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Film & photo: are supermarkets getting the picture?


The year has changed, but the story is still the same: although many grocers have gotten more aggressive about their film, videotape and photoprocessing sales, supermarkets by and large are still letting other classes of trade get away with the lion's share of the business.

Not that progress hasn't been made. As Clay Zimmerman, national coordinator food trade sales for the Eastman Kodak Company describes it, "We're still fighting the nonfoods battle in supermarkets, but the wall is being pulled down."

In fact, film sales in supermarkets grew 8.3% to $518 million in 1990, and processing sales were up 11.2% to more than $614 million. Coupled with sales of cameras and other photo items, the category accounted for $1,151.51 million overall. If videocassettes for camcorder use - especially VHS-Cand 8mm tapes - are also considered part of photo sales, the dollars generated climb even higher.

Still, as Zimmerman says, "We're not there yet." The question now is what should supermarkets be doing, and what should they be doing better to further capitalize on this lucrative business.

As has been noted over and over, the supermarket, with its enviable consumer traffic is a natural to succeed in the photo business. The lure of one-stop shopping is not a myth. Consumers are just as pressed for time as they ever were and convenience is as potent an incentive as ever for buying something in one outlet rather than another. But traffic doesn't necessarily translate into sales.

The first hurdle that supermarketers must surmount - and they are doing so with increasing success - is to make consumers think of the grocery store as a place to purchase film, videotape and processing. That requires attention to merchandising, promotion, advertising, pricing - all elements that determine the success of any product.


"As a general trend," says Paul Hudak, vice president/general manager, photographic products for Fuji Photo Film U.S.A., "film sales in supermarkets continue to grow faster than the industry average. Film is absolutely the right product for them."

According to Kodak's Zimmerman, 65% of film purchases are made on impulse. That can be translated to mean shoppers don't usually make a special trip to purchase film, they buy it where they see it. And since the average shopper is in the supermarket at least twice a week, supermarkets have a far greater opportunity than other classes of trade to make these impulse sales.

The number one rule for promoting impulse purchases is, of course, to make the product obvious. For film (and cameras and tape for that matter), this means two things. The first is a permanent, established "photo center." The second is a year-round schedule of promotion, including instore display built around what Hudak calls "memory recording times of the year."


Because consumers may not think of the supermarket as a place to fill their photo/camcorder needs, a successful program depends on establishing that idea in shoppers' minds. The very best way to do this is by establishing a photo center in a high-traffic location.

At best, such a center may include a minilab for on-site processing and personal customer service, as well as an array of film, some reasonably-priced cameras and a selection of camcorder tapes. In addition, the retailer can gain incremental sales with photo accessories such as frames and albums. (Both of the latter can also be used to build special value-added promotions with film and/or processing.)

Even if on-site finishing is not an option, a photo center helps give the category enough visibility to keep it top-of-mind with consumers when they consider a source for their photo needs. When the consumer does plan a purchase of film or videotape or has a roll of film to process, it's an easy thing to save the film purchase or drop off for the bi-weekly trip to the supermarket, rather than making a special stop elsewhere - as long as the retailer has trained the shopper to think of the supermarket as his or her photo center.

Of course, part of establishing presence in the category is offering enough of a variety of product so the consumer isn't forced to go elsewhere to find what she needs. This is particularly important when it comes to film.

In a survey entitled "Taking the Perfect Picture: A Study of the Amateur American Photographer," Fuji Photo Film U.S.A. Inc. discovered that 60% of those questioned find "some real differences" between brands of film. Perhaps even more important, 69% report that they "use the same brand of film all the time."

It is, therefore, imperative that the retailer stock at least the major brands for which his customers may be looking. As far as types of film are concerned, industry sources report that 35mm color print film accounts for some 80% of all film sales. About 76% of those rolls are 24 exposures and 40% are 200 speed.

Even with that in mind, it's still important to stock other types of film and other speeds and roll sizes. This is true for two reasons. First, the retailer should accommodate as large a part of his customer base as is reasonably possible. Second, a variety of product helps establish the reliability of the department in the consumer's mind by conveying an impression of completeness.

To underscore this point, 64% of those questioned in the Fuji study found it at least "somewhat important" to have a choice of films and film speeds available to them.

The well-stocked film department, according to Fuji's Hudak, should contain at least six to seven SKUs. These would include both 100 and 200 speed 35mm film in 24 and 36 exposure rolls, as well as 110 film in 24 exposure size. (110 still accounts for about 2% of the market.)

In addition to those choices, Zimmerman of Kodak suggests carrying disc film (About 1% of the market), 35mm film in a 400 speed, and some 12 exposure rolls of all the selections. The final addition to the film line should be instant film, a segment that commands roughly 10% of the overall market.


Do supermarkets belong in the camera business? The answer is yes, and no, and sometimes.

Some large stores may be able to support a year-round business in lower-priced, point-and-shoot type cameras, especially if they are sold as part of an electronics center. For the larger percentage of stores, cameras probably represent a seasonal opportunity.

There is, however, one category of camera that could have been tailor-made to bring incremental sales to supermarkets. That, of course, is the one-time-use camera, which continues to gain sales.

"One-time-use cameras have been absolutely unbelievable," says Hudak. "They've been growing every year since they were introduced and are still on fire."

One-time-use cameras represent a significant opportunity for supermarkets for several reasons. On the most basic level, they offer more penny profit than a comparable roll of film. In addition, consumers have a tendancy to bring them back to the purchase outlet for processing.

On an even more important level, these all-in-one cameras can actually grow a retailer's business by providing incremental sales. Because one-time-use cameras are inexpensive and simple to operate, consumers use them to take pictures they would otherwise skip.

Typically, people use them in situations when they would not want to risk a "good" camera, for example, at the beach or on the ski slope. And they are popular for vacations when another camera may be judged too bulky (or expensive) to take along.

When it comes to merchandising, "some sell them with film, some with cameras," explains Hudak. "The more advanced retailers," he continues, "sell them as a category in themselves. The point is that right now retailers tend to offer three to four pegs which isn't enough."

Hudak recommends the use of special floor displays "to really set the product off." One-time-use cameras are also effective impulse items at the front end. And they should certainly be a part of holiday and party displays.


"Very frankly," Hudak notes, "the supermarket trade makes a big deal of price because that's the basis on which they are accustomed to competing. But when it comes to film, price really isn't the issue with consumers. Supermarkets don't need to compete on that basis, because they already have the traffic.

"We've found that convenience and impulse are more influential than price in driving purchases. If a roll of film costs $3.50 as opposed to $3.25 at another outlet, the consumer doesn't think of that 25 [cents] as a big deal versus the time spent to make a special trip."

Besides, as Zimmerman points out, "the average consumer can't even tell you what she paid for her last roll of film. Price is a shallow way to promote. There are other, much better things to do."

If price is not generally the best way for a supermarket to increase film sales, what is? One of the most important keys to successful film merchandising is to keep in mind what photographs represent. As Hudak puts it, "film is a means to an end for the consumer. It's a way of recording memories."

To create more sales then, the retailer should nudge consumers to realize all the many occasions that provide recordable memories. That means featuring film, one-time-use cameras, and camcorder tapes in every holiday display and in event-oriented displays such as those geared toward picnics or sporting events.

New parents probably take more photos than any other single group, so a display of film and videocassettes in the baby aisle is a natural. Secondary displays are also effective in the greeting card or party supply department. You might also try the bakery (where there's a cake, there's usually a party), or based on the same theory, try the in-aisle baked goods section, especially near accessory items such as cake decorations and birthday candles.

Both Zimmerman and Hudak, while maintaining that secondary displays are absolutely essential to a successful film business, recommend retailers vary the site of such displays. Every shopper may not enter the baby aisle and every shopper may not go to greeting cards, but if you utilize all of these different locations at one time or another, and you augment them with a presence at checkout, you should be able to maximize sales and keep a film buy top-of-mind with your customers.

Zimmerman also points to some exceptionally successful promotions when retailers have augmented the manufacturer deal with something special - for example, a chance to win a new car. He suggests that major event tie-ins are a very important part of film promotion, especially if you can give them a local twist. [Tabulat Data Omitted]


Once, families had movie cameras. Today, the role of capturing moving picture memories is increasingly falling, not to the movie camera, but to the camcorder.

The most recent industry figures show that about 15% of U.S. households currently own video cameras. If experience with similar technological innovations is a reliable indicator, prices should continue to fall and, as they do, household penetration should continue to climb.

Now that much of the novelty of the VCR has worn off, people are no longer jumping to record every movie and special event that flashes on the TV screen. Nor are they saving (archiving) as many of the programs they do record. Certainly videotapes used for the recording of television programs have become a healthy, established category and will continue to be so. Nevertheless, as the category continues to mature and prices for standard-grade tapes come down, retailers will be looking for something else to provide the category with real sizzle. Tapes purchased for camcorder use may be the answer to that need.

In fact, according to Daniel Malcorps, vice president audio/video marketing and sales for BASF, camcorder tape sales grew 108% in 1991. And that growth should continue in the coming months. In addition, these products offer a higher ring and higher margins than standard-grade tapes.

John Gitelman, marketing manager, consumer video products for Polaroid puts it this way, "For the smart retailer who's been selling standard tapes but finds profits and margins declining, camcorder products can boost category profits again. Supermarkets need to get into the game as soon as possible."

Almost all of today's camcorders employ one of three tape formats: VHS, VHS-C or 8mm. VHS cassettes, available in standard and high grade, are the same tapes used in VCR decks. VHS-C is a compact tape cartridge about one-third the size of a standard videotape. It can be put into an adapter and played on a regular VCR. 8mm tape is the newest of the formats. It can be played on a special 8mm deck or on the 8mm camcorder itself.

The compact tapes - 8mm and VHS-C - seem to be the wave of the future, but, as David Sigovich, national sales manager, food sales division for Maxell explains, "There is something of a dilemma in the industry right now in that no one knows which format will win.

"8mm offers great technology - a great picture and great sound, but the issue is that the consumer needs an 8mm deck to play it. Today, most people use their camera as a player. [That may preclude sharing tapes or, for example, sending a tape of the kids to grandma.] With the VHS-C you don't have to change hardware, so in my mind the VHS-C should win out."

Others think the technical superiority of the 8mm tape will triumph. 8mm is currently the fastest-growing part of the market, up 75% in 1991 according to Polaroid's Gitelman. By year end, Gitelman anticipates that the 8mm format will account for 50% of hardware sales.

The future winner may be undecided but, as Sigovich puts it, "Whatever happens, these are the two growth items right now and they should be part of the supermarket mix."

"Compacts," Gitelman agrees, "are taking over the market. Full size camcorders are going the way of the 8-track tape."

There are still millions of full-size camcorders and will continue to be for the foreseeable future. Nevertheless, if Gitelman's prediction is correct (and most industry sources share his view), it points to an interesting split in the video-tape category.


Until recently, a tape suitable for the VCR was also suitable for the camcorder. In the not-too-distant future, retailers may be seeing two distinct categories - full size VHS tapes for TV recording and compact VHS-C and 8mm tapes for the video camera.

To maximize sales, the retailer should maintain a video department with a mix of grades and formats. But he should also realize that camcorder tape is a different animal and requires different merchandising and placement if the opportunity it represents is to be realized.

A camcorder is, after all, a camera. Like other cameras, it is used to record events or "memories." The medium on which those memories are recorded is videotape. Ergo, camcorder tapes in this case take the place of film and should be merchandised accordingly.

Says Art Malen, national food and drug sales manager for Fuji Photo Film U.S.A., "Film and video complement each other. There is a place for both types of memories." And for the retailer who wants to encourage sales of camcorder-suitable tapes, those tapes should be merchandised right alongside other picture-taking options.

As Malen says, it's "plain and simple - expose the product. If shoppers see it and it's priced fairly, they'll buy it."

"An ideal place to sell is at checkout," maintains Polaroid's Gitelman. "And camcorder tapes, especially 8mm tapes, should be in the camera center. Camera stores are doing that, but supermarkets don't do it at all."

Malen suggests that camcorder products should, at the very least, be displayed on clip strips in the film department. He also suggests that camcorder tape be included in event merchandising.

"In this case," he comments, "if you lead a horse to water, you can make him drink. What you have to do is expose the shopper to 8mm videotape [and VHS-C] along with snapshot film. Supermarkets are not doing that as well as they should. We see drug stores, for example, making much more of an effort."

Maxell's Sigovich makes a similar comment, "Supermarkets are always the last to jump on the bandwagon with hot GM categories," he laments. "VHS-C and 8mm are one of the genuine growth areas in video, but distribution in supermarkets is very weak. Yet these products are a natural line extension for them."

As with film, camcorder tape is a natural for the baby aisle, party supplies and similar spots. Secondary locations can pack big profits, too, adding as much as 25% to sales, according to Sigovich. And if you're going to advertise, be sure to support your ad with special in-store placement. "In my opinion," Sigovich maintains, "an ad supported only by shelf stock is a waste of money. When product is pulled off the shelf, sales jump as much as 200%."

The average camcorder shoot is about 25-35 minutes. This usage pattern indicates to manufacturers that shorter tapes will play an important role in 8mm sales. Selling shorter tapes also has benefits for the retailer. "We suggest promoting shorter tapes so the customer can archive by event," says Polaroid's Gitelman. "And if the retailer sells short tapes, he can sell more of them. It's a real opportunity to multiply profits."

Multipacks of shorter tapes are popular with consumers and also represent an opportunity for greater sales. Manufacturers are helping with special consumer offers. This spring, Polaroid will appeal to shoppers with a variety pack comprised of two 30-minute tapes and one 120-minute tape. Fuji also has a promotion of shorter tapes on the agenda. And Maxell offers a year-round promotion calendar featuring various items from its video line.

Also new this spring is the innovative 8mm "Long Block" from BASF. The Long Block offers two P6-120 8mm video cassettes in new packaging that allows the retailer to offer 50% more product in the same space as standard two-pack bags. This new entry in the BASF line carries a suggested retail price of $19.98.


While supermarkets are gaining an increasing share of the photofinishing business, they are still well behind other classes of trade when it comes to the installation of on-site minilabs. Since many believe on-site processing to be the wave of the future, it behooves supermarkets that haven't done so to take a long hard look at this potentially-profitable adjunct to their photo business.

"Minilabs represent enormous untapped potential for supermarkets," says Bill DiMinno, director of sales, minilabs for Fuji. "They still account for less than 5% of the business, but most stores that have tried them have been very satisfied."

As in other operational areas, the success of some leading-edge retailers has piqued the interest of their colleagues. "In-store processing for supermarkets is something that manufacturers have been predicting, and now it's happening" comments Mike Lammers, marketing manager for Noritsu. "One executive will hear or read about a chain creating all kinds of revenue with an on-site operation and say, |Why aren't we in that?' That's how it's spreading."

Technological innovation has also made the newest generation of minilabs more suitable to a supermarket operation than labs in the past. The units themselves have come down to a "footprint" of as little as 10 square feet. An operation that would have required a total commitment of 300-400 square feet just five years ago, can now be accommodated in as few as 100.

The cost of entry into the business has come down as well. The Fuji Photo Processing Center for example, offers a complete unit including a kiosk, the processing hardware, work areas and all, installed and ready to go in five working days. The price tag is $65,000.

"If you do things right," DiMinno claims, "payback is one-and-a-half to two years." Or, on a five-year lease program, the retailer can "go into the black in a year and stay there. And there's no capital investment."

Besides cost and size, another stumbling block for supermarkets has been the skill level of employees needed to operate the machine and the labor hours that had to be devoted to the operation. New machines such as the Noritsu QSS-Micro address both concerns.

The QSS-Micro, which made its supermarket debut this past fall, is, explains Lammers, "the first fully-automated photofinishing system." The one compact unit encompasses both a film processor and a paper printer/processor. This allows the operator to load the roll of film once and let the machine do the rest. (Other units require loading the processor then reloading the film on the carrier to make prints.) Because the operator spends less time with the machine, he or she can spend more time at the counter servicing customers.

On-site processing is itself lucrative. The addition of on-site processing also tends to increase other photo business, such as slides, that are sent out for processing. The reason? Because you automatically increase customer awareness of your store as a photo center. And, according to DiMinno, you can add another 25% in ancillar sales just by having the lab.

"An on-site operation represents a tremendous opportunity to upsell, to get additional sales," he says. Creating those sales can be as simple as having an employee ask customers if they need a second set of prints or an enlargement or know about this week's frame sale.

Success will also be determined by advertising and promotion and sensible pricing. As in other aspects of the film business, price is not the most important criteria when it comes to processing. Quality tends to be the number one concern and convenience counts, too. In fact, many supermarkets tend to underprice photofinishing services.

The successful on-site program may include a price for one-hour service, another price for next day, and a third for next week. "The percentage of people who actually want their film back in an hour is low," says Lammers. "The two-trip theory [one to drop off the film, another to pick up prints] still holds. People usually choose the median price."


To answer that question, says DiMinno, look at three things. The first is the demographics of your store. Your shoppers should tend to be 25-44 years old with children and at least a middle income. Then look at the number of rolls you're processing without on-site capabilities. "If you're doing 10 rolls a day with no effort, that's a good sign." Finally, consider whether you're willing to dedicate this as a separate product center with one or two properly trained employees to staff it.

There's one more thing you may want to consider. Reports Lammers, "Deep discounters like Wal-Mart are now looking at the grocery chains to see what happens with their minilab business. That makes it imperative for supermarkets that want to get in to establish themselves now."

"On-site photofinishing is no longer a novelty or a luxury," DiMinno insists. "45% of all processing is now done through minilabs and in the next year or so that will grow to 50%."

Lammers sees it this way, "I think 1992 will be a very interesting year. Noritsu has expected supermarkets to be a large channel. Now the products are there to make the business cost effective for them.

"The explosion of on-site processing is just beginning!" And in a business environment where every dollar counts, this is an area where supermarkets really can't afford to be left behind.

PHOTO : "Compared to five years ago, are you taking more pictures, fewer pictures or about the same number of pictures?" In addition to reporting that 78% of us are taking as many or more pictures than we were five years ago, a Fuji study also found that two in three of those surveyed say their pictures are "very important to them," and that four in five report taking pictures is "something they like to do."

PHOTO : FAVORITE SUBJECTS FOR PICTURE TAKING The Fuji study investigated, among other things, the subjects that inspire picture taking. Their findings might suggest some ways to promote film, camera and camcorder tape sales in the store. For example, what about a Beautiful Baby contest accompanied by a display in the baby food aisle (or a cutest cat or dog contest with a display in the pet section)? For spring and summer travel, consider a display that incorporates travel-size HBA items along with film and one-time-use cameras.

PHOTO : The Noritsu QSS-Micro is an all-in-one film processor and paper/printer processor.

PHOTO : PHOTOPROCESSING PLAYS AN INCREASING ROLE IN SUPERMARKET SALES Although some think supermarkets have been slow to get on the photoprocessing bandwagon, the trend is clear. In past five years, processing sales in supermarkets have climbed 40% as grocers have found increased traffic and high margins a tough combination to ignore.
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Title Annotation:Advertising Supplement
Publication:Progressive Grocer
Date:Feb 1, 1992
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