There are currently approximately 700-800 active photography stores in Israel. Film development and stills picture-printing revenue was approximately 300 million NIS per year, and is now decreasing. Simultaneously, there is an increase in picture printing from digital media. Film sales in Israel are at a constant decrease due to the large penetration of digital cameras into the market. Three companies primarily control the industry: Kodak- 35%, Agfa- 30%, and Fuji- 25%.
Photography stores are segmented as follows:
- Photography stores that do not own a Minilab.
- Photography stores that own a minilab.
- Photography stores with the ability to print from digital media.
- Websites from which pictures may be printed.
Seasonality: It is estimated that approximately 60% of equipment and film sales in Israel occur in the summer, during summer vacation and travel season. Second high-sales period is Purim.
Development and Printing: It is estimated that most people choose to print 10X15 cm pictures. There is a clear preference for 100-200 speed, 36-exposure film. Penetration of digital media has dubbed film and its development obsolete and allows people the to print only a few chosen pictures. This has resulted in a decrease in profit areas of stores.
Customers: Defining the Target Market and Its Size, Market Segmenting
Young couples: Largest photography consumers are young couples, who tend to often photograph their children in their first years.
Amateur Photographers: The age of amateur photographers is constantly decreasing, and it seems that the number of young and teenage photographers is growing. However, the age of amateur photographers is usually 28-45 and 55-65.
Many photography stores supply special-event photography services (wedding, bar mitzvah, etc.) These services are a source for revenue increase. Note that profit percentage for a package including video photography and 100 pictures is approximately 85%.
- Orient Express chain operates more than 200 stores and leads the photography store market.
- Fuji operates approximately 150 stores in Israel.
- Privately owned stores. These are usually small and based on a lasting reputation and service offered to customers.
- Points of sale offer sales of photography equipment, mainly film. They are usually located in large retail chains (consumer goods, office depot, etc.) In addition, there are some points of sale offering development services.
- Online internet stores usually offer promotions for subscribers, and prices 25%-35% lower than store prices. The largest site in the industry is pic4u.
Main vendors in the industry are importers who own franchise rights for companies manufacturing film and printing paper, cameras, and other photography equipment.
Additional vendors are companies that import photography equipment such as cameras, batteries, etc. All vendors offer and supply digital media equipment.
Typical credit terms in the industry are EOM+60 to EOM +90.
There are a number of typical marketing resources in the industry:
- Local press advertisement.
- Distribution of photo-albums carrying the store's logo.
- Promotional offers- A number of free enlargements for each roll of film.
- Various promotions – for example, any customer developing 3 sets of film gets a free roll of film.
- Internet printing option.
- An additional service is index printing. This is a single picture with small, thumbnail size pictures of the developed roll. This facilitates picture identification for reprints.
- Discount prices for pre-paid memberships for a predetermined amount of prints.
Future Development Options
Increase in points of sale: Picture printing is usually conducted at the nearest available photography store; however, points of sale offering "as you wait" printing service are becoming increasingly common. This results in increased competition and significant erosion in store profitability. These points of sale are established at stores such as Super-Pharm, Office Depot, Kravitz, and recently even some retail food chains. Large companies currently offer employees discount film development and printing.
Digital photography. The massive penetration of digital photography and the price drop of home printing costs are causing a significant change in the photography store industry. It is estimated that within 3 years traditional film photography will only be used by professional and amateur photographers. Meanwhile, store profitability is decreasing and alternative revenue sources are required in order to retain profitability.
Factors Affecting Success:
Location is a primary factor affecting the store’s success.
Locating the store in shopping malls increases the number of customers and sales respectively.
A Minilab is a parameter significantly affecting revenue per worker. Revenue and profitability data analysis shows that the machine increases revenue from regular actions (development of film, print processing, peripheral and film sales) significantly, and causes an increase in profit rates stemming from regular activities.
Ability to process digital media, including proper equipment.
As the store's period of service and reputation grow, so will income level. At stores active for less than two years as photography stores, revenue will be approximately 25% lower than average.
- Professional barrier- it is recommended that storeowner or one of the employees will be a professional photographer (there is no legal requirement).
- Investment- financial analysis data shows that ownership of a development and printing machine brings a significant increase (double or more) in revenue. But cost of this machine is very high, and increases the overall investment in store establishment.
- Profitability of investing in development machinery is doubtful due to the rise in digital media usage.
Typical Terms of Payment
Customer sales are conducted in cash, check, or credit cards. Large or corporate customers EOM+30-EOM+60.
Industry Revenue and Profitability
Revenue per worker at a photography store (in NIS thousands)
A store without a Minilab
A store with a Minilab
Revenue will be lower than noted above if an additional store is located in the area (approximately 100 meters)
Revenue at stores active for less than two years will be approximately 25% lower than noted above.
Raw Profit Percentages:
- A photography store without a “Minilab”: Regular activity- 32-40%
- A photography store with a “Minilab”: regular Activities- 32-82%
Licensing and Certification.
Only local authority licensing is required.
Before establishing a new business, the area should be thoroughly examined. Note that competitors (of any type) in the vicinity will increase difficulty.
Regularly expected expenses such as rent and property taxes should be examined as they may significantly change establishment profitability.
Data shows that the Minilab significantly increases revenue, but due to the machine’s high cost profitability should be thoroughly examined.
It is recommended to consult with your local Business Development Center regarding business establishment and operations.
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