Dixons’ decision to close the shutters on 35mm cameras and focus on selling digital models is part of a strategy to keep pace with cutting-edge technology.
It is a strategy likely to result in the disappearance of many more products from its shelves. Last year the chain axed VCRs when it became clear that consumers were upgrading to DVD technology. But it is not the only retailer to have axed 35mm cameras – Asda, too, switched to selling only digital cameras last year.
Product manufacturers are also having to adapt their businesses to keep pace with consumer demand. Kodak, for instance, has already stopped producing 35mm cameras for the UK, although it continues to supply them to the rest of Europe.
Kodak has also had to redevelop its photo-processing business. It has introduced a variety of new ways to develop digital pictures, including in-store kiosks, which can be used for digital cameras and camera phones; and small-format printers, an area in which it claims to be market leader.
It also has two websites that enable consumers to upload photos and print them. One, Kodak Easy Share, is for cameras, and the other, Kodak Mobile, is for camera phones.
A Kodak spokeswoman admits the company was caught off-guard by the demand for digital: “The take-up of digital was rapid and we were surprised by the speed of it. But we are back up to speed now.”
To make sure it stays ahead of the game, Kodak’s new technology also caters for camera phones, which some industry experts expect to replace disposable cameras and even digital compacts.
But the same spokeswoman refuses to write off 35mm cameras completely: “It is down to consumer choice. People still have landlines despite the popularity of mobile phones. I think they’ll be around for a while yet.”
Unlike Dixons, Asda will continue to sell 35mm camera film, but both are installing in-store kiosks where consumers can develop their digital pictures. An Asda spokesman claims that development of photos is split evenly between digital and film. “Digital processing is very popular but it hasn’t cannibalised traditional film processing yet.”
Professional photographers are likely to continue to use 35mm alongside digital, especially when they have their own dark rooms.
It is these high-end consumers, along with skilled amateurs, that Nikon has had to reposition its business around. This week, it revealed it had quadrupled first-quarter profits after focusing on expensive advanced cameras, including single lens reflex (SLR) models. Its aim has been to avoid intense price competition at the lower end of the market, where consumers can now pick up a reasonable digital three mega-pixel camera for under &£100.
Although digital cameras are now outselling 35mm cameras by 15 to one in Dixons stores, fierce price competition in digital cameras is having a negative effect on some manufacturers’ profits.
Like any craze, the surge in demand for digital cameras is also likely to peter out. Figures from the Photo Market Association International, a trade body for retailers and processors, show that the US digital camera market, which is expected to account for 82 per cent of camera sales this year, will peak in 2006 and start to decline in 2007.
Savvy manufacturers will then be preparing for the next burst of activity when camera phones take the place of digital compacts.