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Computers may have not won the war yet, but the digital revolution has begun in photo/film and the effect is hitting retailers sooner than later.Digital cameras, in-store computerized photo-processing kiosks and Internet sites devoted to digital imagery are slowly transforming the photo/film category forever, and no nostalgic 35mm can bring it back.In 2000, 6.7 million units of digital cameras are

Computers may have not won the war yet, but the digital revolution has begun in photo/film and the effect is hitting retailers sooner than later.

Digital cameras, in-store computerized photo-processing kiosks and Internet sites devoted to digital imagery are slowly transforming the photo/film category forever, and no nostalgic 35mm can bring it back.

In 2000, 6.7 million units of digital cameras are expected to be sold, and that number will soar exponentially to almost 42 million by 2005, according to Michelle Lampmann, a market research analyst for Info Trends Research Group, Boston. While there hasn't been a decline in film camera sales, Lampmann told SN that sales would not increase, either. She said digital cameras have an estimated $280 price tag today, but they should drop to a more consumer-friendly price of $129 by 2005. It puts standard point-and-shoot cameras in heavy competition with their more sophisticated digital counterparts.

"Increasingly, retailers are going to offer digital-camera services because of the growing penetration of cameras," said Lampmann. She told SN that 6% of U.S. households currently own a digital camera.

What does this mean for supermarket retailers? Digital cameras, Web-based photo processing, and digital imaging are no flashes in the pan, and supermarkets have slowly but surely started to ride the digital wave.

Osco Drug, a subsidiary of Boise, Idaho-based Albertson's, and NCR Corp. in Dayton, Ohio, have teamed up to implement a Web-based photo-processing kiosk called Xpress Film Check-In. This pilot program rolled out in February in two Scottsdale, Ariz., area stores, where customers can process their film information by computer. According to Roy Evans, a photo associate at a Fountain Hills, Ariz., store, customers can type in their personal information, particular photograph size, the type of film used, and the format (slides, digital pictures, etc.).

NCR is a provider of Relationship Technology solutions in the retail, financial, communications, travel and transportation, and insurance markets, and it partners with Infopoint Systems in Ireland, where together they have used their software with NCR's kiosk. A spokesman for NCR, Robert Kramer, said two European supermarkets and a Canadian one have signed agreements to also pilot the Xpress Film Check-In. NCR, however, would not announce their names until they have been installed.

Kramer said, "The key benefit for the retailer is that the Xpress Film Check-In helps avoid errors on the [normally handwritten] envelopes, and transactions are faster." This quick service leads to overall greater customer satisfaction, he noted.

The Xpress Film Check-In application itself is not linked to the Internet, he told SN, but the NCR kiosk is completely Web-ready. Thus, he said, it is entirely possible for a retailer to provide touch-screen buttons enabling the consumer to link to relevant Web sites. This could be used to help a consumer find additional information or to promote related products or services, according to Kramer.

"The system keeps things organized and tracks lost film easily," Evans said. "For some customers, it's the greatest thing, but others don't like computers."

Still, Evans said, some computer-weary customers are happy when they are able to work the Xpress Check-In correctly. "It really shows what technology can do," he said. Some customers are so impressed with the Xpress Check-In, Evans said, that they even take pictures of the revolutionary kiosk itself.

Gina Nastasi, a photo technician at the other pilot store in Scottsdale, said photo-processing sales have increased approximately 85%, with the drug store processing an average of 40 to 60 film rolls a day.

"The elderly don't like [the kiosk] as much, but the younger kids dig it -- we get a lot of 'oohs' and 'ahhs."' said Nastasi.

Rochester, N.Y.-based Eastman Kodak Co. will take this photo-processing kiosk one step further with its Kodak Picture Center. After the kiosk was successfully tested last fall and winter in an Albertson's in Sacramento, Calif., and a Kroger's in Cincinnati, Kodak is ready to launch this "interactive drop box" in the next month, according to Jason Howard, an associate product manager for Kodak. It is the only kiosk on the market that allows consumers to plug in their digital-camera memory card (the most common way to develop pictures on a digital camera), select the images they want to print, enter their personal information, and receive their pictures in three to five days for a low 49 cents for every 4 by 6-inch print. The images are banded together by a telephone line in the kiosk. The images are sent to one of 50 Qualex photo-imaging company locations nationwide, where the pictures are printed out on Kodak paper. Howard told SN that Kodak wants to tap into the average digital-camera user who takes 10% to 15% more pictures than a typical 35mm user, but does not print them out.

"[The Kodak Picture Center] turns a digital-camera card into a reusable roll of film," Howard said. Qualex, Durham, N.C., is an Eastman Kodak company.

Both Konica and Fuji have introduced processing options and are using the Internet to move to digital photography as well.

Despite the growing trend of digital technology, some naysayers argue the effect has been minimal so far.

Paul Worthington, a spokesman for the Silicon Valley-based research and analysis firm Future Image, San Mateo, Calif., said there are many obstacles and limitations standing in the way of total digital-camera domination. "You can't just drop off a digital camera like you can a roll of film," said Worthington.

Right now, price is the biggest obstacle, according to Worthington. He said $200 would barely buy the consumer a one mega-pixel digital camera, while $200 can buy the consumer a 35mm that can churn out poster-size photographs. He stressed that people aren't willing spend the money yet for a subpar digital camera at high-end prices. This discrepancy, said Worthington, is enough to lose a sale.

Dan Van Zant, director of general merchandise at C&K Markets, Brookings, Ore., agreed. He said, "Digital cameras have not caught on, although that will probably change as the price drops."

Van Zant told SN that 35mm-film sales at C&K stores have not leveled off at all, but have actually picked up. Sales for the convenient single-use cameras, retail-priced at $6.99 to $9.99 for non-flash and flash, respectively, have increased 9%, said Van Zant. He also said the store has been promoting the cameras all summer long on fixed "power-wing" displays.

Then there are the obstacles for retailers once a consumer buys a digital camera. Since supermarkets and mass retail outlets will lose on repeat film sales, retailers will have to find new ways to keep the consumer coming back. Worthington suggested that retailers should have in-store print stations for digital-camera users, as well as make digital cameras rentable for those who don't want to own one.

Skip Colcord, a spokesman for Polaroid Corp., the nation's leading digital and instant imaging company, based in Cambridge, Mass., said Polaroid is trying to ease some of the consumer reservations about digital technology. "Polaroid's offerings are primarily concentrated on the first-time user," he said. He added that the company produced a joint product with Olympus that can allow users to get "instant gratification." Within the next year, Polaroid will put forth a consumer digital-printing camera. It will come with an instant print option, so the consumer can take a digital shot and pop out the print instantly. The digital file can be saved for later use for the web or e-mail.

Internet sites are also tapping into the digital trend. Web sites such as, Campbell, Calif., hope to become a "brand behind the brand," said a source close to Photoloft. The source said that wants to provide a "service infrastructure" for digital-camera customers. Ultimately, the source told SN, the company wants customers to receive their finished, digital prints from the actual supermarket or mass retailer, with Photoloft as the silent middleman. People at the Web site would print out the files and send them back to the retailer.