How one imaging retailer transformed his business through cellular
In the last five years, we have seen hundreds of imaging businesses fail due to a refusal to embrace change. If you own or manage a camera store, you may be (or should be) concerned about the future of your business. This is the story of how one retailer watched the trends and took action to not only save his business, but grow it dramatically.
32 years ago Bob Stumpner, photographer, bought a small camera store in Wisconsin and promoted himself to small business owner. He called the business Camera Case and slowly and steadily grew his retail business, eventually buying a Kodak mini-lab and getting into the finishing end of the biz. Stumpner has always been on the look out for product trends and on a trip to Disney noticed that a large number of people had camcorders.
This prompted him to start selling video cams and VCR’s. An opportunity came along to purchase the small electronics store next door, and needing the space, he made the deal. Camera Case now sold a variety of electronics including TV’s. More products meant more space, so he went on the hook for a 4,700 sq.ft. building to display all his products.
Business was pretty good in his town of 8,000, but things started to change. Digital cameras killed the film and processing business and profit margins weren’t as robust as in years past – a familiar tale.
One of his long-time customers asked him to sell her a cell phone. “I’m sorry, but we don’t carry them” was his response. She persisted, saying that she knew if she purchased it from them, that they would take care of her and show her how to use it. That was the start of the cellular story for Camera Case. It proved to be THE most profitable decision that Stumpner ever made as it saved his camera business and showed him how to focus on making more money versus just trying to make more sales of low-margin products.
“Without cellular, we’d have gone out of business long ago,” he says. The imaging business has changed. Film and development services have all but disappeared and the margin on cameras, “is pitiful,” as Stumpner puts it.
“Retailers only make $11 – $15 on a cameras that costs us $200 or more, unless you buy in really big quantity and that ties up a lot of cash,” he added. For Stumpner, this meant really looking at his current business and re-focusing on the products and services that would enable his business to survive.
At the end of one disappointing year, Stumpner pulled all his records and did an analysis of each product category. “We were shocked to see that we had sold $600,000 worth of TV’s and only made about $20,000.” And here was the real heart stopper: “We also found that we made more profit selling cellular car cords than we made on all the point-and-shoot cameras we sold for the entire year.” The Plan: Get out of the TV business and put an increased emphasis on the cellular side to replace lost imaging margins and support the camera business. Little did they realize the impact that cellular would have on their business.
“There’s something odd about camera store owners,” Stumpner notes. “Many look at their business as a hobby not a business.” And, running an imaging business has become an expensive hobby. “We used to have twenty eight Camera Stores in our service area. Now we have five.”
He added that it was becoming more and more obvious that if you’re not actively diversifying your business today, you’ll be out of business in a year or so. Stumpner notes, “We sold over 100 cameras out of our main store in December. We sold 571 camera phones in the same month.” He quickly added that he makes five to ten times the profit on a cell phone sale as he does on a camera sale.
Stumpner pointed to a recent presentation at the CES show in Las Vegas given by the Wireless Business Owners Consortium (WiBOC) that introduced some interesting facts that might help make the case for imaging retailers to jump on the cellular bandwagon:
- There are 265 Million Cellular Subscribers in the USA.
- Almost 100 percent of camera customers also purchase cellular products and services.
- The average 15 year old will spend over $30,000 on cellular products and services by age 35.
- 20 percent of cellular subscribers now call their camera phone their “primary” camera and this number is likely to increase by 50 percent by the end of next year.
- Average gross profit margin on a camera sale ranges $15 to $50 (with accessories)
- Average gross profit margin on a cellular sale ranges $150 to $250 (with accessories) and can reach over $400.
- Cell Phones will outsell digital still photo cameras by 12:1 in 2010.
- Cellular customers upgrade their phones every 18 months.
Stumpner asked himself the question, “How many of our customers would purchase their next cell phone from us if we made the effort to sell them one?”
Curt Tuescher, Operations Manager echoed his Stumpner’s comments when discussing how the cellular business started to become a dominant part of the Camera Case business model 5-6 years ago.
“Walgreen’s moved in and we ended up closing our lab. At the same time, film and development revenues started disappearing. Phones have now become our core business,” he explained. Tuescher found that cellular customers were worth about “five to six times more than imaging customers…and there are a lot more of them!”
Tuescher added that several indicators are pointing imaging retailers in the direction of becoming mobile imaging retailers. His advice for other dealers, “Trying to make a go of it in photography alone is very difficult. Find a cellular product.”
Camera Case has used their success in cellular to grow from one store to eight stores with cellular becoming the core profit center and imaging taking on a supporting role. His recommendation was simple, ”Camera stores need to be in the cell business. Owners need to be educated.”
