As the numbers bear out, competition is fierce for supermarkets trying to turn a profit in photo-film services.
However, supermarket retailers say it is a growing category and a strong customer draw. To maintain their share of the business, chains are applying sharper pricing, using forceful ads and putting more emphasis on store-level displays.
"Film, cameras and photo-finishing are growth areas for us," said John Stahl, director of general merchandise and health and beauty care at Genuardi's Family Markets, Norristown, Pa. "We focused tremendously on photoprocessing and promoted film in ads 20 to 30 times during the year."
According to the Photo Marketing Association, Jackson, Mich., supermarkets slightly improved their share in photoprocessing for all types of film. Supermarkets had a 12.7% share of the business from January to November 1998, compared with 12.4% the year prior.
The drug and mass-merchandiser channels increased share points as well. Drug stores developed 22.4% of all film processed, compared with 21.7% in 1997, and mass merchandisers grew their share to 32.9% from 32.6%.
Specialty photo shops, warehouse clubs, mail-order outfits and others grabbed a 32% share of the photoprocessing market in 1998.
In the battle for film sales, however, food stores lost ground. Supermarket sales declined 0.8% to $330.3 million, and unit sales slid 6.7% to 58.7 million rolls for the 52 weeks ended Dec. 6, 1998, according to point-of-sale data from Information Resources Inc., Chicago.
During the same period, drug-store film sales also lagged, falling 1.5% to $583.4 million. Unit sales decreased 2.9% to 93.1 million rolls.
Meanwhile, mass merchandisers picked up the slack, recording a sales increase of 4.1%, to $780.3 million, and a unit volume increase of 1.9%, to 107.4 million rolls.
Supermarkets are doing strong business in high-impulse sales of single-use cameras. Disposable sales leapt 22.6% to $144.7 million, with unit turns rising 23.8% to 14.1 million, according to IRI.
The disposable-camera segment also performed well for drug and mass channels. Single-use dollar sales surged 32.7% to $234.8 million, and units advanced 37.5% to 22.7 million in drug stores. Mass-merchandiser sales rose 19.8% to $220.7 million, with unit volume increasing 39.8% to 28.3 million.
But despite competitive pressures, chains like Genuardi's are managing to boost photo-department sales. According to Stahl, Genuardi's saw film sales soar 100% last year after vigorously pursuing the category.
Last spring the chain shifted to an everyday-low-price format for film developing. Any size roll is processed for $5.99, with a second set of prints free. "This sent our business through the roof," Stahl said.
For B&R Stores, Lincoln, Neb., photo and film sales overall have increased, "especially in disposable cameras in the Advanced Photo System format," said Barb Zugmier, director of nonfood.
"Disposable cameras priced at $10 to $15 are being driven by families on the go and events like graduations," she added.
B&R plans to add Polaroid's new 10-exposure, instant Pop Shots disposable model, which retails for a suggested $19.99. "We'll add it to shelf stock to test customer reaction before ordering promotion shippers," Zugmier said.
For Associated Wholesalers, York, Pa., film processing and private-label film sales have shown the strongest growth in the category, said Charles Yahn, vice president of general merchandise. Private-label film accounts for 30% of Associated's film sales. "Consumers are more comfortable with store-brand film than they were a few years ago," Yahn said.
A source at wholesaler Bozzuto's, Cheshire, Conn., said film and photo sales have picked up nicely for retailers that make sure they carry the most popular stockkeeping units and support the category with extensive advertising.