WHAT PEOPLE BUY: PHOTOGRAPHY EQUIPMENT AND SUPPLIES

Purchase incidence of photography equipment and supplies has experienced a rise and fall since 2000. In that year, some 38 percent of households bought photography equipment or supplies. Purchase incidence rose to 51 percent in 2001, only to drop down to some 43 percent of households in 2003.

This up-and-down trajectory may in part be explained by the pace at which consumers adopt new technology. Since 2000, the photography market has been impacted by new technology and the ready availability of affordable digital cameras, which offer a significant improvement to film-based photographs. Through digital cameras consumers have the ability to store and arrange picture images on computer disks. This is an attractive and lasting alternative for recording a family's heritage, rather than flimsy paper images stuffed in books, drawers, and scrapbooks. Presumably, the peak year for households to adopt the new technology occurred in and around 2001, with the drop since then due to fewer households having a need to upgrade to digital.

Industry Snapshot

The market for photography equipment is vibrant and benefits from technological advancements, such as digital imaging and computer storage of digital images. No longer is the family or hobbyist photographer limited to storing images on film or paper. Today, photographs are being stored as digital images in computer files, thus opening a whole realm of new possibilities in photography storage and transmission.

The retail sale of photography equipment, film, and photography supplies is about $7.5 billion, according to statistics compiled by the Bureau of Economic Analysis (see Figure 7.12). The Photo Marketing Association estimates the cost of photo finishing and processing to be about $7 billion, making the services side of the amateur photography market larger than either the product equipment ($4 billion) or film and photography supplies ($3.5 billion) segments today. However, spending on photo finishing may slide as more photographers opt out of film processing in favor of digital storage and display.

	2000	2002	% CHG '00–'02
Total Personal Consumption in millions	$7,116	$7,462	4.9
Photographic equipment	3,808	3,993	4.9
Film and supplies	3,308	3,469	4.9
Source: Bureau of Economic Analysis

Figure 7.12: Photography Equipment and Supplies Industry Snapshot

Retail Overview

While an estimated 4,600 camera and photo supply stores currently operate in the United States, these stores have been on the decline as shoppers turn to alternative outlets. In film processing, mass merchants and discounters, notably Wal-Mart, and one-hour photo shops, are drawing away a significant share of business from dedicated photography shops. In addition, mass merchants and electronic retailers are gaining more ground as merchants for the new digital-based cameras and digital imaging equipment.

Discount department stores lead as the favorite place that consumers shop for photographic equipment and supplies. More than half of households (53 percent) made purchases of these products at discount department stores in the past year. The next most widely used source, used by 31 percent of shoppers, was electronics and appliances stores. Nonstore retailers are becoming a more important source for photography goods, with some 15 percent of shoppers buying from the Internet, catalogs, or television shopping channels in the past year.

There is only one store today that can lay claim to being a national specialty retailer of cameras and photo processing—Ritz Camera Centers. For years, Ritz with some 1,000 stores and an estimated $500 million in annual sales, held the lead over archrival Wolf Camera, with 530 stores and $467 million in sales. What made the competition even more intense was that both stores were owned by cousins and descendants of commercial photography pioneer Benjamin Ritz.

But in 2001, the family rift was mended when David Ritz, chief executive of Ritz Camera Centers, rescued his cousin Chuck Wolf's Wolf Camera from bankruptcy in an $85 million acquisition deal. Privately held Ritz Camera Centers today boast over 1,200 stores in 48 states and estimated revenues of $1.34 billion.

Ritz Camera faces stiff competition from both the mass merchants and the electronic giants, like Best Buy and Circuit City, in the camera market. They also are challenged by the growing obsolescence of film processing due to the digital revolution. Ritz Camera's strategy to maintain growth is to fully embrace the new technology. Besides selling new digital cameras, which can run up to $7,000, Ritz is installing new equipment in all stores to make high-quality prints from a customer's memory card or media storage disk. Ritz also operates Internet sites where customers can buy cameras, film, and accessories as well as read product reviews and share digital photos.

Purchase Drivers

Driving the purchase of new photographic equipment is innovation in technology. With the price of digital cameras coming down and more households having access to a computer, consumers are upgrading their old cameras with the latest digital models. As one young mother explains: "I really wanted a digital camera. I asked my husband for one for my birthday, but I knew he wouldn't get it. So I went out and bought it for myself. I want to record all the stages of growth of my baby. It's important, but my husband doesn't see it like I do."

In a recent survey among 950 consumers, Unity Marketing found that about 54 percent of households reported having a digital still camera. This survey also uncovered how consumers view their picture-taking activities. Some 44 percent agreed with the following statements describing their participation in photography: "I enjoy taking pictures. I do so throughout the year, not only for special occasions. I like having a lot of pictures."

On the other hand, about one-third of consumers were less involved with picture taking and agreed with these statements: "I take pictures occasionally on holidays and special occasions. Sometimes taking pictures is a bother."

Only 14 percent of consumers reported they rarely take pictures.

Demographic Variables

Women show a slightly higher propensity to buy photography equipment and/or supplies for their households than men. This is a class of goods that is likely to be purchased by all age groups, except the most aged. White households, as opposed to black and/or Hispanic households, are more active buying photography equipment and suppliers.

Purchase incidence in this category rises with income. Households with incomes of $50,000 or more are most likely to purchase photography equipment and supplies, as are larger households and those with children. Educational attainment is linked to purchase incidence, as more educated consumers buy more.

Key Demographics of Photography Equipment Buyers.

• Women are more likely to buy these products for their households.

• Except for the most aged, consumers of all ages, from 18 to 64, are likely to purchase.

• White households buy more.

• Larger households and those with children buy more.

• Purchase incidence rises with income and educational attainment.