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Ted’s: Eight cent prints work…sort of

December 1, 2010: Ted’s Cameras has declared its 8-cent print ‘one-off tactical experiment’ a success in terms of increasing store traffic.

While keeping sales and foot traffic ‘hard data’ in-house, Ted’s Cameras managing director Richard Robertson indicated that there was a big rise in 6×4 throughput both in-store and online, and an increase in foot traffic measurable in thousands of customers nationally.

‘We achieved our objective and we were pleased with traffic flow generated – but no with the profit,’ said Richard Robertson, noting that there was no money made directly from 6×4 prints over the 10 days.

He said it was a one-off tactical experiment and Ted’s ‘got the result we expected’.

He explained that Ted’s was interested in gauging the response to the price point. The promotion was run at the same time Harvey Norman was running a 9 cent promotion, and Ted’s said prior to launch that it needed to halt the leakage of customers lured away by cheap prints.

Harvey Norman responded by running its own 8 cent promotion as soon as its 9 cent promotion concluded!

A valuable insight which Ted’s was willing to share is that the industry has quite probably over-estimated the drop off in consumer print volumes.

‘What came out of the whole thing is that we thought 6×4 printing in general is declining rapidly, but the actual sale of paper hasn’t declined that much.’

He estimated that print volumes overall had decreased by only around 10 percent.

This view was supported by Steuart Meers of Photo Direct (which wholesales a range of photographic papers including Kodak and Fujifilm, and HP inkjet media).

‘In Japan and other countries they have very accurate data, but this is not the case in Australia. We’ve never had a good baseline so this is anecdotal, but if you talk to independents, they will tell you print volumes have declined 50 – 70 percent.

‘I don’t believe for a minute that this is true. Instead there has been a massive channel shift.’

He estimated the real decline at around the 10 – 15 percent mark, adding that it would be useful if an organisation like PICA commissioned research to uncover the true numbers, possibly via the ABS and Customs codes.

Meers said this had some implications for the messages the industry is sending: while it was common wisdom that consumers had to be urged to print their digital files, ‘they are printing – just not at the places we are familiar with.’

He said that consumers had now been educated that there would be regular cheap print promotions, and they were now waiting for the next one to roll around and then printing in big volumes – sometimes a thousand or more 6x4s in an order.

He felt that this would continue to be the demand pattern ‘until that cycle is broken somehow’.

‘The million dollar question is, would they print in the thousands if they were priced at 20 cents?’ *

He said the big winner in this environment had been Fujifilm, which had done well in acquiring high volume paper burning customers.

Richard Robertson pointed to the situation in petrol retailing, where now that Coles and Woolworths have achieved a market share of around 80 percent, the 4 cent shopper docket ‘discount‘ is in reality the standard price.

‘There is no competition and this is what will happen to photo retailing if Harvey Norman and Big W wipe out independents – they can do what they like.

‘And the manufacturers and suppliers will only have two customers to talk to.’

Robertson urged fellow specialist retailers to stop thinking of 6x4s as a cash cow.

‘Invest in new plant and equipment, find niche markets, get creative,’ he said.

* Digressing here to do a little arithmetic, if there’s a 1 cent margin on a 10 cent print, the total gross on 1000 prints is $10. If prints are at 20 cents, so there’s an 11 cent margin, just one-tenth of that volume – 100 prints – will deliver a total gross of $11. One thousand prints will make you $110. Makes you think, don’t it!? – Ed

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