a Greensboro Target.
"Everybody's fighting for the same digital photos," Lee said.

Stacy Bowden, manager at Ritz Camera in Friendly Shopping Center, said his store is the busiest Ritz in the state when it comes to digital photo printing. The store has offered multiple kiosks for about three years and has directed customers to Ritzpix.com for about half that time, he said.

There often are lines at the kiosks, where customers also can print calendars and greeting cards using their photos, he said. At Target, Martell's even seen fights break out when a customer with a single photo to print is standing behind someone tinkering with an entire album.

Considering these conditions, some consumers find it easier to stay home. For Greensboro resident Kelly Ellis, it's easier and cheaper to print pictures without ever leaving her home.

And no, she doesn't use a photo printer.

Instead, with the click of a button, Ellis uploads her photos to the Internet. Another click, and she's edited them for the pages of her scrapbooks.

She pays online, plunking down 12 cents per 4-inch by 6-inch photo on Winkflash.com and receives her pictures a few days later in the mail.

If she prints in bulk, she's paying less per photo than the typical retail price of 29 cents, even with a 99-cent shipping fee tacked on.

It's consumers such as Ellis -- female, the family archivist -- spurring the competition between retailers. Women, particularly busy mothers with more than two children, are the target market for digital photo offerings at CVS, said Erin Cowhig, a company spokeswoman.

In trying to capture these consumers, CVS and other area retailers not only have to worry about online marketers but also have to fight against home printing.

The bulk of digital-photo printing still happens at home, Lee said. Last year, 19 percent of total 4-by-6 photos produced were printed at retail locations. The remainder was split between online photo sites and printing at work.

But Lee predicted a 45-percent market share for retail by 2010. Home printing will be about even with retail then, he said, with Internet and printing at work sharing 10 percent of the market.

One reason for this shift is that retail printing, most of the time, is cheaper. Canon spokesman Justin Joseph said the company's latest printers make it possible to print at home for 29 cents per 4-by-6 photo.

But you have to calculate carefully which paper and ink to buy to bring your costs down that much. In general, Delis said, it's cheaper to print smaller photos at a store.

InfoTrends data predicts an output of 12 billion 4-by-6 photos in 2010, Lee said. Experts would like this number to be higher, but factors such as the rise of online photo sharing are giving consumers alternatives to printing.

The average household is still taking the same number of pictures as it did on film, Delis said. But digital camera owners are only printing about 25 percent of their photos.

Much of this printing will continue to take place at kiosks, which are likely to pop up anywhere shutterbugs might want to print -- or take -- a picture.

Someday, you might be able to snap a picture of the Grand Canyon, walk a few steps, slide your memory chip into a kiosk and pay 29 cents for an instant photo.

Kodak, the leading vendor of kiosks, is eyeing supermarkets and popular tourist destinations, said spokeswoman Kathy Rauschenberg. This is a particularly appealing technology, she said, because the return rate of customers is more than 90 percent.

"It's like once a consumer uses it once, they're hooked," she said.

Contact Michelle Jarboe at 373-7075, or [email protected]

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Posted by keefner at October 4, 2005 02:11 AM