The Death of Camera Stores

A revolution as swept
through the camera industry.

30
25
20
15
10
5
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Number of film and digital cameras
sold in the United States

It has put many former
giants and famous brands in
some big, big trouble…

Kodak has demolished
building after building…

… Polaroid is gone now…

… Leica has had tough times…

Konica is gone…

… Agfa has been demolished…

… Hasselblad
merely
survived...

… Ilford died…

… Bronica died...

… And so did Contax…

The manufacturers are not
the only ones who’ve been
into bad times…

Ritz Camera – the largest chain of camera
stores in the USA, has gone bankrupt.

Ritz is not
the only one
that’s been
troubled…

I bet there you know several
camera stores in your hometown
that have gone out of business.

They may have looked
something like this:

This photo was taken in Kuwait and the building was
just about to be demolished. Most likely, the camera
store has gone out of business.

There
must be
thousands
of them
around the
world…

This is not exactly what you think of when
someone says Photoshop today.

In the UK, Jessops has been into
a lot of difficulties.

Recently, the company posted a
loss of 50£ million and the stock
crashed once again.

The Executive Chairman David
Adams stated that:
\"We can't carry on carrying
£57m worth of debt on a
business which is generating
£4m.\"

The firm also stated that:

\"This is the first time
for many years that the
digital camera market
as a whole has seen
such a slowdown.\"

Well, the market for digital
cameras may be
increasingly saturated and
the recession may be
worsening the situation.

But given
that so
many
camera
stores, all
over the
world, have
gone out of
business…

… These
cannot be the
only reasons...

The underlying
business model
for these stores
must have been
destroyed in
some way with
the shift to
digital imaging.

Let’s try to
find out how
and why this
happened.

Needless to say, the camera
stores sold cameras…

.... Lenses
and
accessories.

The continuous consumption of film
generated continuous revenues and
visits to the local camera store.

And they repaired your camera.

Cambridge 1987

… They provided service to their customers
and were usually skilled in the art of
photography and at repairing cameras.

I found the following story
and photo on Flickr:

“I bought a new Pentax K10 and Mom gave me Dad's
old K1000 and lenses just before we went on
vacation. When I arrived in Ottawa I found there was
an incompatibility with the telephoto and the K10. I
happened to wander past the Camera Trading
Company and stopped in. Thomas was able to figure
out the problem and came up with a solution, at no
charge. Thanks Thomas.“

You would
never go to
Best Buy
or Wal Mart
and ask
the staff
for help
with your
Pentax.

However, with the rise of digital imaging,
Thomas and his peers throughout the world
have lost ground to Best Buy and the other
super stores for consumer electronics.

Let’s go through the different
sources of revenues and see
how they were destroyed by
digital imaging.

1. Camera sales

With the shift to
digital imaging,
camera sales
exploded and the
big retailers could
sell huge volumes.

Since new models
are introduced at a
much higher pace
when an industry
is digital, it was
hard for the small
dealers to reach
sufficient
economies of
scales.

Hence, they had to charge
more than the big retailers.

In addition to this, more and
more people started to buy
cameras over the internet
instead of going to a store.

2. Film sales and development of it.

Well, for most people, film is dead…

And the death of film implied less revenues
and less visits to the camera stores.

Film dropped – bigtime.

3. Repairing cameras.
Cambridge 1987

Have you ever repaired a
compact camera?

Probably not.

Maybe you have asked
someone to repair your SLR,
but unless it’s a really
expensive one you would
most likely regard it as a
reason to buy a new one.

Right?

There are two reasons for this trend.

Digital products decrease rapidly in
price since new and better models
tend to be launched at a high pace.

At the same
time, wages in
many countries
are very high in
relation to
these goods.
This means that
consulting
someone to fix
your camera
would cost a lot
in relation to
what the
camera costs.

This is the
case with all
consumer
electronics.
Back in 2003
I had this
Nokia phone.

It got ill after
a rainstorm,
so I went to
the store and
asked if it
was possible
to repair it.

They wanted
300 SEK for
checking it
this was
possible, and
if so, this
would cost
me 1200
SEK.

For that
amount of
money I
could buy a
new, much
better phone.

It’s exactly the same with digital cameras.

’If it ain’t broke, don’t fix it’
has become
’If it is broke, don’t fix it – buy a new one’.

Thus, another source of revenue
for the camera stores diminished
with the rise of digital imaging.

Because of all this, the camera stores
were put in a situation where they could
not compete on price.

The film business had collapsed.

And the need for reparation had also
decreased with the rise of digital imaging.

The only
competitive
advantages
left were the
personal
skills and the
sales of
accessories.

But the
overall
decline in
this
business
implied that
costs had to
be cut
somewhere.

The stores
were forced
to slash
much of their
competitive
advantage.

Many people
at different
photo forums
have
complained
about the low
level of
knowledge at
Ritz and Wolf.

These stores were most likely aware of
this, but were stuck in a vicious cycle.

Dropping film sales, price
competition from big retailers
and a reduced need for
reparation – all these factors
contributed to the fall of camera
stores around the world.

All this is related to one thing:

The shift to digital imaging.

Image attributions
http://www.flickr.com/photos/djking/1185670528/

Christian Sandström is a
PhD student at Chalmers
University of Technology in
Gothenburg, Sweden. He
writes and speaks about
disruptive innovation and
technological change.
www.christiansandstrom.org
christian.sandstrom@chalmers.se