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Walgreen's boldly goes where no retailer has gone before with its single-use digital camera, now in test market in the Midwest. Front panel copy clues shoppers that it's "the only single use camera" with a delete button to let them retake shots (a point reinforced by a blow-on sticker), fully automatic flash with red eye reduction, and a self-timer buttons. But the bottom line is, they have to bring it back to the store for prints and a CD of their digital pictures.

Getting customers back to the store for processing is still the key. It's still just in test market, but Walgreen's may have found the secret to keeping them as loyal for digital cameras as for standard single-use models or its reusable loyalty camera.

They call it their "Loyalty Camera" And that's just what their Studio 35 camera is for the photofinishing business at Walgreen's, Deerfield, IL. Customers who bring their business back to Walgreen's will get free film for the life of the camera.

But now the nation's largest drug chain is test marketing a new kind of loyalty camera-a $9.99 Studio 35 single-use digital model that can tap into the burgeoning field of digital photography while still giving customers a reason to come back to the store for processing.

Maybe it's just in time. After showing steady gains for years, sales of what might now be called analog single-use cameras are faltering, according to Information Resources, Inc. (IRI), Chicago, IL, with private label dollar volume off 4% to $126.3 million for the 52 weeks ended 3/23/03.

Overall disposable camera sales were down 1% to $696.6 million for the same period, and while that doesn't count Wal-Mart, Bentonville, AR, Wal-Mart doesn't have any store brand cameras. Film sales have been declining for several years; store brand volume was off 17.8% to $44.5 million over the past year, according to IRI.

By the end of 2002, some 23 million U.S. households, 20% of the total, owned digital cameras. Amateur digital camera sales were up 22% to $2.96 billion last year, according to the Photo Marketing Association, whereas silver halide camera sales were off 11% to $1.21 billion. But the average price of digital cameras last year, although coming down, was still $340.

Bring Back Digital Dollars

Walgreen's "Loyalty Camera" promises free film for as long as the camera lasts, as long as camera bugs bring it back to the store for processing. Pathmark's single-use flash camera is typical of the breed, but Kroger offers a coupon deal and Eckerd a multipack for weddings. Kinney Drugs has an attractive daylight model.

The overwhelming majority of the store brand cameras are single use models, with only bare bones features like manual advance. Flash versions are gaining against daylight-only, but they're still basically a loyalty device. Photo processing brings in enough revenue to justify even reusable cameras: that shows what a profit center it is.

But what happens when the digital age comes to photography? Where's the profit for the store? With high-ticket digital cameras, people can download picture files from smart cards straight to their home computers, and run off color copies on their inkjet printers using photo quality paper from the nearest Staples. The in-store photo lab is out of the loop.

Or is it? Walgreen's single-use digital camera, which doesn't even have an LCD viewfinder (users can delete pictures manually if they think they've missed a shot), may be the answer, at least for the economy segment. Despite an apparent lack of advertising or in-store promotion, copy on the blister card seems to make the chain's marketing strategy digitally clear.

"Experience DIGITAL At A Single Use Price!" boasts a call-out on the front. On the back, customers are advised to return the digital cameras to the Walgreen's one-hour lab. What do they get? A set of 25 high-resolution prints of their pictures, an index print and a photo CD with their pictures that can be copied to their hard drives and e-mailed to friends and relations.

There isn't any mention of customers being able to plug the Walgreen's camera into their computers and download the images themselves, as with more expensive digital cameras. That too must be part of the strategy. But back panel copy does boast nine features that the "leading 25mm single-use camera" lacks, including automatic flash and advance and a "smart exposure system for perfect lighting" as well as the strictly digital things.

Analog Fires Still Burning

Digital cameras are still in the indefinite horizon for most retailers, and store brand reusable cameras the exception to the rule. Single-use analog cameras are still the core of the private label business, but packaging and promotion are always critical.

Even though they're in great demand for weddings, for example, retailers don't always remind their customers of that. But Eckerd, Clearwater, FL, won't let them forget! A special four-pack of its store brand cameras is being merchandised in special sleeves that shout "Wedding!" and are decorated with a red rose. Images on side panels also suggest that they're great for other occasions like birthday parties. Price: just $19.99.

Not long ago, Kroger, Cincinnati, OH, promoted its single use flash cameras with on-pack coupons good for $3 off on the next purchase of Kroger film or a Kroger camera for anyone who also purchased a Duracell Ultra Photo lithium battery pack. Extras like that can make the difference, now that most single-use cameras are loaded with 800 speed film, and that nearly all offer 27 exposures as a standard feature.

Multipacks are always popular. Safeway offers twin packs of its flash cameras for $11.99, versus $7.99 for just one (daylight cameras are $5.99); but club card holders could recently get single flash cameras for $4.99. CVS, Woonsocket, RI, goes for a much higher price point, retailing three-packs at $24.97 (Single flash cameras are $8.99).

Like Walgreen's, CVS also offers a $9.99 reusuable flash camera, with free film for the life of same-"life" being defined as two years from date of purchase. But unlike Walgreen's, the CVS camera is loaded with 200 speed Kodak film rather than 400 speed private label film.

Price points on singles vary widely, even in the same area: at Big Y, Springfield, MA, flash cameras were $9.59 recently; at Brooks Drug, Warwick, RI, $8.99. But at Shaw's Supermarkets, West Bridgewater, MA, they were only $6.29. Daylight cameras were more comparable in price: $5.99 at Brooks and $5.49 at Shaw's.

In film, there is a continuing trend towards higher speeds. About 47% of all sales now are in 400 speed, compared to 40% in 200 and a mere 5% in 100. While 800 speed accounts for just 8%, its use in disposable cameras is bound to increase its popularity. But APS film, which also accounts for about 8% of the market, has been flat for the last two years and doesn't seem to have much of a future.

As with cameras, multipacks are a popular promotional tool for store brand film; in fact, multipacks account for 60% of all film sales. Eckerd offers four-packs of its Living Color film for $6.99, way below Safeway's $11.99 and only twice the price of a $3.49 Eckerd single roll. Prices for single rolls vary by speed at some chains.