Digital photography's popularity with consumers may be ramping up, but it's not expected to pull the rug out from under supermarkets' traditional film-processing business for at least several years.
General-merchandise executives say that while the handwriting may be on the wall, it takes binoculars to see it.
"The issue of what impact digital cameras will have on regular film, cameras and photoprocessing is still a blip on the radar screen," said Bill Mansfield, vice president of nonfood at Marsh Supermarkets, Indianapolis. "I think digital will have a big impact as soon as more hardware and cameras are in the consumers' hands. But there will still be a demand for regular film and one-hour and overnight processing."
Mansfield said it's unlikely digital cameras will do to 35mm photography what desktop computers have done to typewriters. Instead, he compares digital's effect to that of laser discs and DVD on conventional VHS videotapes.
"Each time a new [technology] is introduced, they say they're going to do away with VHS tapes as the mainstay component of that industry," he said. "But none of them has been able to do that."
Meanwhile, the new picture-making technology appears to be fueling an increase in film-processing volume at supermarkets and other photofinishing outlets, as many consumers opt to digitize prints rather than make the leap to filmless digital cameras.
"Film is not going away in this lifetime," Lori Manning, vice president and general manager of consumer imaging at Eastman Kodak Co., Atlanta, said. "We aren't anywhere near replacing film with digital."
Even so, Kodak forecasts digital photography could balloon to 20% to 40% of the snapshot market by the year 2000. When and if the mass market finally does embrace digital photography, supermarkets can still grow with the new medium if they turn to such digital services as electronic-imaging and digital-print kiosks, experts say.
"Supermarkets need to approach digital from the services point of view, not the product point of view," said Paul Hudak, vice president and general manager of Fuji Photo Film U.S.A. Inc.'s Photo Imaging division, Elmsford, N.Y.
"Putting pictures on floppies and offering retail kiosks are the two best ways the food channel can get its toe wet in digital. I don't think the price points on digital products are where supermarkets want to get into that yet."
Supermarkets have good reason to be concerned about digital-photography's growth. Traditional silver-halide film development has been a healthy ancillary business for the food sector. The photofinishing market accounted for $741 million in sales for supermarkets in 1996, according to the latest research by the Photo Marketing Association International, Jackson, Mich. That's about 12.8% of the entire $5.8 billion film-processing industry.
Taking into account both rolls of film processed by in-house minilabs and those sent to outside labs for processing, supermarkets handled about 4 million more rolls in 1996 than the 98 million rolls developed the previous year. Given that digital cameras don't use film, the increase might at first seem counterintuitive.
But analysts say it's because consumers have only partly bought into digital photography. Many use scanners to convert conventional photographic prints to digital images that can be viewed and manipulated on desktop computers and sent to others via e-mail. So even though more pictures are being digitized, they're still being shot with traditional 35mm film that's processed by supermarkets and others.
It's only when amateur photographers shift en masse to digital cameras, which use no film but store images on memory cards that can later be transferred directly to computer hard drives or floppy disks, that supermarkets and other mass merchandisers who rely on traditional film-processing will have to worry.
"Looking ahead in the next 10 years, digital is where the whole thing will be," said Denny Voight, nonfood buyer at Rosauers Supermarkets, Spokane, Wash. "The film category will be refined so much that where we used to have up to 8-foot film sections, it will be narrowed down and simplified with fewer film types."
So far, digital cameras have hardly inundated the market, although they're mounting a surge. Last year, the Consumer Electronics Manufacturers Association, Arlington, Va., estimated, 700,000 units were shipped from factories. The association projects that figure will rise to 1.1 million units in 1998.
To date, high price points have been the barrier to digital cameras penetrating the mass market. Some models still fetch as much as $1,200.
"People won't pay the prices until the products become mass-marketing competitive," predicted Charles Yahn, vice president of general merchandise at Associated Wholesalers in York, Pa. "And without that, it won't happen."
It's the vast potential of the digital market that indicates a photographic revolution in the offing. Kodak notes that the "infrastructure" for digital photography -- essentially, households with multimedia computers -- is already in place. More than 175 million multimedia PCs have been sold since 1990, and more consumers bought PCs than televisions in 1996 (31 million vs. 26 million). More than half of all households that use a camera have a PC, Kodak estimates.
In the electronic-imaging alternative, consumers drop off their film at the supermarket and check a box for either "pictures on the Internet" or "pictures on floppies." Depending on the choice, floppies containing digitized images are returned with the prints (if prints were also ordered), or digitized images are posted on a web site where the consumer accesses them via a password. Either way, the pictures are ready to be pulled into photo-editing software for manipulation or touch-ups or to attach to e-mail as files that friends, family and business associates can view on their computers.
Each option costs about $5 a roll and represents a source of additional revenue for supermarkets, as double and triple prints do.
The floppy and Internet options are available through Kodak's Qualex, Fujifilm Processing and Konica Quality Photo East/West operations, the three largest wholesale photofinishers in the country and those used by most supermarkets and mass merchandisers.
Kodak last week struck a deal with America Online Inc. to take its Kodak's PhotoNet Internet service a step further by returning images in 48 hours to an AOL member's e-mail address. When pictures are ready, AOL's familiar "You've got mail" notification is joined by "You've got pictures." Members will be able to order hard-copy reprints and enlargements on-line, all of which they can pick up at the store where they originally dropped off their film.
Digital print stations also offer a chance to capture more revenue. Consumers can tailor photographs to suit their tastes at the walk-up kiosks.
Using negatives or prints, taken years ago or freshly developed, a customer can rotate, zoom or crop an image; make color adjustments or touch-ups; convert color images to black-and-white; and make enlargements or wallet-size versions.
Retailers who choose to process film in-house are also able now to offer shoppers digital "extras" without off-site assistance. Konica U.S.A. Inc. recently rolled out its QD-21 in-store photoprocessing minilab that is the first on the market to feature an all-in-one printer that can spit out top-drawer prints straight from digital cameras, floppies, CD-ROMs and zip cartridges, as well as from negatives, slides and prints.
