In an IBISWorld report (a leading publisher of business intelligence), camera stores were shown to be among the top five distressed industries in the U.S. (DeCarlo, Kalyani, Oliver, & Peters, 2017).
That’s probably no surprise for those remaining in this business. It is, however, further evidence that the current drivers of the industry—equipment manufacturers—seem to be in a race to diminish their products’ value.
Many blame recent declines in the photo industry on disruptive changes in technology. Analysts cite smartphones as a primary factor. Also cited is the pressure on industry profit margins that has caused many companies—mostly retailers—to exit the industry.
The contraction of the photo specialty retail sector over the past decade is a result of lower profits due to increased competition from large-format resellers with significant online and logistics efficiencies. Losing over 90% of the industry’s retail infrastructure footprint may have streamlined manufacturers’ operating efficiencies. However, it has also helped the industry to lose its voice.
Some could argue that photo industry firms can more easily communicate using e-commerce and social media channels. That could be true within the context of limited target markets. Most current marketing communications are attempts to sell products to those who have expressed interest, either by searching for a product or visiting a manufacturer’s website. Such targets—people who have expressed interest—are obviously aware of the product’s existence and probably aware of some or all of its benefits or value. That is a real problem.
Market Growth through Increased Awareness
Consider the marketing communications of brick-and mortar (B&M) retailers. While such stores often advertise special sales or price events, they also offer something that manufacturers cannot or will not—increased awareness. Research data consistently shows that retailers can grow an industry’s market through the unique capabilities of conspicuous display and experiential elements. This includes face-to-face discussions.
Increasing awareness, known to marketers as diffusion of innovations, catalyzes word of mouth that can increase awareness exponentially. The mechanics of B&M retail sales and demonstration don’t simply exploit a market of those who are already aware. More importantly, the B&M structure helps grow the market in ways that are not achievable through low-cost resellers.
A healthy B&M retail channel is an important conduit through which manufacturers can create a voice, increase awareness and sustain market growth. The photo industry’s inclusion in the top five distressed industries shows the results of manufacturers’ narrowed focus on large-format resellers.
An obvious disinterest in sustaining profitability in lower-volume channel partners has resulted in a race to the bottom in terms of growth and profits. High volume sales, revenue growth and improved efficiencies are all laudable goals. But focusing exclusively on those goals to the overall detriment of an industry seems myopic and statistically self-destructive.
As the industry lost over 90% of its retail channel, it also lost its voice. The focus on short-term results and the disregard for long-term sustainability are distressing. This is both for the industry and for those interested in growing it.
About the Author
Bob Banasik is an associate professor of marketing and business management at Post University. He is also a contributing faculty of the DBA program at Walden University. Dr. Banasik earned an MBA from Post University and a doctorate in business administration (DBA) from Walden University. He can be reached at RBanasik@instructor.post.edu.