Photo retailers benefit from 'Starbucks effect'
by James Bickers, editor • 18 Sep 2006 - Kiosk Market Place
When Fred Schwartz returned from a recent 16-day trip to Italy, the retired phone-company worker had a lot of pictures to print. As usual, he took his memory cards to 30 Minute Photos Etc.in his hometown of Irvine, Calif. But this time was different: Rather than hand the cards across the counter, Fred sat down at a photo kiosk and took matters into his own hands. He got hands-on assistance from storeowner Mitch Goldstone, plus some above-and-beyond treatment.
"Halfway through, he brings me cold bottled water and a candy bar," he said. "I’ve never been exposed to anyone helping out the customer that much, the extra step. I’m just not used to that kind of personalized service."
30 Minute Photos is indicative of an emerging trend where photo retailers use self-service in tandem with extraordinary customer service to create an atmosphere where people want to linger. Call it the "Starbucks effect."
"I’m using his services more and more," Schwartz said. "It’s just so comfortable in his store."
Catering to ‘Jennifer’
The proliferation of digital cameras has been good news and bad news for photo retailers — more people are taking more pictures, but they’re also printing them at home in large number. The Photo Marketing Association International reports that 61 percent of the digital photos printed in 2004 were done on home printers, versus 31 percent at retail. Retailers did better in 2005, but the majority of prints were still made at home.
"For the specialty photo retailer to survive, they have to clearly identify their target market and design an experience around that market," said Chad Munce, PMA’s group executive for digital-imaging markets. "If you consider the demographic of the memory-keepers in the household that are buying photographic products and services, you will see that the Generation X mom — PMA calls her ‘Jennifer’ — is the primary target for photo kiosk services."
Patrons use the DigiPrint Lounge at Dan's Camera City, Allentown, Pa.At Dan’s Camera City in Allentown, Pa., the experience is clearly aimed at Jennifer. The store’s 450-square-foot "DigiPrint Lounge" features 15 kiosk stations, each featuring a custom-designed stool, purse hooks and a La-Z-Boy chair for friends and family. A children’s entertainment area is nearby, and staffers are on hand with free coffee and other drinks. The lighting in the entire area is reduced, cutting down on glare on the Lucidiom kiosks.
"Customers — especially women — seek out the lounge," said Michael Woodland, chief executive of Dan’s. "It is relaxed, provides all they support they could wish for in terms of entertaining the kids, having a knowledgeable person at the ready, and easy-to-use systems."
Mitch Goldstone took a similar approach to 30 Minute Photos in June, when he remodeled the store to give it more of a boutique feel. "We redesigned the entire store — it was getting old-looking," he said. "There was a lot of clutter, and there wasn’t any of the type of merchandising and marketing that takes place in, say, a Starbucks. We wanted to create a unique destination experience, designed to make people stay and play."
At 30 Minute Photos in Irvine, Calif., a staffer teaches a customer to use the Lucidiom "Luci" kiosk.For 30 Minute Photos, that experience includes full-spectrum lighting, a high-end air filtration system, and a refrigerator full of Voss water and Ghirardelli chocolate — complimentary for customers.
"You go into the Ritz Carlton, for example, and they’ve always got fruit available at the front desk for their customers," he said. "That’s got a special magic to it, and we wanted that for our store."
The magic continues when customers leave, too — Goldstone said he hands out single-serving containers of Haagen-Dazs to departing shoppers. Goldstone said he couldn’t give specific revenue figures, but did say sales had risen 60 percent since June, when the store makeover took place.
"That’s an enormous number, especially when you consider that the traditional photo industry is down about 20 percent," he said. "We feel it’s extraordinary."
Paying more for the experience
"Why would anyone pay a dollar for a bookmark?" Steven Spielberg once asked. "Why not use a dollar as a bookmark?"
Spielberg’s frugal viewpoint underscores an aspect of human nature that is pivotal for retailers: the emotion of buying. In any given city, you can find a cup of coffee for a dollar or less. You also can find a $4 cup of coffee in that same town, very likely on the same block.
What justifies the difference? Taste and quality are part of it, but not all. Customers pay more for a positive buying experience, and interestingly, the phenomenon is not diminished with awareness — even if you know you’re paying way too much for coffee, you’ll occasionally do it anyway, because you enjoy it.
Dr. Michael Kasavana, professor of hospitality business at Michigan State University, said this phenomenon is well documented, and can be put to good use by the photo retail industry. "There is much research to indicate that a comfortable environment encourages more effective purchase decisions, and likely more spending," he said. "Additionally, a personal loyalty tends to be attached to the comfort station and hence a higher propensity for repeat business."
In the case of Dan’s Camera City, higher quality prints coupled with the "lounge experience" have justified higher prices — which customers are happily paying. "We are 29 cents for a 4-by-6," Woodland said. "That’s not a lot compared to other specialty stores, but certainly more than the local 19-cent big-box stores or the 9-cent online companies. In our case it is quality and experience. We do produce prints which are noticeably superior to these other sources, so there is a double incentive for them to choose us — allowing us to appeal to both the left and right side of their brain."
At 30 Minute Photos, prices used to hang on the walls. After the June makeover, they are nowhere to be found on the store signage. "Price isn’t an important component any longer," Goldstone said. "People are so dazzled with the service and quality that they don’t question the pricing."
[source: Kiosk Market Place]
