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What's in store: photos on just about anything

As specialty sales soar, Kodak and Fujifilm want shoppers to get creative at retail kiosks.

March 15, 2007|From the Associated Press

More Americans than ever are wearing their photographs. Or eating them. Or showcasing them on calendars, greeting cards and china plates.

In the versatile digital age, picture-bearing merchandise is a booming segment of the photo printing market. Now, the mostly online arena appears poised to gravitate big-time to the corner pharmacy.

Scores of online players, led by Shutterfly Inc., Eastman Kodak Co.'s and Hewlett-Packard Co.'s, tout a variety of photo novelties, including laser-etched crystal ornaments, personalized postcards, key rings, T-shirts, purses, mugs, mouse pads, birthday cakes and lollipops.

Kodak and Japan's Fujifilm Holdings Corp., which divided up the traditional film market, are unveiling technologies and partnerships designed to counter eroding profit from film processing by reeling in custom-photo customers via retail channels.

U.S. sales in the specialty market -- counting online and retail -- jumped 50% to an estimated $694 million in 2006 from $461 million in 2005 and could reach $951 million this year, according to Photo Marketing Assn. International, a trade group.

"The photo industry is desperately looking for ways to replace the money lost to lower volumes and lower prices for basic 4-by-6-inch prints," said Alan Bullock, a consumer-imaging analyst at InfoTrends Inc.

Digital and film images ordered from retailers and websites or made at home fell from a peak of 30.3 billion in 2000 to 26.6 billion in 2006 and could bottom out at around 22.5 billion by 2009, said Dimitrios Delis, research director at the Jackson, Mich.-based photo association.

But the blossoming of often expensive alternatives, such as photo apparel and putting computer reproductions of images onto posters, drove an 11% jump in overall revenue from $9.9 billion in 2005 to $11.1 billion in 2006, Delis said.

Redwood City, Calif.-based Shutterfly, which generated $40 million in fourth-quarter sales of personalized products such as photo-adorned necklaces and handbags, is the biggest online player with a 25% share, said analyst Chris Chute of IDC Corp.

Kodak, which has more than 75,000 photo kiosks installed at retail businesses worldwide, is hoping to duplicate that success at brick-and-mortar stores. In May, it will offer free software to enable shutterbugs to design photo books, mugs and other custom items at home that can then be produced at retail stores in hours -- rather than days when ordering online.

Fuji, which delivers digital prints solely through retailers, is putting Xerox Corp.'s high-quality Phaser 7760 printers in Wal-Mart Stores Inc., Walgreen Co. and other chains to allow customers to make their own creations at store kiosks.

"Every day that goes by, there's another application of how you can use your image in some type of other product. It's absolutely limitless," said Bing Liem, a senior vice president of sales at Fujifilm USA.

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