RETAILERS VIEW DIGITAL PHOTO AS MIXED PICTURE

ORLANDO, Fla. (FNS) -- While retailers are looking to digital photo technology as the next big development, they are also wary about getting into the business too fast, according to retailers at the recent Photo Marketing Association's Fall Imaging Conference and Trade Show, held here Oct. 8 to 10."It's a big gamble, because we don't know where the customer is going to be in two to three years," said

ORLANDO, Fla. (FNS) -- While retailers are looking to digital photo technology as the next big development, they are also wary about getting into the business too fast, according to retailers at the recent Photo Marketing Association's Fall Imaging Conference and Trade Show, held here Oct. 8 to 10.

"It's a big gamble, because we don't know where the customer is going to be in two to three years," said Dave Rogers, vice president of photo centers at Wal-Mart Stores, Bentonville, Ark.

Retailers agreed that manufacturers must keep systems simple for the mass market's target customers, who are snapshot photo takers.

"The customer doesn't need to know that it's digital. They'll just know we have an additional service, such as [photos] on a disk, or PhotoNet," said Carlton Williams, senior vice president for photo finishing at Wolf Camera & Video, Atlanta.

"It's got to be simplified before it is accepted by more of the mass market," said Gordon Addington, division merchandise manager of photo finishing at Walgreen Co., Deerfield, Ill. "The future of digital is something simple, like copy print stations," he added.

In addition, Walgreen stores do not currently have the "caliber of people behind the counter" for the retailer to fully enter the digital market.

Specialty camera stores insist digital technology will flourish with customer education. "They're very interested, but don't know where to go to learn," said Donald Spring Jr., vice president of Cavalcade Color Lab Foto Source, Huntsville, Ontario. When digital cameras were introduced, Spring held a free seminar to show photographers how to use the cameras. He was shocked when nearly 400 people, from up to 400 miles away, attended the session. "[Abandoned Photo System] never got that much excitement," he said.

Retailers' hesitation on digital technology may stem from the APS introduction flap about two years ago, when camera suppliers did not have products available. Addington said that although Walgreen was behind the APS launch, officials there still have a "bad taste in their mouths" from it.

"We set up advertising two to three months in advance, and we didn't have cameras,"

Addington said. "We still haven't warmed back up." Now, suppliers have plenty of APS cameras, but minimal consumer demand, and only about 6% of Walgreen's rolls processed are APS film, according to Addington.

Nevertheless, Addington expects APS processing to be about 20% of Walgreen's business by the year 2002. "To get any higher, manufactures are going to have to come down on the price of cameras and film," he said.

Wal-Mart officials have put more faith in the technology, taking APS "at least" to every market, according to Rogers. At the same time, specialty stores, with their one-on-one relationship with camera buyers, are on the frontline of new technologies such as APS. Cavalcade's APS camera sales are now up to 45% of all camera sales, according to Spring.

Williams is looking forward to APS' re-introduction at Christmas to fuel APS education and sales. At a recent family reunion with 100 guests, he said, not one person knew about APS technology.

Retailers at the PMA show shared their views on other hot photo topics, including:

One-hour photo: Walgreen's one-hour-photo market is now 40% of its business, according to Addington. Other retailers agreed that offering one-hour and same-day photo service is a key method to differentiate their stores from others, especially in tourist areas.

Photo print kiosks: Williams, owner of Wolf Camera & Video, said print stations are the "easiest way to get into digital for a small camera chain." And Addington said Walgreen has Kodak's Copy Print stations in all of its 1,500 stores that offer one-hour photo service. "Last year that product almost didn't exist in our stores. Now, we're showing the customers what they can do," he said.

Internet photo service: "It's too sophisticated for our customers," Addington said. However, Williams pointed out a retailer could add $4 to $6 to photo orders by offering Internet service.

Passport photos: Sales of passport photos, a new service at Walgreen, have been "very strong," according to Addington. Wal-Mart also offers the service.

Double prints: Double prints are big business for most retailers. Addington said doubles are 60% of Walgreen's overnight business.

The PMA is headquartered in Jackson, Mich.