f22 u.s. retail on site printed output projections 2009 2014 (2)

coverU.S. Retail Photo Print Output 2009-2014Confidential Property of [F/22] Consulting, Inc. - 2010

1

U.S. Retail Photo Printing

2009-2014

Report Objectives

• To provide a comprehensive review of photo printed output produced in-store at retail outlets in the United States.

• To cover only printed output.• To project printed output for the period 2009-

2014 based on current volumes, current and likely trends, and currently available products.

2PAGE 2Confidential Property of [F/22] Consulting, Inc. - 2010Retail Photo Output – 2009-2014

Situation Analysis - 1• Conventional1 print volume (film + digital) and revenue continues

to fall.• Conventional digital print volume and revenue began to decline in

2009 and the decline will continue.• Walmart Stores, which enjoyed share leadership for numerous

years, has slipped from the top position, replaced by the promotional drug chains Walgreens and CVS.

• Personalized output continues to be the category growth opportunity for retailers.

• Kiosk prints as a % of total prints will grow as retailers increasingly turn to lower-cost, lower-touch print solutions and as consumers opt for ever-easier, ever-more-robust product creation and instant gratification.


Situation Analysis - 2• Transformation from “wet” chemical minilabs to “dry” ink, dye-sub,

laser and xerographic replacement print platforms has begun (Walmart has completed more than ½ of their installed base to Fuji and Epson Inkjet and Xerox . Meijer and Duane Reade have hp ink and laser platforms. CVS and Target are rapidly updating with Kodak Apex dry solutions).

• Seasonal demand spikes are a significant and increasing challenge for retailers as demand shifts from everyday conventional print demand to personalized products with primary demand concentrated from mid-November through late-December.

• Focus required to identify and develop new output products with everyday demand.

(1) Conventional prints are defined as 1-sided (i.e. simplex) photo prints with no personalization


Conventional and Personalized Photo Prints

Conventional Prints• 4x6 prints from film or digital• All other print sizes printed in-

store on 1-side with no personalization.

Personalized Prints*• Greeting Cards

– Slimline – Folded

• Photobooks• Scrapbook/Album Pages• Calendars

– Calendars (simplex)– Calendars (duplex)

• Collages/Posters Banners• Other


*The list is inclusive of all current popular printed products produced on-site. “Other “includes random personalized printed products currently printed. No effort is made to project results for currently unavailable products.

Understated Projections• This study does not attempt to project sales

generated by currently unavailable retail printed products, therefore, the projections for outlying years are undoubtedly understated.

• It is reasonable to expect that manufacturers, service providers and retailers will collectively develop and deliver important new products over the next 5 years which will drive new streams of revenue resulting in a significantly larger personalized printed products opportunity than currently reflected in this study.



Total On-Site Photo Print Output 2009-2014

(4x6 Equivalent Units - B)

2009 2010 2011 2012 2013 201402468

101214161820

17.9 16.6 15.4 14.2 12.6 11

1.4 1.9 2.5 3.5 4.5 5.9

Conventional Photo PrintsPersonalized Printed Products

The growth of personalized printed output is not yet on a trend to compensate fully for the loss of conventional print consumption.


Total On-Site Photo Print Revenue ($B) 2009-2014

2009 2010 2011 2012 2013 2014$0.00$0.50$1.00$1.50$2.00$2.50$3.00$3.50$4.00$4.50$5.00

$3.94$3.35 $3.24 $2.86

$2.30 $2.00

$0.29$0.63 $0.87 $1.38

$1.84 $2.79

Conventional Photo PrintsPersonalized Printed Products

•The richer revenue from personalized output, however, should begin to drive higher category revenues and margins within 5 years.•By 2014 revenues from personalized printed products are likely to represent more than 50% of category print revenues.


Retail Digital Prints(Conventional 4x6 Equivalent Prints - B)

2009 2010 2011 2012 2013 20140

5

10

15

20

25

30

35

3.35 3.54 3.65 3.69 3.55 3.34

11.72 11.07 10.23 9.360000000000018.18 6.99

15.21 14.76 14.0213.18

11.8610.44

Instant Print Minilab Print Total Print

•Total Conventional Digital Prints at retail began to decline in 2009 and that decline will continue.•Minilab prints decline by >40% over next 5 years while kiosk prints hold steady.


Retail Digital Prints(Conventional 4x6 Equivalent Prints - B)

•Total Conventional Digital Prints at retail began to decline in 2009 and that decline will continue.•Minilab prints decline by >40% over next 5 years while kiosk prints hold steady. 1/1

/2008

1/1/2

009

1/1/2

010

1/1/2

011

1/1/2

012

1/1/2

013

1/1/2

0140

5

10

15

20

25

Digital Web-2-Store (Minilab)Digital Counter (Minilab)KioskFilm Prints


Total Retail Prints(Conventional + Personalized Prints 4x6 Equivalent Prints - B)

•Total Conventional Digital Prints at retail began to decline in 2009 and that decline will continue.•Minilab prints decline by >40% over next 5 years while kiosk prints hold steady. 1/1

/2008

1/1/2

009

1/1/2

010

1/1/2

011

1/1/2

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1/1/2

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5

10

15

20

25

Digital Web-2-Store (Minilab)Digital Counter (Minilab)KioskFilm Prints


Instant Prints vs. Minilab Prints(Conventional 4x6 Equiv. Prints - B)

2009 2010 2011 2012 2013 201402468

10121416

3.35 3.54 3.65 3.69 3.55 3.34

11.72 11.07 10.239.36000000000001 8.18 6.99

Instant Print Minilab Print

•There are forces at work that advance the need for minilab printing (especially web-2-store printing, new personalized product possibilities, and the availability of informed staff).•There are, simultaneously, forces at work that limit the investment interest in minilabs (especially labor costs, operational complexities, and declining revenues).•With a declining market for conventional prints investment in new clerk supported print technology will be driven by a desire to capture share of new personalized output growth.


Retail Digital Print Revenue ($B)(Conventional Prints)

2009 2010 2011 2012 2013 2014$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$0.94 $0.96 $1.03 $1.03 $0.93 $0.84

$2.40 $1.99 $1.89 $1.64$1.22 $1.05

Instant Prints Minilab Prints

•With an average price per print commanding an ongoing premium the share of revenue from instant prints increases substantially as minilab demand for conventional prints declines.

Kiosk =44%


Retail Digital Print Revenue ($B)(Conventional Prints)

2009 2010 2011 2012 2013 2014$0.00$0.50$1.00$1.50$2.00$2.50$3.00$3.50

$0.94 $0.96 $1.03 $1.03 $0.93 $0.84

$2.40 $1.99 $1.89 $1.64$1.22 $1.05

Instant Prints Minilab Prints

2009


2014


•Kiosk revenue share as % of total available category revenue will grow substantially as many retailers opt for low-cost, low-touch printing solutions and as busy, time starved consumers opt for instant gratification.•Revenue from self-service kiosk prints is projected to reach 44% of total by 2014.

44%28%


Retailer Share of Prints - 2009

Wal-Mart; 10.9%

Walgreens; 19.1%

CVS (incl. Longs); 12.4%

Rite Aid 5.2%Costco; 7.3% Sam's Club; 3.0%Supervalu

(Incl. Al-bertsons);

2.1%

Kroger; 0.7%Meijer; 0.6%

H-E-B; 0.5%Ritz; 2.6%

Target; 6.0%Kmart; 0.5%

Other Mass; 5.5%

Other Drug; 12.0%

Other Food; 6.5%

Other Photo Specialty; 5.1%

Share

Seasonality of Print Revenue2014


January

February

March AprilMay

JuneJuly

August

September

October

November

December

0%

5%

10%

15%

20%

25%

Conventional PersonalizedTotal

•Current personalized printed products are dominated by products with demand primarily from mid-November through late-December.•As the share of output from personalized printed output grows this trend threatens to shift even more volume to a narrow holiday window.•The popularity of photo merchandise, which is currently dominated by holiday gift giving increases the challenges of equipping and staffing this changing category.

Personalized Photo PrintsShare of Revenue - 2009


Slimline Cards; 22.6%

Folded Cards; 15.0%

Photobooks; 29.7%

Scrapbook/Al-bum Pages; 1.0%

Calendars (simplex); 2.4%

Calendars (duplex); 0.5%

Wall Decor 24.8%

Banners; 0.1% Other; 1.0%

Share of $

Wet vs. Dry PrintsB - Conventional Prints


2009 2010 2011 2012 2013 201402468

10121416

Wet Prints Dry Prints

•Loss of film processing demand +•Growth of kiosk print preference +•Installation of dry minilab replacement technology =

•Dry prints will rapidly begin to replace AgX prints over the next 5 years +•A majority of all personalized printed output will be dry.

Wet vs. Dry Prints% of Conventional Prints


2009 2010 2011 2012 2013 20140

10203040506070

% Dry Prints

Dry Prints

•Loss of film processing demand +•Growth of kiosk print preference +•Installation of dry minilab replacement technology =

•Dry prints will rapidly begin to replace AgX prints over the next 5 years.


Threats & OpportunitiesThreats Opportunities

Accelerated non-printing behavior by consumers (e.g. Facebook, Twitter sharing as beginning and end of most post-capture activity).

Rapid development and effective merchandising of streams of critical new personalized printed output (especially products with year-round appeal).

Accelerated category retreat by major retailers Low-cost, low-touch, robust new print technology and low-cap/no-cap manufacturer business models drive broad penetration of new on-site print capabilities and increased merchandising support from retail.

Widespread adoption of camera phones as primary household capture device

Content become a powerful economic engine and drives demand for boundless new personalized output opportunities at retail.

Failure to develop and merchandise critical year-round high-volume personalized printed products

Major retailers in combination with industry partners aggressively pursue and support awareness campaigns.

Quote


"We are very excited about the future of the industry and it's being fueled by the innovative retailers who are delivering specialized services to their local consumers that enable more creative, expressive story telling. Images are being integrated in more forms of communication than ever before via Facebook, MySpace and camera phones. We are inspired by our leading edge retailers tapping into this and monetizing the benefits of transactions that go beyond the simple 4" x 6" print. We'd like to see more participation across the industry. Our innovative technologies, flexible hardware and some new product announcements we plan to make at PMA will enhance the fun for the consumers to tell their stories with images. "

Lori Babigian

Quote


“It is important to see the photo department through

the eyes of this core [predominantly female]

customer. It is not a photo center anymore; it’s a

personal publishing center.”

Manny Almeida

Quote


“The Industry will take a quantum leap forward, I have no doubt, when it is able to master this unique skill of delighting the customer, by giving her the experiences and the solutions that she craves – anytime, anywhere, and in any form!”

Miguel Adao

Engines of Growth


Personalized Event Celebration BundlesHome DecorCommercial Image-Rich Printed OutputRetail Products with Output ComponentsLicensed Content for Consumer and

Commercial OutputDelivering a select number of new high-

demand products with year-long demand.

New Revenue -Personalized Event Celebration Bundles

• Birthday• Anniversaries• Family Gatherings• Class Reunions• In Remembrance• ….and much more!

PAGE 2525Retail Photo Output Projections Update – May 2009

New Revenue –Home Decor

• Canvas Prints• Posters• Collages• Framed Prints• Etc.


• Flyers• Menus• Direct Mail • Catalogs• Image-Rich Business Cards• Banners• Interior and Exterior Signs• Variable Data Advertising

(circulars, handbills, etc.)• Variable Data Direct Mail

Materials• ….and much more!

PAGE 27

New Revenue - Commercial Image-Rich Printed Output

27Retail Photo Output Projections Update – May 2009

New Revenue - Retail Products with Output Components

• Photo Albums & Software Bundles

• Digital Scrapbook & Software Bundles

• Collage Frame and Software bundles

• Album, Scanner & Software Bundles

• ….and much more!


New Revenue - Licensed Content for Consumer and Commercial Output

• Disney Characters & Movie Releases)• Mattel• Hasbro• Martha Stewart• NFL• NBA• MLB• NASCAR• Warner Brothers (Characters & Movie

Releases)• Pixar (Characters & Movie Releases)• Celebrities• Events (Festivals, Major Sports Events,

Concerts, etc.)• ….and Much More


Retail Photo Output Projections Update – May 2009

About the Author

• Frank Baillargeon is founder and president of [F/22] Consulting.

• Please visit www.f22consulting.com for more information about the author or services available from [F/22] Consulting.

• Contact: 208-939-3301• fjbaillargeon@f22consulti

ng.com

http://www.f22consulting.com/

mailto:[email protected]

mailto:[email protected]

f22 u.s. retail on site printed output projections 2009 2014 (2)

Documents

4x6 equivalent

replace agx

personalized

retail digital

minilab prints

characters

conventional

retail began