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Looking back - and forward.

Peter Thornton

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Many of us said that 2005 would be a critical year for minilab owners. I think that this was the case.

Film sales have virtually collapsed and many labs are now reporting their first ever day on which they process no films at all.

The good news is that the worse is over in that there's really not that much volume left to go from the silver halide business. I think that we've touched the botom as far as print volumes.

What none of us expected was that the industry would try to destroy itself by giving away our product at less than cost. This is the real challenge of 2006, and as always, we (the small operators) are in the grip of the major players.

The problem is in deciding whether or not to join them in discounting our prints and having continuous "special offers"?

Let me throw out a thought to you all. What would happen to your businesses if your digital volume doubled during the next year? Would you be more or less profitable?

Remember that it's not just the good orders that would double but all those time consuming (but very necessary) half hour chats about resolutions, cxamera cards, how to get pictures out of the cameras internal memory, why 2 pictures don't cost 14p, why those 10x8's are blurred and why it's not our fault, why we no longer stock black and white 12 exposure 125asa film and all the rest of it.

Factor in a new machine to cope with extra volume, also more staff to man the kiosks etc and you may get a shock.

Many people feel that the present situation is simply unsustainable. I think that Summer 2006 will be the crunch point.

What do the rest of you think?

(As always, these are my personal views and not necessarily those of PMA)

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Peter, as you know, we are a stand alone minilab with no camera sales.

Although we don't have an epos system, we have a 40 dept. till and this has allowed me to keep a very detailed record of our sales breakdown over the past three years.  By analysing both the amount and the rate of change for each cost centre ("digital" has 18 different cost centres for example), and by taking into account the introduction of new services, I have made predictions for next year's sales.

Our sales for 2005 were just 2% above the prediction I made at the beginning of the year (although we tried hard to make it more).  If my predictions for 2006 are anywhere near as accurate then we will see two things.  First, our revenue from digital sources will be greater than our revenue from traditional film sources.  Secondly, the increase in revenue from digital (year on year) will be greater than the reduction in revenue from film sources.  If I am right, and I know it is a big if, then it is good news for us and,I hope, good news for other minilabs.  There are things that are difficult to predict, the machinations of the "muppets", the uncertainty in the economy, oil prices etc. but we may, just may be turning the corner.

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I have seen many labs around me dissapear in 2005 and its made no increase to my business, either they were really doing nothing or those customers have gone else where. My silver business is virtually nothing and Digital is either big orders of 100+ prints or 2 prints on the kiosk. We have sold many mini printers over the past year (through public demand) and every time you sell one you have lost a d&p customer. Do they come back for media, yes but they are not printing much out as they are being very selective.

Customers are just not printing, home or in shops, they have seen the image on there camera and no longer have the need to print it.

Even places like Tesco and Asda, with there cheap prints, are they actually getting volume?, Are they printing as much as they did when it was 35mm, I doubt it.

2006, 2007, 2008 then end of the minilab. It will be kiosk or nothing.

One last thought, we are no getting asked for digital photo frames, new one from Phillips. If they take off and get cheap enough then it could kill frame sales and printing photos for frames.

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I dare to say that the day will come soon when we process NO films. Though for the last 3 years we have be recoding a daily print count, which is interesting.

2006 like the last 2 years are going to see those that have maintained a high price will survive, while the Muppet's that are doing things at cost price waste away. The challenge though, is the like of the supermarkets, that can have lost leaders to try and gain market share. Though IMHO this will not last for to long.. each SQ meter of floor space has got to yield a return.

Internet sales for those that have a on-line shop will increase ;) ours are doing very nice thank you ;) Those that do not have one, well you are now 2/4 years behind get your arse into gear and get selling on th net!!

Keep looking at new things, and remember we are retailers that is we have have a shop, and have to sell, it does not matter f it is photographic or not, get money in your till and all of that, most of all, do not let your fears stand in the way of your dreams.

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