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    Supermarket NONFOODS Business: Image marketing

    With sales of digital cameras poised to surpass those of traditional models, Lunds/Byerly's is already capitalizing on in-store print-making.

    Last October, during Lund Food Holdings' BOO Blast, photo operations manager Dennis McCoy ran around a supermarket snapping pictures of children in Halloween costumes as they ate, played, and danced to a DJ's music.

    McCoy shot more than 800 photos that evening at the Byerly's location in Edina, Minn., in what has become an annual event. The difference from past years was that he used a digital camera. Each family received a four- by six-inch print on the way out, courtesy of the Sony PictureStation countertop unit in the store.

    "We got an overwhelming response to this," says McCoy. "People were asking how we did it so fast, how the pictures came out so good, and what do they need to get pictures like this for themselves. This was a great opportunity for us to market our digital printing services, because once people discover the power of digital, they are sold."

    And if the Photo Marketing Association International's Industry 2003: Review and Forecast is any indication, McCoy is right on target.

    According to the report, by the end of 2002, 21 percent of U.S. households owned a digital camera, and digital camera sales are expected to reach 24.9 million units this year, surpassing traditional camera sales for the first time. The two main roadblocks to the purchase of digital cameras—the cost of cameras and media for storing images—are quickly disappearing, as their prices drop significantly every year.

    McCoy ordered 20 Sony PictureStation countertop units for his eight Byerly's locations and 12 Lund Food Stores last year. "With the emergence of digital cameras at very attractive price points, we felt we needed a solution that would enable customers to conveniently make four- by six-inch and five- by seven-inch inch prints on-site without any hassle, in the most customer-friendly way possible," says McCoy. "One of the reasons we went with Sony is that, aside from their reputation for reliability, they are committed to staying current with updates to their systems. In fact, they added the CD-burning capability to our units after we had already purchased them."

    More upscale users

    From his experience in the store, McCoy believes the share of households using digital cameras is higher than the 21 percent in the PMA report. He attributes this, however, to his company's upscale clientele. "Certainly it is higher with an upscale clientele, in which there are a lot of early adopters and technically savvy people," he says. "It is a mix, but it tends to be driven by younger people, particularly younger females. Images are still about family and kids and events."

    What McCoy has also started to see is an increase in customers who do both conventional and digital photography. "One remaining bright spot would be the single-use cameras," he says. "We are up 10 percent from last year in single-use camera sales, while at the same time digital is going gangbusters."

    The only problem McCoy sees in the future of digital is the matter of compatibility. "I have identified nine different types of media card," he points out. "This can be really confusing for customers who don't understand the technology. If there is any issue that can harm the growth of digital, this is it, because everybody is trying to control their media types and its distribution—they want to sell the razors and the razor blades—but I think they need to consider the consumer and the bigger picture, and offer more uniform standards."

    Fortunately for McCoy, the PictureStation accepts all formats, either in the unit itself or via adapters for XD and SD cards.

    There are a few key factors that McCoy believes have helped the success of his digital photo operation. One of these is reliability. "When you have a kiosk, it has to operate at all times," he says. "There is nothing worse than going up to a kiosk and seeing a sign that says 'out of service.' We have had no downtime with our Sony PictureStation at all."

    And Lunds knows kiosks. In addition to the 20 PictureStations, the company operates recipe kiosks, a cheese database kiosk, and deli ordering kiosks at its locations.

    Training is another crucial element. Simply placing a kiosk in every store is not enough, according to McCoy. It is important for staff to go the extra distance to make sure customers are comfortable using them. To ensure this, all managers are thoroughly trained in using the kiosks and teaching customers the proper way to use them. This is important because while some customers are technology-savvy and familiar with the machines, others prefer to have a store employee do the work for them.

    Because Lunds opted for the countertop version of the PictureStation, there must be some employee involvement, as the printer station is placed behind the counter, and users must pay through a customer service associate. The PictureStation units are placed in the Fields of View photo labs at six locations and at the service desks in the remaining stores.

    At the service desk, customers complete their orders themselves, inserting the image storage media into the PictureStation unit and selecting which pictures they would like to print. The software also gives customers the option of performing limited editing—such as removing redeye and cropping photos—and then prints the pictures from a unit stationed behind the service desk. The employee simply packages the pictures and takes the payment.

    When customers need guidance, the employee can spin the user interface around and walk them through the procedure.

    McCoy has purchased a digital camera for each store to give employees hands-on experience in using the cameras, as well as to help promote the company's digital services. "We encourage the general managers and store managers to use these cameras for store events, to record store conditions, anything that might be happening in the store, such as community tie-ins, and to make their own prints," says McCoy. "That's the best way to get them familiar with the operation."

    Promoting the service

    Perhaps most important, though, is promoting the digital picture services. As the data from PMA indicates, although sales of digital cameras are rising dramatically, the bulk of owners are still not making their prints outside, even though images printed at home are more expensive and of lower quality than those printed outside.

    In the association's report Marketing to Mom—Profile of the New Digital Camera User, 96 percent of men and women who own digital cameras were found to print images at home, while only 3 percent of women and 1 percent of men are using self-service kiosks for their digital printing needs.

    At less than $1 per four-by-six photo (Lunds charges 49 cents), there is a tremendous untapped market available for aggressive retailers. "The real message here is we have to convince customers that it is more convenient to make prints at a retail location versus taking the time and effort—and money—to do it at home with an inkjet printer," says McCoy.

    McCoy accomplishes this by using a combination of strong signage, strategic positioning of the countertop units, and customer interaction. Twenty-two- by 28-inch signs are placed throughout the stores so customers can see them when they walk in, walk through, and walk out. Each sign has sample prints affixed to it, so shoppers can see exactly what they could be getting from the PictureStation.

    McCoy is also looking to tie in cross-promotions with the floral and bakery departments, two areas in which he had great success with single-use cameras. "We do things like 'Buy a bakery cake and receive a complimentary single-use camera,' because cakes and flowers are strong in terms of picture-taking activities," he says.

    To increase his customers' familiarity with the quality of the prints and the convenience of printing, McCoy plans to do a mass mailing of certificates that offer a complimentary four-by-six digital print. "We feel that if they try it once and see how easy it is to get good prints, they will keep coming back," he says. "One of the good things about the service is you only pay for the pictures that you want, and of those that they do like, they can get as many copies as they want. The average number of photos we are seeing per customer is between 12 and 16."

    The countertop units will also allow customers to archive their photos on a CD so they can reuse their image storage media.

    Looking ahead, McCoy sees a digital future. "Having been in this business for 30 years, I would have to say that the days of silver-halite film are numbered," he says. "If you ask me—and I know this is not a popular opinion—I think we will be through with film within the next five to seven years, especially with the drop in the cost of the cameras. Just look at the price points for the four-megapixel cameras. I have a 4.1 megapixel camera that cost me $700 a year ago; it is now $499. Three years from now, where is it going to be?"

    Add to this the growth of all the new handheld wireless devices like cell phones and personal digital assistants that can take pictures, and the future of traditional film looks more ominous, McCoy adds, especially with some of the devices reaching the two-megapixel range.

    Perhaps future generations of McCoys will pop an XD card into a Sony PictureStation and print photos of how traditional cameras used to look.

    Nonfoods Editor Joseph Tarnowski can be reached at [email protected].

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