GROWING PROFIT IN A COMMODITY FIELD
From his mezzanine office, Concord Camera Store owner Michael St. Germain has a bird’s eye view of his sales floor. Last November, it was hopping. Customers were checking out a wide selection of the latest sub-$1,000 digital SLR’s and the ever more affordable point-and-shoots, pleased to be getting a lot more camera for their money than the year before. St. Germain’s staff had good offers for customers that day, showing an 8 megapixel Kodak 875 for $199. The year before, he said, a comparable camera would have sold for about $700. Surveying the busy registers from his desk chair, St. Germain could cross off “generate foot traffic” from his daily to-do list and turn his attention to number crunching.
“So I was sitting at my desk looking at inventory levels and purchases,” he said. “We have a very good POS system. I saw that in 2006, I spent $12,000 less on cameras than I did the year before but actually purchased more units. What does that tell you? I realized I was going to have to do 175 percent of last year’s business in cameras and hard goods to be ahead. That’s a staggering number. There’s just no way I’m going to sell twice as much stuff. I almost got up and jumped!”
Dealers have to be brave in the new world of consumer electronics retail, and no one knows this better than photo specialty retailers who have watched more than a third of their competition close up shop in the last five years. It’s not just that they’ve seen cameras, memory cards and other hardware turn into virtual commodities. The margins on those items have always hovered around 10 percent. But more damaging to their bottom line, photo retailers saw their profitable printing operations dry up as film cameras became relics. Customers no longer needed to make prints to see their images, and even when they did decide to turn a hard-drive full of digital files into actual photographs, many decided that self-printing, online discount operations or drug store kiosks would do the trick.