Camera and Photographic Supply Stores

The retail photographic supply industry has historically been competitive, even more so in recent years as establishments struggle to attract the 6 to 10 percent of U.S. households that purchase cameras and photography supplies at camera specialty stores. The vast majority of Americans purchase cameras through consumer electronic and computer stores, mass merchandisers, drug stores, and supermarkets. As digital cameras and camera phones overtook the market during the 2000s, department stores, mass merchandisers, and electronic equipment stores took further market share from stores that specialize in camera and photographic supply. There were approximately 3,150 camera and photographic supply stores in the late 2000s, which generated over $1.2 billion in revenues. Camera specialty stores were generally small, with an average of five employees.

The downturn in camera specialty stores coincided with the maturation of digital cameras, which are sold through many different Web and brick-and-mortar outlets. In 2003, U.S. sales of digital cameras surpassed those of traditional devices for the first time. By the end of the decade, digital cameras dominated the general consumer market as their price dropped and their quality improved.

The camera sector is a mature industry. The majority of those who purchase cameras are repeat buyers who are either upgrading their camera or adding a second camera to the household. Camera technology improved rapidly during 2000s, providing ample opportunity for sales for much of the decade. For example, in February 2009, over 40 percent of units sold were 10 or more megapixels and just 15 percent were fewer than 8 megapixels. Comparatively, in February 2008, 60 percent of camera units sold were fewer than 8 megapixels and only 12 percent 10 megapixels or more. As prices dropped, big box and discount outlets such as Wal-mart and Target, as well as drug stores, became leading suppliers for digital cameras. Specialty shops were often left to compete for high-end models and accessories.

Another segment taking business away from camera retailers was the proliferation of camera cell phone use. According to PMA's U.S. Camera/Camcorder Digital Imaging Survey, by 2009, more than one-half (53 percent) of all U.S. households owned at least one cell phone with a camera, and 10 percent of households owned three or more camera cell phones. (Other studies estimate camera cell phone saturation to be between 70 and 80 percent.) Of camera cell phone users, 57 percent noted that they did not own another digital camera. Although camera phones do not have many of the built-in features of a regular digital camera, and the photo quality is not as good, users cited convenience as their main reason for using the camera function as well as the ability to easily upload photos.

Another strike against the specialty camera market was the economic downturn in 2008, which negatively impacted the entire camera sector. Approximately 30 to 40 percent of digital cameras are sold during the fourth quarter, and roughly one-third of digital cameras are purchased as a gift. When consumer spending declined during 2008, so did camera sales. In 2008, the sale camera sales fell 2 percent by unit but 16 percent by revenues. In particular, sales were sluggish for digital and film-based single lens reflex (SLR), which are the high-end cameras with interchangeable lens commonly used by professionals and photography enthusiasts. These cameras had begun to gain popularity over the previous years as the price dropped and more nonprofessional users made purchases. The segment still controlled less than 10 percent of the camera market, however.

Another issue for some camera shops was the tremendous drop in photo processing revenues. In 2009, just 50 percent of photos were processed at retail outlets. Online processing companies continued to increase in popularity, and many consumers opted to retain their digital images in venues other than print, such as digital photo frames, online photo galleries, and popular social networking sites. For example, by mid-2009, more than 10 billion photos had been uploaded to Facebook.

Most of the leading companies in this retail industry are privately owned. Ritz Camera Centers Inc. was the industry leader with approximately 900 stores nationwide in 2008 but many of these stores were shuttered during the year. The company's stores, which generated more than $1.1 billion in total sales in 2008, operate under the Ritz, Wolf Camera, and Kits Camera names, offer one-hour photofinishing, cameras, film, and photographic and optical products and services. The company operates a network of e-commerce Web sites, selling digital cameras and photography products. Ritz Camera also owns Boater World Marine Centers.

Hurt by declining sales due to the loss of photo processing services to digital technology, a weak economy, and poor boat sales, Ritz Camera (including Boaters World) filed for Chapter 11 bankruptcy in February 2009. According to the terms of the bankruptcy agreement, Ritz Camera will close the doors on 300 of its remaining stores, leaving 400 in operation.