What Camera Store Is Being Sued
40 years ago, Bob Khoury and Warren Steinberg started selling used photo equipment out of a showcase in an Atlanta, Georgia, flea market. Soon they moved to a brick and mortar shop which, to incorporate their earlier experience, they chosen Showcase. The shop grew to exist the largest in Atlanta and sold photo and video equipment to amateurs and professionals alike and terminal twelvemonth they historic their 40th anniversary.
To provide the best customer experience they hired knowledgeable sales people, some of whom accept been with the company for more than than xx years.
Fast-forward to 2017 and they are the largest photographic camera store and the terminal ane left standing. Withal, dark clouds take been covering the horizon for some time and on January fifth Showcase announced:
As you lot are well enlightened, the coming of the Internet and high-volume consumer electronics stores accept progressively shrunk our retail market. We have adapted to these changes in as many creative ways equally nosotros could and have survived to be the last photo and video store in Atlanta. But we have reached a point that we can no longer sustain a retail business. So it is with great regret that we will be closing Showcase Photo & Video on Tuesday, February 28th.
A General Manager's Perspective
Showcase general manager John Williams, who has been effectually for nearly 50 years in the photo field and equally a manufacturers' representative, believes the business is unsustainable based on the current combination of factors and pressures on the photo retail business (east.g. there are several things that are going on at present that are affecting about all photo retail stores in the country). Williams outlined 3 main reasons why independent photographic camera stores are going the way of the dullard into extinction:
#1: An "Uneven Playing Field"
"The showtime thing is that we're all operating in an uneven playing field which has been influenced by the failure of states, in this case Georgia, to require the collection of sales tax from retailers operating outside of state," Williams says. "Failure to come upward with a way of collecting sales taxation has put a burden on our company and others in the land that is currently viii%, before long to exist about 9%, then I'm operating at an 8% disadvantage."
"Now I can tell you that the state is collecting their 8% from me, and that in many cases far exceeds the percentage of turn a profit that I'thou making on merchandise. The state makes more than (profit than Showcase) on many of my sales, which strikes me every bit being an unsustainable number."
#2: Information Smash
"The second issue has to practise with the amount of, shall we say, digital information that's now available," Williams says. "In the old days customers would sometimes seek data or seek pricing for a product by using one of the several photography magazines that were available, so they thumb to the dorsum, find the product and encounter what the toll was in the back of the books."
"Sometimes that was reliable and many a times it was not. Well today the consumers practice not have to worry about a mag as they have a computer in their hand in their smart phone that volition tell them instantly what the production sells for here and elsewhere so they have an instant comparison shopping. And well, I'm fine with that and we are very competitive with most everybody else in the whole country."
"However the consumer, more than often than not, now is non coming in to heed to our conversation about the product, the value that we bring to the product and what special offers that we might have. What we've seen over the last couple of years is steadily failing store traffic and equally the store traffic has declined the sales volume follows that and has been shrinking."
#3: Manufacturer Marketing
"The third unsustainable issue is that manufacturers have come up with a marketing strategy that involves rebates, oft referred to as instant rebates, when we take them out immediately," says Williams. "As an example a $ane,000 camera might have a $200 instant rebate and so the way information technology is ready upward to work is that, I take a selection whether to offering the rebate or not. Simply I tin can assure you that the consumer knows there is a rebate and I'm having a gun held to my head and told by the manufacturer you basically have to offer this to your customers."
"Here'south how it works: I sell the $g camera to the customer and then I deduct the $200 instantly, then $200 of my money is gone. In order for me to collect the rebate from the manufacturer I take to file diverse documents on a timely basis and promise that they laurels and fill up those requests in a timely basis. That could be weeks to months so in a fact they're belongings my money for weeks to months. Now when they reimburse me for the $200 instant rebate they practise not reimburse me 100%. The manner it works is they reimburse me 80%, so it's an 80-20 organization where the manufacturer reimburses me $160 and I've essentially given upwards $twoscore of my money on the sale."
"And so every bit I said before, this is just another unsustainable proffer that'due south going on in the industry and dealers are putting out tens of thousands of dollars and in some cases hundreds of thousands to support the manufacturers' rebate programs, which are just being reimbursed to the tune of 80%. Once again, it's an unsustainable model."
"Unfortunately, the manufacture has become driven by-product, so that the manufacturer regularly introduces new products. Of course we meet the pick up in sales but if they're not introduced by the manufacturer and so sales tend to tail off or reject at the end of the life wheel and that'southward unfortunate."
"Just every bit unfortunate is the beginning of the life bike where the manufacturer introduces a product and is unable to supply the product in sufficient quantities to fill up the existing demand. So not only are y'all unable to fulfill a auction but in many cases it basically stops the auction of other merchandise. The consumer decides I desire that item model and so you have kind of a Catch-22 of not selling one cause you lot can't go it and you can't sell the one you take because it's non the electric current model."
In the Business concern of Losing Coin
"People come and ask me what happened with Showcase, a company who'southward been in concern for 40 years, and the reply is that the curve between making a little coin and losing money has intersected, so now we're at the point we're not making simply losing," says Williams. "And a business tin can't exist sustained very long if you're losing money, and so that's kind of where we've arrived."
"It'south a very interesting from an economic view-indicate where yous take essentially a city of almost 5 million people and here nosotros are the only photo-video specialty store in the metropolis with a 40 year track record and nosotros found that we are unable to sustain our business in a profitable fashion."
"Now, I often call up to myself maybe it's something we're not doing or something we did wrong and and then forth. But we have a lot of experience and I accept spent my whole career in the photograph business, and that's about 50 years. I've seen from both sides of the desk not only this position but out on the route and I visited hundreds of dealers (as a manufacturer's rep in the past) and did business organisation with them so it's a very difficult position."
"As I expect around the state, just a few months agone a major West Coast dealer Keeble & Shuchat Photography out of Palo Alto, CA shuttered his business and if y'all read his remarks, they're non a lot unlike those that I just made nearly the state of the industry."
"Now what's going to happen going forward is really difficult to say but the manufacturers have not done themselves a favor. The country of Georgia has not done itself a favor. Georgia is not but going to lose the sales revenue enhancement that was generated on a regular footing out of this location, but too there are other fees and taxes that they collect during the course of the yr which is immediately going to drop to zero."
"And so the State is essentially forfeiting in excess of a million dollars, which is a small amount and before you know it is a 100 meg and and then 500 one thousand thousand and now it is about approaching 'real coin'."
"The decision to close the business organization is extremely difficult for a lot of dissimilar reasons most of it is that I've never washed it earlier and there are no guidelines as to how to become about it. How practise you deal with personnel, all kinds of issues and insurance? Information technology'south kind of unfortunate especially when you have personnel who accept been with the company, not perhaps for the unabridged forty years, but we have a number of employees that have been hither over 20 years. And they didn't stay here for 20 years because they weren't good at what they did, but they happen to exist very good at what they practise."
"They are excellent technical people, they are excellent sales people, they work well with people and the customers chronicle very well to them and we've had literally hundreds of customers come in and say they were very disappointed that things have played out this style and they were very sorry and wished united states of america well."
"Some other casualty of this whole procedure, besides the State and the manufacturers, volition be our customers who volition non do good from our employees' expertise and the power to come and visit us and talk well-nigh photography and video in general. And unfortunately our sales staff will have to discover other homes in gild to practice what their specialties are."
The Fall of Showcase and Rising of Showrooming
Showcase owner Bob Khoury says his business kept on growing till 2012, when it started to plateau off. They were pretty flat for 2013 and 2014, so dropped off a little in 2015 and more in 2016. This was enough to paint a moving picture that they could non sustain their current business organization model and they had to either dramatically make some changes and cut overhead or they had to close.
Showcase did not want to reduce the staff or their level of service equally their customers had come up to await that from them and any thing less would not have been off-white for the loyalty they had provided to the business. When it came to inventory they had to stock all the popular lenses and cameras and hold equally much inventory of everything as they perhaps could — if customers were told that items were not in stock, so they would go home and order online and not come dorsum.
Showcase's demographic was aging, ameliorate cameras on smartphones were eating into the digital camera market, less customers were coming into the shop and fifty-fifty those that came were frequently showrooming. The word "showrooming" gets underlined in red by my Microsoft Discussion spellcheck, so I get to Merriam-Webster but it is not in that location either. However, showrooming has get a legitimate word in the concluding few years and Wikipedia defines information technology equally the practice of examining merchandise in a traditional brick and mortar retail store and and then buying it online, sometimes at a lower price. Here they were not just examining the merchandise simply getting the input and advice of the experienced staff to figure out which model was the most suited for them, property it in their mitt, picking on their noesis, using their time… and and then buying online.
A Canon EOS 5D Mark Iv DSLR Camera with 24-105mm f/4L Two lens costs $4,599.99 at Showcase, which is exactly the same at most major players, but the added 8% sales revenue enhancement of $368 is what the client gets to go on as a bonus past ownership out of state. Catechism and other manufacturers provide a MAP or Minimum Advertised Cost and when the main players stick to that the others take to follow. Amazon does charge taxation in Georgia because they accept warehousing facilities in the country but that does not utilize to online photo retailers.
"Amazon is not my major competitor," says Khoury. "My major competitor is New York."
Shrinking Turn a profit Margins
Sales tax is not the merely reason that Khoury has to shutter his doors: margins is the other. In the past margins were around 20%, today it is one-half of that on cameras and lenses and even less.
"Ane of the main reasons — and I in no fashion want to encounter equally a victim — is the manufacturers, and I lay a lot about information technology on the manufacturers, who take been cut my margins for years and fixing Minimum Advertised Pricing to the point where it's very difficult to make whatsoever coin in this business," says Khoury. "My margins have fallen 5% over the past eight years. To give you an idea, the minimum advertised cost on Canon lenses is 5%; we make 5% on Catechism lenses. Others are 10%, but even that's non enough to sustain the business."
"The margins have been cut and so low on our major products and then the manufacturer say, well the reason you know we're doing this is that it drives business organization to your store. Fine, but if somebody comes in and buys a lens that I make five% on and if they pay me with an American Express bill of fare I have to give American Express over three% of that. Where are my margins? I have no margins."
"Photographic camera bodies are a footling more, anywhere from seven to 10%, still non much, not when I used to exist able to brand 20% on cameras years ago, back in the good onetime days. Those good old days are gone."
A pocket-sized particular like a filter might accept margins of more than 50%, but unless a dealer can accessorize a camera/lens purchase there may not be sufficient margin on the sales. And fifty-fifty then a small item like a filter may not be enough to compensate on an expensive lens beingness sold at a low margin.
Brick and mortar stores have to go online to survive, but Khoury says: "I never had the resources to properly do it. In order to do information technology correct it needed $500,000 merely to create a website that works well! We did our best when digital came on to comprehend information technology and to sell, just unfortunately it'due south just get incommunicable to make whatsoever coin, enough money in this business to sustain this business model."
Big online sellers are getting special deals and that is okay with Khoury as they are ownership in bulk at a level that he tin't, as that is their concern model.
"More power to them," Khoury says. "The only complaint that I have is the sales tax upshot, because everything else I tin can fight. I am in business and I realize if somebody else has a ameliorate business model or a different business model, I can change and I can arrange, but I cannot change the federal regime giving my competition an unfair advantage."
Khoury says that after his store closing on February 28th and after he has paid off all his vendors, he will "go up to Washington DC and encounter if I can lobby somebody to get this (sales tax) nib passed, considering what has happened to me I don't want to happen to anybody else. When Keeble & Shuchat Photography went out it devastated me. It made me realize that the writing was on the wall and I actually had to look hard and fast at it to determine where I wanted to be."
A West Coast Perspective
Terry Shuchat, who owned Keeble & Shuchat Photography in Palo Alto, California, for 51 years and closed in Oct 2016, says: "The photo industry is actually in trouble. So many people are no longer buying cameras. They're quite happy with pictures from smartphones and that has taken away a dainty chunk of the photo business organization. So few people are printing pictures and that was also a nice part of the business organization."
"Its [slow down] been happening gradually for the concluding three or iv years. It has been accelerated for the concluding year and a half. I own both of the properties where we were and I did not accept the trouble where loftier rents take forced other stores out of business. Only simply the lack of sales forced u.s.a. out of concern."
"Nosotros started losing money nigh iv years ago, first information technology was just a little bit and then it got greater each year. But nosotros made a lot of coin for a agglomeration of (earlier) years. I have a lot of the aforementioned employees for 20, 25, 30 years and more and I felt really badly for them. That was 1 of the reasons I kept it going perhaps a little longer than I should take considering I had great respect and cared for them. Merely and then it just reached that point when it was becoming just a coin pit instead of a manufacturer of coin."
"We started in 1965 and lasted 51 years, which is a expert run. We were even profitable in the first year in 1965. I enjoyed retail. Dorsum in the days of film, customers came in to see us oft, when they would come in to buy a roll of film and we talk to them, then they bring the (exposed) roll of moving picture back for processing and we talk to them, and so they come back to pick upwards the pictures so we saw them over again and nosotros had a close rapport with our customers."
"Once the digital historic period came especially in the last few years when cameras take gotten so wonderful that we would sell a camera and they had no reason to come back once again. We gave classes and the enrollment went up dramatically the concluding few years but they did non produce the kind of sales increase nosotros would have hoped."
"And the other thing is that places like B&H Photo Video and Adorama, which are huge, are very honest and skilful places to bargain with, so customers aren't taking any kind of chances when they are buying from them. Whereas back in the days of mail club, at that place used to be a lot of dishonest dealers, so mail order had a bad reputation and it wasn't difficult combating someone ownership mail lodge but in the Net Age there is nothing bad to exist said of them."
Cameras every bit Electronics
Profits take gone downwardly dramatically always since cameras became part of the electronic industry. Before there was a huge, separate photography trade evidence put on by PMA (Photo Marketing Association) and in 2011 information technology got merged into the CES (Consumer Electronics Show) annually in Las Vegas. Back in the days of flick cameras models were out for longer and the profit potential was much higher. Today information technology is minimal.
"The manufacturers permit united states to make so little profit," says Shuchat. "Quite often the value of the instant rebates is more than our profit, so we would sell a camera at a loss until we received the instant rebate back from the manufacturer. And at that place is always a lag time at that place, so cash menstruation became a trouble. The rebate was reimbursed at fourscore% and the manufacturer justified it proverb our profit margin was the same."
"I say we are yet making whatever we are making, 15% or thirteen% merely our bodily dollar amount that we made is less. So we take to sell more cameras to have in the same corporeality of money except that camera sales take been going down every year. So it was not possible to brand it up in volume what we were losing in each sale. Even if the margin on a camera is fifteen%-17%, but if the customer gives you a credit carte du jour you are out 2% there, and the customer will sometimes say OK, I'll buy information technology as long as there is no sales tax (like online), so nosotros would concur and pay the sales revenue enhancement and now we are out ii%+8%=ten% and so we have to pay the sales person, and so we could feasibly lose coin on a sale."
Keeble & Shuchat Photography had an online site also but the locals mainly used it as a reference and there were not much national sales. "When Amazon started collecting sales tax in California 3 years ago, we initially noticed a little increment in our sales," he adds. "Merely the ratio of customers going to New York retailers as opposed to Amazon is 75/25". He is not bitter at his store going away and fifty-fifty adds, "We made a lot of coin the first few years from digital as it was very assisting."
Ritz and Wolf
Ritz Camera which was started in 1918 concluded upwardly being the largest camera-store chain in the US with one,200 stores in 48 states plus the District of Columbia and estimated annual revenues of $1.34 billion as reported by Forbes in 2002, but today has almost vanished with but five stores remaining and being run by another company which bought out the proper noun. This huge number was accomplished by acquiring and merging with other photo chains, including Wolf Photographic camera which had 700 of its ain stores nationwide — 70 in just Atlanta lonely (with one mall having 2 Wolf Photographic camera stores), and 50 in Chicago and bottom amounts in Dallas and other cities.
Wolf Camera at one fourth dimension had 70% of the Atlanta camera, lenses and accessories market share. Ritz Camera/Wolf Photographic camera had a business concern model that failed. Both based it on film processing or 1-hr processing especially in malls where you could driblet off the film roll, finish your shopping and then pick upwardly your prints. Digital ran them out of business organisation when people could view their images without having to pay for paper prints.
Chuck Wolf, a relative of Benjamin Ritz (who started Ritz Photographic camera most 100 years ago), says, "Ritz Camera and Wolf Camera were about the aforementioned thing and sold a lot of cameras, only mostly the business profit was from photo finishing. And then 40% of my business was photo finishing and threescore% was other sales including cameras and accessories. And the 40% that I sold on photo finishing was a lot more profitable."
"In my days y'all made 20-25% on a purchase (camera sales), but we probably averaged about a third every bit we sold accessories with it, camera bags, service contracts, filters and tripods and at present it is below 10% (margin) on just cameras or maybe even eight%, and take to wait for rebates, I understand, and you don't brand any profit."
"Information technology'south non a real healthy thing to be a retailer of cameras right now. Photograph finishing was 70-75% gross turn a profit, possibly more than. People used to bring 3-4 rolls of 36 exposures and that was about $15 a bag (each roll)."
Wolf who says "a photo is not a photo until it is printed" has been beaten by electronic devices, which have made viewing prints easier than shuffling through paper albums and cheaper too!"
About the author: Phil Mistry is a photographer and instructor based in Atlanta, GA. He started one of the first digital photographic camera classes in New York City at International Middle of Photography in the 90s. You lot tin can attain him via e-mail here.
Image credits: Header photograph by Random Retail
Source: https://petapixel.com/2017/03/02/another-big-camera-store-fails-many-closing/
Posted by: reedvortunfir88.blogspot.com
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