… And made good money on its photofinishing business.
The shift to digital imaging had twounpleasant consequences for Ritz.
1. People consumed less and less film andthus, the photofinishing business became very unprofitable.
2. The margins are much lower on electronic goods and their value diminishes rapidly. Therefore you need huge volumes, you can’tafford inventories and you can’t afford to have a lot of employees providing service.
Cameras are nowadaysmainly sold at large retailers of consumer electronics such asBest Buy…
These stores can sell the large volumes that are required to make a profit, theyhave a lower overhead count, don’t makemoney on film and are masters of supply chain management.
The economics are simply not in favour of smaller chains like Ritz anymore.
The same thing has happened in other digital shifts.
The big old tube radios used to be soldin special stores, which provided service and reparation.
The Transistor Radios were smaller,cheaper and demanded less energy…
In order to sell transistor radios, Sony had to create a new channel. The Radio stores made money on repairing furniture radios and were therefore not interested in selling small, cheap transistor radios which did not generate service revenues.
Sony dealt withdiscount storeslike Woolworth which did not have any service departments.