BY DOUG DESJARDINS
According to research firm Interactive Data Corp., suppliers shipped 34 million digital cameras in 2007 and generated a record $8.5 billion in sales. But with camera prices falling and such products as camera phones stealing market share, IDC said the market has peaked and will begin a slow decline this year.
And that’s good news for drug stores, at least the part about camera prices declining. Now that the average price of an entry-level digital camera has fallen below $100, pharmacy chains are re-entering a business they were once priced out of.
The NPD Group stated that camera sales in drug stores have doubled since last year as falling prices have lured more chains back into the business. “They still represent a small part of the market, but drug stores accounted for 2 percent of overall digital camera sales in April [2008] compared with 1 percent in April 2007,” said NPD Group
As price points drop, retailers are stocking such items as the 2. 1 MP Digital Camera for Dummies.
analyst Liz Cutting.
She noted that the average price of cameras in drug stores is $86, less than half the average industrywide, and that consumer tracking shows pharmacy consumers are looking for bargains rather than high-end cameras with bells and whistles. “Our consumer research shows 71 percent of
camera purchases in drug stores are motivated by price,” Cutting said.
And those statistics are reflected in the type of cameras in stores. Rite Aid now carries a few basic digital cameras that are in the impulse-buy range. It sells a 2. 1 Megapixel Digital Camera for Dummies for $39.99 that produces cell-phone camera quality photos. It also carries a higher-quality 4. 1 MP camera from Digital Concepts for $59.
Walgreens added a new line of digital cameras in April when it began carrying two models from General Imaging with an entry-level price of $89. The General Imaging cameras were added to a lineup at Walgreens that already includes four cameras from Kodak and Polaroid priced in the same range.
Longs Drug now carries five different camera brands in its stores, including Vivitar, Kodak, Fuji and Canon. And CVS carries the 5. 1 MP Kodak Easyshare camera at a price of $99.
And now that digital cameras have gone mainstream, several chains—
including Longs Drug, CVS and Rite Aid—have added private-label, single-use digital cameras and camcorders.
Rite Aid’s basic single-use cameras can take up to 25 photos and include such fairly advanced features as redeye reduction and a photo delete option. Both CVS and Rite Aid have private-label, single-use camcorders priced around $30 that take up to 20 minutes of video.
Longs Drug and other chains also are using in-store kiosks from Kodak and other photo suppliers to enter the growing photo-book business. The Photo Marketing Association estimates custom-made photo books will become a $359 million business in 2008 compared with $81 million three years ago.
To help retailers grow that business, Kodak this summer is rolling out its Adaptive Picture Exchange processor in stores, a system that allows customers to create such elaborate items as picture DVDs, photo books and greeting cards in stores.
DVD rental business moves toward convenient kiosks
Video has always been a small part of the gen- last year along with Albertson’s-Sav-on in California eral merchandise mix in drug stores, relegated and Jewel-Osco in the Chicago area. At the end of to low-priced catalog titles and family-themed 2007, RedBox had kiosks in more than 6,000 stores. new releases. But the business now is trending Wal-Mart also is joining the move toward kiosk-toward kiosk-based DVD rentals and could soon based DVD rentals. It began testing RedBox kiosks in include in-store digital downloads. stores last year and recently signed a deal to install
According to a study by Convergence Consulting them in more than 2,700 stores nationwide by the Group, titled “The Battle for the American Couch end of 2009. Other major chains are expected to test Potato: New Challenges and Opportunities in the them in stores this year as well.
Content Market,” DVD rental kiosks will account Rental kiosks have been around for years, but until for 11 percent of the total rental business by 2010, now, they haven’t had much success in drug stores. nearly triple the 4 percent they captured in 2007. Duane Reade tested kiosks in about 25 stores near That forecast has caught the attention of several big subway stops in New York City in 2005 but dropped pharmacy retailers, including Walgreens, Jewel- them after less than a year.
Oscoand Wal-Mart. NPD Group analyst Russ Crupnick said the
Walgreens has RedBox DVD rental kiosks in RedBox kiosks are succeeding where others have
more than 250 stores but will have them in 2,000 failed because of an attractive $1 per day rental fee
stores by 2009 through a new deal it signed this and the fact that they’re easy to use, something he
spring. The chain began testing the kiosks that rent witnessed recently during a store visit. “Everybody,
DVDs for $1 a day in about 50 stores in Chicago whether they were young or old, had no problems at
and Houston in 2006, and expanded that test last all,” Crupnick said. “You can’t underestimate the
November to 200 stores in Phoenix and Ohio importanceofasimpleuserinterface.”
before announcing in March that it will add them While rental kiosks have proven to be a success,
in 1,800 additional stores over the next 18 months. the debut of kiosks that can download and burn
The Walgreens rollout will expand what’s already DVDs is new territory that Walgreens plans to vena significant footprint for RedBox in pharmacies. ture into this summer when it tests DVD burning Smith Food & Drug began testing the kiosks in stores kiosks in a handful of stores. It hasn’t discussed how
DVD rental kiosks like RedBox will make up 11 percent of the total DVD rental business by 2010, according to the Convergence Consulting Group. much a typical DVD would cost, but said it would take about 15 minutes to burn a movie to a blank disc, allowing customers time to shop and pick up their DVD before leaving the store.
Blockbuster will be the first retailer to move into digital downloads when it tests in-store kiosks in a few stores starting in late June. The chain unveiled a kiosk prototype at its annual meeting on May 28 and said it hopes to eventually allow consumers to download a movie to a blank disc in less than 30 seconds.
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