Digital photo printing business develops rapidly at retail outlets

The number of digital prints processed at drug stores and other retailers continued to grow in 2007, according to a new study from the Photo Marketing Association. The PMA report released in January also showed the total number of digital prints processed for the 12-month period ended last October jumped 25 percent.

The good news for drug stores is that more people are choosing to make their prints through retailers, as the number of do-it-yourself home printers declines. The PMA estimates 49 percent of digital prints were made at retail outlets last year—up from 45 percent in 2006. That compares to just 35.7 percent of respondents who said they made their prints at home, down from 41.5 percent in 2006.

In-store kiosks that allow customers to process their own prints continued to be popular, as well, accounting for 14.7 percent of all orders compared with 13.9 percent the previous year. The number of people making orders through in-store labs remained about the same at 23.5 percent compared with 23.8 percent last year.

The strongest gains were made in prints ordered online, with total spending jumping 62 percent in 2007 to more than $2 billion. The percentage of people who ordered their prints online and received them by mail jumped to 14.1 percent from 11.4 percent in 2006 with a comparable gain coming in orders made online and picked up at retail (11 percent in 2007 compared with 8 percent in 2006). And the forecast calls for consumers to do more ordering online during the next few years, with 32 percent of all orders expected to be made online in 2008 and increasing to 38 percent in 2009.

Most drug stores are tapping into that demand with expanded services and special offers that encourage online ordering. Walgreen’s ran a special in January offering custom-made calendars and hardcover memory books for $14.99, a $5 discount that was valid only with online orders. Longs Drug is providing digital photos ordered online for just 19 cents a print with one-hour processing available in some stores.

The amount of money consumers spent on buying digital cameras also increased last year in spite of price erosion that’s driven the entry-level cost of cameras close to the $100 mark. The NPD Group estimates that spending on digital cameras increased 3 percent for the year ended October 2007 to $6.23 billion and that total unit sales jumped 16 percent for the year to 28.2 million cameras sold.

But after years of rapid gains, digital camera sales finally are flattening and are expected to drop this year, with camera sales expected to fall to 27.2 million in 2008 and to 25.9 million in 2009.

In terms of digital resolution, seven Megapixel cameras were the dominant category, accounting for 48 percent of total sales, with eight MGP cameras generating 23 percent of sales. Cameras with six MPG and less accounted for just 19 percent of total sales for the year, with the average price in the sector falling more than 70 percent from the same period last year.