Digital camera sales stay on the rise

Digital camera sales continued to climb the first half of the year, bucking projections that they would begin a slow decline in 2008 after a record-setting year in 2007. According to data from the NPD Group, camera sales increased 5.8 percent from January to June compared with the same period last year.

NPD Group analyst Liz Cutting said those numbers were helped by a good month in May, when sales increased 13 percent compared with May 2007. “That was a real surprise, and I think the economic stimulus checks had something to do with it,” Cutting said. Sales were up again in June, but only by 3.2 percent.

While drug stores still account for a small percentage of digital camera sales—a little more than 2 percent—the rate continues to grow as camera prices fall and retailers add more models. NPD estimated that digital cameras priced under $100—typically the highest priced models in drug stores—now account for 14.3 percent of cameras sold this year, compared with just 9.4 percent at this time last year.

That price deterioration has allowed retailers like Walgreens, Rite Aid, CVS and Longs Drugs to carry a wider variety of cameras. Walgreens added two models from General Imaging to its lineup in May priced at $79 and $99. The average price of a digital camera sold in drugs stores is now down to $86.

But on the other end of the spectrum, sales of single-use cameras—once a strong category for drug retailers—continued to decline. The NPD Group study shows single-use camera sales were down 40 percent during the first six months of the year compared with the same period last year.

“The fact that 76 percent of U.S. households have at least one digital camera has a lot to do with that,” Cutting said. “There’s still a market out there (for single-use cameras) but it’s shrinking.”

Recent trends in photo processing also are tilting in favor of drug retailers, particularly in online orders and the use of in-store kiosks. According to the Photo Marketing Association, online photo processing increased 47 percent in May with photos processed through in-store kiosks jumping 25 percent for the month.

In all, 50.2 percent of photos processed in May were done through retail channels. The percentage of orders made online and picked up at retailers increased from 10.2 percent to 11.3 percent, and the percentage of prints made at kiosks rose from 14.3 percent in May 2007 to 15.1 percent in May 2008. Orders made and processed at in-store mini-labs remained about even at 23.7 percent.

The percentage of prints made at home dropped more than 6 percent from 38.7 percent last year to 32.5 percent in May, but was offset by orders made online and received by mail, which accounted for 16.5 percent of the market compared with just 12.1 percent last year.