Growth in the European photo products market with Jeremy Wills, Futuresource

Gary Pageau of the Dead Pixels Society talked with Jeremy Wills, principal analyst, pro displays and imaging, for Futuresource Consulting. In this wide-ranging interview, Wills discusses the growth opportunities for the photo output markets in various European countries, how various regions differ from each other, the shift to mobile apps, and more.

Futuresource Consulting, based in Hertfordshire, United Kingdom, is a market research consulting company providing a range of specialist intelligence reports and ongoing personal debriefs to support with business decision-making. The company delivers fact-based insights and market forecasts on a global scale – advising on strategic positioning, identifying key trends, analyzing competitors, and underpinning major technological developments. All services are tailored to the individual needs of each client to deliver the best possible results, ranging from bespoke custom research and end-user analysis to multi-client subscription services and business intelligence platforms.

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Transcript

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Erin Manning  0:02  
Welcome to The Dead Pixels Society Podcast, the photo imaging industry's leading news source. Here's your host, Gary Pageau. The Dead Pixels Society Podcast is brought to you by Mediaclip, Advertek Printing and IP Labs.

Gary Pageau  0:17  
Hello again, and welcome to The Dead Pixels Society Podcast. I'm your host, Gary Pageau. And today we're joined by Jeremy Wills, who is the Principal Analyst of Imaging for Futuresource in the UK. Hi, Jeremy. How are you today?

Jeremy Wills  0:31  
Hey, Gary, how you doing? I'm great. Thanks. It's Friday evening here. So I'm in quite good spirits.

Gary Pageau  0:38  
 Well, hopefully, I won't keep you from the pub too much longer. But we're here to talk about European photo data. And future source is probably the leading source for reliable industry data related to the photo printing photo merchandise market. Can you talk a little bit about how Futuresource gathers this data? Before we dive in?

Jeremy Wills  1:02  
Yeah, sure. Just as a bit of background, I think maybe about 20 years ago, because we primarily working with you know, the hardware side of the imaging business, some of the camera companies said to us, Look, you guys are, you know, capturing all this camera data, could you do something on the photo printing side of things, that's how it all began is back in the day, we photo prints, obviously, very different kind of market to the one we see now. But then, and then we've got into the books, further books and merchandise as it comes along. And methodology, I think generally is a research firm is very much based on, on sort of top up bottom down, we get either via primary research interviews and, and data feeds information from brands in the photo, sort of, well, then we talk about print service providers, apps, retailers, etailers, cross referencing with equipment and paper companies, and sometimes a distribution channel as well, just to get analystic and realistic view of the market, the channels the competitive landscape, and the outlook as well. That's, that's how we do it. It's very much based on our own primary research, it's nice to have some secondary sources of data, you know, some of the big players in the finance sector published quarterly, and annual reports, but we re reliant upon information, which isn't in the public domain. And of course, our own knowledge of the markets built up over 20 odd years, plus a reasonably robust sort of analytical and forecasting skills as a, as a as an analyst firm, which goes obviously, way, way beyond the imaging into the sort of wider sphere of technology.

Gary Pageau  2:42  
Yeah, cuz because future source consulting does more than then Photo Imaging. There are other categories like consumer electronics and other things that you're involved in. So you've got a long history and a long expertise in marketing research. Can you talk first about what and when we talk Europe, what countries are we talking about?

Jeremy Wills  3:04  
Well, nowadays, we think the countries we track in Europe are the sixth largest Western European market. So France, Germany, Benelux, Italy, Spain, UK, sorry, not quite alphabetical. But the reason we re centered around those is, well, there's two reasons. One, it is quite a mature market, it's still growing, we'll come on to that. But it's a mature market. And it's maturing, both in terms of the direction he's heading in the players in the market, but also, because those those six countries are people take around 80% of overall Western European volume and value, you know, commercially in this day and age, it's really having that overall, I guess, key view, which is most important to some of the other companies we're working with. So as I say, we don't occasionally pick up reviews for other European markets, but but they're the core ones that we focus on there for that reason. Well, and then that makes

Gary Pageau  3:59  
sense. I mean, if you cover 80% of Western Europe, you're, you know, that's the bulk of the market and the remaining 20%. I'm sure a lot of the insights still apply. So for the photo market, market value piece, when I look at some of your information, looks like future source centers, the market really the output market in three areas, photo books, photo merchandise, and photo prints. Before we dive kind of deep into those Can you go over what is in those categories. So we kind of understand what you mean by merchandise versus a print, for example, because sometimes there's some crossover and show

Jeremy Wills  4:40  
show category. I think that the fasting decides that we what we're tracking is what we call the consumer or that market, so product to consumers or it doesn't have to necessarily be an image they've captured themselves the image they have on on some kind of device. Obviously a lot of people are already for smartphones nowadays, or PCs. either in store or online, so consumer ordered, there's a bit of a gray area because people sometimes use a consumer firm like for instance, Shutterfly in the US to order wedding out but generally it's you know, family holidays, things like that brand. And then the categories photo prints. So any kind of commercial prototype print, whether it's printed at retail in a photo lab or PSP, anything up to about eight by eight inches I was thinking in centimeters but converting into into inches for for the US market. And beyond that we consider it to be a poster so so that that's for us is Friday prints we include home printing, which can be on a on a home print, it could be on something like an HP sprocket and other there's other device as well a print device we don't include the the likes of the instant cameras. And that's not part of the market we cover that's almost a separate category which never got into but and irrespective I guess at the technology, whether it's sort of a light inkjet dye sub whatever it may be so and we standardize our market sizing around six by four inch prints just so that we've got a consistent way of counting the market I guess. It's photo books, any any commercially produced photo book printed at retail printed by a back end photo lab or ordered online audit in store that's becoming less, less common layflat, silver halide, whatever it may be soft hardcover, right, again with consumers and images in and once again, it's a little bit of a gray area because sometimes people may be doing a random review for commercial purposes or bulk of them again will be you know, wedding christening family holiday, those kinds of things, gifts, gift for Christmas and q4. On both sides, the Atlantic is the big boom season for the photo industry. And then the merchandise is and it's some people include books in merchandise, we've always break it out. So within merchandise, we've got got some broad categories, which is Friday calendars, photo cards, then we have wall DECO, right, which includes multiple substrates. Obviously, Canvas has been the big one for a while, but we've got acrylic word added dye bonds, various other substrates, they're all within that wall deco category, then we split posters out from all deck. And the reason we do that is posters generally are, you know, there's a higher volume, but there's a much lower ASP. And then then the opposite with the wall deck or where you know you've got at high end, a clearly Academy dive on going way above 100 euros, $100 100 pounds. So if you blend the two together, you get this unholy mix of low price, high volume and higher price and low volume and the numbers look ridiculous. So we keep the two, two separate. And then then the other category is the mirror photo guess which is constantly reinventing itself. You know, I see I think it's come to this side of the Atlantic now from the US but we've got blankets, flip flops, tins, you name it. I mean there's there's the evergreens like, like mugs and mouse mats and key rings and things like that. But there's hundreds and hundreds excuse of these these threads, I guess with locks, it just goes on and it reinvents itself. I mean, a few years ago, phone covers were begun I think possibly they still are.

Gary Pageau  8:16  
But they used to be right. I mean, that used to be like a major emphasis for people. And now I hardly ever hear much about it. I think there's so many varieties possible. Now it's difficult to keep the popular ones in stock.

Jeremy Wills  8:29  
Exactly, exactly. This there are so many different different models. I mean, phones and sales are interesting. It's a bit of an aside because, you know, they're the de facto image capture device. Now we've seen cameras, you know, I just saw an advert like could be maybe isoleucine ating. Because it's late night I was tired, but like swipe advert for a Samsung phone the other day without wanting to endorse any particular brands that they were saying had some crazy like it's your 100 megapixel cap set of cameras. And you just think Wait a minute again, that might not be correct. So don't quote me on that. But but as I get a miss No, I

Gary Pageau  9:03  
think I think there are some Chinese brands smartphones coming out megapixel cameras. And I think I think musanze announced one in the pipeline is Samsung or Sony has announced a 20 megapixel chip. So I think it's definitely yeah, I'm really curious as to the instant piece of what you're covering, because over here that is a pretty significant market. I can't tell you how large it is. But it is if you go to a Best Buy or target. There's significant end cap space being dedicated to the Fujifilm Instax the Polaroid version and things like that. So clearly, it's a very popular category. In your print numbers you're not included.

Jeremy Wills  9:41  
I just know we don't it's not something we that the same old albeit we might pick up somebody in their home data because people are using these little vial printers. The thing I will say for things like Polaroid and Fujifilm Instax is that they? I think they've actually sort of driven some breath of life. into the wider Photo Print sector because, you know, in the Western European market, the online business is strong and it's getting stronger but but instant print chaos, which do exist in the US but never been as strong in the US are really, really big. In retailing in Western Europe, self service, screen instant chaos, often where you, you pay at a terminal with a card nowadays, rather than having to pay for the prints before the machine delivers them. And a lot of the retailers have seen that the volumes, the basket size, maybe it's fallen, but they've been able to push the pricing up and up and up on those and Gen Zed. And some Millennials with that kind of mindset coming from Instax. And other types of Canberra, have then started printing photos on a kiosk, they're very agnostic to the price they'll happily pay, what's the equivalent in euros or British pounds, nearly $1. At print, they're not printing many of them, and they stick them up on the wall on clothes pegs. And they change them regularly. And that that is actually, you know, we've had quite a few inquiries in recent years about the photo prints market, again, commercially is Ali's firm, we kind of thought that was dead and dying, but it's not. It's very much alive.

Gary Pageau  11:11  
You know, it's funny, because that reason I've recently had on a new, one of the mobile app vendors and he then they do a lot with photo prints on the podcast. And he was talking about the need for the industry to to raise prices, because he said 1929 cents a print doesn't reflect the value of what younger consumers are willing to pay. And you're supported that I mean, I have not thought about that coming from the Instax world where it's more than a buck of print. Right? So they're probably looking at 29 cents going that's a great value when they like you said they would pay more because they're not gonna print as many obviously is their mom or dad or grandpa. Exactly.

Jeremy Wills  11:51  
And it's that immediacy as well. I mean, I think when people are still going for a bit more volume, then then sure they'll they'll order them from from Shutterfly in the US. And again, I'm just taking an example I'm not promoting anybody from maybe trade their box, our bellies shuts, they'll snap fish or something in Europe, and that is still a little bit more competitive. But again, people are not like going to the store and having to 300 prints off a mini lab. That was the case for a long time. We, I think we were in that mindset when we moved from film to digital that even though we had all the images on an SD card from a camera, we still printed the whole lot out because that's what we did.

Gary Pageau  12:31  
So before we dive into your date, I got one more question about film. Are you seeing the resurgence in film? Processing and printing over there? I mean, I didn't hear you mentioned film. So I just wanted to touch on this a little bit, because I know it's a weird category. You know, over here, people are saying they're processing more film than they ever did 10 Year 2010 or 15 years ago. And we are we are but do you account for that in like the print side or since a lot of these are just processing scan? Direct Output usually, right away at least what are your thoughts on the film market in Europe?

Jeremy Wills  13:12  
Yep, sales is definitely on the up. There's no doubt about it. I went through a photo show called fair topia in Hamburg, late last year, and I saw them a fantastic actress standard and almost got the recreation of a sort of like, set the 40 year old photo store inside of all these great films and reprint and also selling reconditioned cameras. It's hot, there's no doubt about it. I mean, we've seen Kodak ring, I believe bring in some backs and films, maybe some of the other brands as well. But as you say that the thing is, there's a company opened up in London, just processing filled with new equipment in the last year or so. But a lot of it is is processed and scanned. Would you say it's not necessarily getting to that printed stage so so we do see, I think maybe the overall interest in film cameras again from younger generations is probably helping to slow the decline in the the output of film prints, which off the top of my head. I haven't got the data in front of me, but it's probably less than 10% of the overall digital print sector in Western Europe now but it's slowing that decline for sure. But a lot of what is caught on film is not ending up as photographic prints where it does it's possibly something an enlargement or something specific rather than just it's more

Gary Pageau  14:29  
like more likely to end up probably as a canvas probably well that that cut than a traditional four by six print. Yeah.

Jeremy Wills  14:38  
So So So yes, it's definitely definitely hot. I mean, some some of my colleagues in future souls who are in their 20s Really, really into film photography is a definite trend. There's no doubt about it.

Gary Pageau  14:54  
I just hope that what I'm concerned about as an industry person is the you know, kind of the the infrastructure For the film process, if you will, is kind of being stuck together with baling wires and glue. Right? Because, you know, there's their film processors are having trouble getting parts for their machines. There's some question whether you can get chemistry. And there's some question how long certain manufacturers are going to be staying with silver halide printing materials. So I mean, so it's it's interesting that it is popular, there's a lot of things in the value in the value change that could get broken.

Jeremy Wills  15:30  
In date in dates. Yeah, they, as you say, the a lot of the the actual processing equipment for these films. Stuff is from year verily. And the brands are long since gone. So there, there's always a danger there. But I guess, I mean, we seen this with, you know, as an aside with the vinyl industry, the way that's boomed in the last sort of 567 years that come there were one or two companies left in the world that made vinyl presses, and all of a sudden, their demand is fantastic, because the disc presses one want to buy vinyl presses again, and I never would have seen that coming 20 years ago.

Gary Pageau  16:07  
I think this was the first year actually or last year was the first year that vinyl actually exceeded CDs again, in terms of, and there are people who are coming back with photo printers, I think I've did a podcast, a gentleman from Australia, a company called film never die that has come out with a kind of an open source film processor platform. And I think Kolenda is, is coming back with some products. So I think but again, if you're a photo lab, and you've been you've got your fuji film processor from the mini lab days, keeping that thing going, has been a challenge.

Jeremy Wills  16:43  
Indeed, indeed. The other interesting thing is in recent years as well. And I think maybe and again, I'm not not promoting any brands, but it has been a bit of a phenomenon as we've had the the free prints app in Europe that started out with faded prints, and that has other incarnations, like books and cards, I don't know what you call them. wall tiles, just looking at one on picture me and my niece on the wall in my office, it will tiles Yeah, that's it. But they have they've helped to drive some some interesting volume from from apps or from people that maybe never, were no longer or hadn't ever come to photo printing. And the result of that for some of the PSPS is that they're actually actually investing in equipment for digital film prints as well in recent years, which again, a lot of my guests thought they wouldn't have to ever do again, and they

Gary Pageau  17:30  
never thought it would. So we stopped a little bit about some of the information, the data that you've been sharing publicly about kind of the post COVID world. You know, 2001 I'm looking at one of the reports here it says 2001 was a challenging year did the lack of print were the images from 2000. Right? I mean, people out there 2020 and 2021 people weren't generating printed were the images, right. But now coming out of the pandemic in a lot of ways, right. I mean, I know there's so some some some regions that are still dealing with pandemic measures and things like that. But you're still seeing substantial growth coming out and talked about some of the growth patterns that you're seeing, is it in all categories? Or is in other categories? Where's that growth happening?

Jeremy Wills  18:23  
Yeah, I mean, I, I think it's fair to say that, you know, a lot of the none of the growth in the photo sector now can seem fair to say it's, it's been driven by the books and the merchandising. And if I step back, so it's something is an interesting kind of trend there. Because if we go 2019 years before then the West European photo book sector was continuing to exhibit value growth with higher end products, it'll behave like layflat, more pages, bigger books, those kind of things, but the volume was kind of plateauing. But we've gone through the 2020 boom, and everybody had time on their hands and made books and did Waldeck on the

Gary Pageau  19:01  
review.

Jeremy Wills  19:03  
Yeah. And what's come out of that is we're actually seeing after a bit a bit, sort of, I guess, a bit of a sort of knee jerk dip last year that the volumes as well as the valleys are now you know, we see growing again, in that book sector, maybe people because they are, like me remote working several days a week and have a bit more of a work life balance and ways that people get more time to, you know, to put into making further products or to thinking about making further products. So that is that is driving. The growth in our CAGR there for 22 to 26. On books for these Western European sector is is about 4% We're looking on the merchandise at about 5% The prints are flat volume wise, the value still growing if people are paying more than the race to the bottom for prints were you know, sort of, I don't know Sub Sub $10 sub 10 cents in US sub 10 euro cents You're probably over people do like to monetize them now. So So what that's doing to to find a prince is that we're looking at the value there, I think increasing by about 7%. Okay, three last year and 27. And the volumes kind of flat, which, if you think not that many years ago was dropping in about 10% A year is, in itself a bit of a departure. And also, it's still, again, off the top of my head looking at these figures for the last year, and we've got a three, just over 3 billion euro market for photo consumer photo products in Europe and prints was 1.3 billion of that. So it's still holding its share at the market not insignificantly.

Gary Pageau  20:42  
And it's still a home. I mean, from a production standpoint, it's a relatively high margin product, right? I mean, I mean, that's one of the things it's, it's it's basically a piece of paper with some with a coating on it. And, you know, if you're, depending on your own economics and production, you know, you can make money at 1015 cents for just not a crazy amount like you used to. And as we've suggested, perhaps it's time to raise prices. So yeah, so exactly what I heard about photo books, because, you know, I keep hearing from people who have been in the industry a long time, who, you know, maybe go back 10 or 15 years, and, you know, they remember the days when photo books were, you know, these, this is the next future growth category for the industry, it's what the consumer wants, it is the photo album of the future, it is gonna be the savior. And clearly that really hasn't happened. And so they kind of have a cloudy view of photo books. But as you're saying, that's, it's still a healthy growth rate, what is driving that growth, because I always hear from people talking about him, well, they're still too complex to make. They're there, they're not for everybody, etc, etc, etc. So what is continuing to drive the growth?

Jeremy Wills  22:00  
I think that's, that's, there's three things I guess I could break out there. One is that we could almost split the fader book market into into two sectors. Now, one is the sort of the core a four, which, just looking at my data, here, we're looking at what the A fours were bout after market, volume wise in 2122, I would say. And then you've obviously got some of the largest sizes that come out of that. And then you've got, I guess, a bit of a new paradigm, which has been driven by some of the apps on both sides of the Atlantic, which is, you know, smaller square and softcover, and hardcover 20 or 20, odd side side ebooks from the likes of chapbooks free prints pop. So just again, naming a few brands without promoting anybody specifically, yeah, they've created and use almost a new strata in that sector, since lower costs, easy to produce quite often with a bit of AI, bang, bang, bang, and you're done almost the Amazon model and click click and you're done kind of thing, I think they've actually generated a bit of incremental volume in the market, whilst at the same time, both the brands and the PSPS will continue to understand the push and promote highest higher end products and, and to try and take customers that have been buying a floor on a journey for, for photo paper, lay flat nicely, you know, covers and all sorts of other schemes, which are available now. So, so I think amongst all of that, and the fact that we were saying that maybe, you know, consumers who are lucky enough to be remote working, if lucky is a word to use that just have a bit more time on their hands, cuz they're not spending an hour and a half in the car per day.

Gary Pageau  23:40  
Or on the tube, if I may use the Yeah, yeah. So so there's what you're saying is that even within the photo book market, it's kind of bifurcated there, where you have the small, simple app driven book. And they're the other half is the, what I would call the creative publishing mindset, where it's a book lay flat hardcover, maybe that's your trip to your big vacation trip or something like that. And you think the growth is coming from the smaller format.

Jeremy Wills  24:15  
I think the I think the volume growth is coming more than the smaller format, the a lot of the value growth is coming to the larger format, the smaller format, I mean, there's brands that are obviously monetizing that there's the I need to be careful I was gonna say the elephant in the room but I don't want to be be too prescriptive, but you've got the the free Prince model where it's kind of free, although the delivery charge effect the pace of the product. And then there's an upsell. I mean, obviously, it's been going for years so it must work otherwise the software company behind it wouldn't continue to operate it but but you've got that going on as well. So so as an entry level to consumers who like I remember somebody saying to me all this is Apple free prints, I get free prints. I've done that for years. And they've come into books. And that's, that can take some of them onto the journey to, I guess to other brands, other sizes, those kinds of things.

Gary Pageau  25:10  
Touching a little bit by country. Clearly Germany is is the dominant player in that money. But all the countries that looks like for whatever looking here are seeing growth.

Jeremy Wills  25:23  
Yeah, I think I think it across all of the markets, I mean, that that definitely is growth. I mean, if I look at the split, see if I can find the right I mean, I'm just looking at photo books. Let's see where because I don't actually have any data right in front of me showing the combined splits across the Friday market. But yeah, Germany is its fourth your percent of the market it's very mature for the books been around for a long time. It's got the whole save a b2b b2c phenomenon. You get off a plane in Germany, you see a save a photo advert in the baggage Hall. It's that mindset that they as consumers, they just love photo products. They're really really into photo products. But trans Benelux both been in faded books for quite a while France got a very, very saturated market of players. Benelux has got some, you know, some very well established players, I think, again, the Netherlands tend to, from what I understand buy more books than the Belgian consumers. So there's some different dynamics going on there. And I guess that's another thing to, I guess, to touch on. When we compare European market of whatever 600 million people are in these six countries with the US that they've in different languages, different cultures, different dynamics that drive all these markets in slightly different ways. UK has come probably much later, the Phaedo books, some of these, these brands and apps I've talked about, particularly within e commerce because UK is a huge e commerce market. We're small island, it's easy to deliver things to people because nothing's that far away really. So we lend ourselves superbly three commerce and and that's able to drive some of the some of the sort of web to home photo book activity in the UK as well. But and then you've got the sensitivities to the markets as well, the Italy in Spain, Southern Europe, very price sensitive. The Germans like to see a product before they buy it. So we have to retail works well in Germany, because they want to actually see the book before they park their money. Whereas here in the UK will pay up front and wait for it to come through the post. So all these different kinds of dynamics going on? Well, you know,

Gary Pageau  27:33  
it's interesting, you describe, you know, cya as as a phenomenon, because I've always been impressed the fact that they do, you know, they were they obviously their their heritage was the traditional wholesale lab, people didn't really know, or, and then when photo books came in, they really pushed the brand very strongly, always wondered, and obviously they're reaping the rewards of that. I mean, you know, looking at the photo book market there, and I've always wondered, wow, what if, what if there were Shutterfly planes in America, right? Or Snapfish, or one of the brands doing that sort of level of awareness that CV does so I think and have been doing it for years because like it's a cumulative effect. I mean, they've been doing it now for 1015 years. So it just to me as a person who was interested in marketing I think that's sort of a missed opportunity that most other countries have have missed out on is keeping it in front. Summers right yeah.

Jeremy Wills  28:37  
Yeah, know the consumer in Germany or you can go to multiple retailers retailers, but but the prominence is that it's a Safeway produced Photobucket. I think that also carries a lot of weight in France, Benelux maybe we're not we don't cover them anymore. But some of the Nordic markets as well, they've carried that into Central Europe. It's quite a broad broad influence. Yeah, mad about that.

Gary Pageau  29:00  
So can you talk a little bit about some of the different channels that photo books are offered? Because there is sort of the web to retail and and web to home? Does that change based on the country? Is that? Is that something that is country specific?

Jeremy Wills  29:15  
Yeah, they did that there's a bit of a distinction. I mean, I'll start with Spain because generally Southern Europe or Spain and Italy they still quite like there as you guys call Mom and Pop kind of photo stores as opposed to big big because they're not so many big changes there. But at the same time, if I look at Spain, they've had the the Hoffman brand which came from the free throw album Days and there's been a massively dominant part of the market which has driven quite a lot of online freedom that behave in Spain but yeah, they still they people will still order in stores, much more in Spain and Italy than they will in North Europe. You've got I think, Benelux France and UK where we've re e commerce driven so a lot of the orders will be be web to home, particularly in UK little bit more went to retail in France and Benelux. But again, maybe because of, particularly with France the size of the country, then then sometimes it's just easier for the consumer to pick something up from a store or a collection point than necessarily having it delivered to their house. And then Germany, very much driven by by the big retail chains, ecommerce takes its place and, and Safeway themselves, you know, got their own front end brands pixum as part of Safeway, that's a big, big E commerce brand. But you've got all the pharmacies and the and the supermarkets and the electronics chains that have been big in fact to in Germany and still are. So again, that that web to homie, it dominates everywhere now, but But again, the in store ordering is probably larger in German anywhere else. And the web to retail element is probably larger in Germany than anywhere else still.

Gary Pageau  30:53  
Yeah. You know, the web to retail thing is interesting, because, you know, in the US here, we've had sort of a weird relationship with the web to retail. We've had several people, big brands, you know, Costco target, you know, changed their offering, let's put it that way, whether it's partnering with Shutterfly, like Costco did, or just transferring it to their vendor, like, my target did? And I always seem that be that's always a missed opportunity, I think for those retailers, to not even just have any kind of presence. I mean, and it's just it's, I don't know the words, because our country is so large that it's just too difficult to manage, or the retailers aren't receptive or something but I've always thought specifically like for target, in store photo of just a display or something year round, or find people to to keep it going wouldn't be a natural fit for them. Right. I always thought target and Shutterfly should be you know, should have some sort of relationship and you know, the only retail partnership that no Shutterfly has for example, is with BestBuy where if you buy enough stuff, they give you a free photo book, you know, will be I just think you know, in terms of you know, what you see what happening in in Germany and clearly, you know, CV is a public company, you can see their data, they clearly know what they're doing they're very successful I think they just announced their you know, raising their dividend again for like the 10 three year so and it's because they're able to touch successfully all the pieces of the market

Jeremy Wills  32:23  
I think I think so yeah. And and I think not just for them but for some of the other print service providers strike wholesale labs Yeah, that that's becoming a stronger part of the market because the the European retail on site failure for any model is quite rapidly dropping away from from retail many labs now becoming don't get me wrong, many labs are still there particularly I think you may be some of the independent furniture stores but for some of the bigger chains it's the tear now is instant print kiosks, which the said are quite big in Europe, and then back the back end ordering. And we've seen the boots, pharmacy chain and UK go down that route, save as now the chaos provider but you've got the whole power of the back end production that comes through that as well and can drive a lot of orders straight through wholesale lab. And obviously, the innovation and product technology which comes with that likewise with some of the other labs that are partnering with various retailers as well whereas it's been a while since I looked at the US but I always remember that spoke to Prince was being driven quite a lot of years ago in the US to store and they can actually then be printed on a mini lab or even a kiosk in store and consumer pick them up rather than being pushed back to the district photo or Fuji labs or various other wholesale labs so slightly different model maybe the retail is being a bit more for their site savvy in the US and driving that footfall in store because once you've got them in store, hopefully they're going to buy something else whatever it may be,

Gary Pageau  33:53  
well I'm the building that was definitely the model was boy if we didn't get people to hang around the store for an hour while they wait for their film that says we've got a winner and they wouldn't have been you know, provide the film and processing it costs possibly to just keep them there that long. So what is it let's shift a little bit for a short time for the digital photoprints even within the countries you track it's very different you know some are growing and some are not is there anything happening there? Is it more app driven or retailer driven? Because according to the data I'm looking here you know Germany's up Italy's up Spain is up slightly. But the other ones are showing declines Benelux France and UK are showing slight declines in the digital photoprint category. Is anything happening there? Or is that just the trend in those markets?

Jeremy Wills  34:43  
The differences are I think mainly predicated around the fact that everywhere was seen in 2020. In Europe we saw saw retail clothes and the whole on site printing business kind of really hit the hit the buffers and even when they started reopened the chaos had you could only have every Have the kiosk in use and things like that because of distancing, we saw, maybe Germany, Spain, Italy, were on site is still a slightly stronger proposition. And in Germany is crazy crazy because the sheer volume of print chaos there across, you know, some of these big, big retailers that consumers that that had to go online in 2020 started, not entirely, some of them unfortunately lost forever, come back to retail, and drive some of those volumes in those three countries in France, Benelux UK, which are already quite apparent for E commerce markets for for photos, then then I think even fewer consumers went came back to retail. Arguably some of those may be I don't know if you can say they're at last forever or not. But but that that could be some of the justification there. But again, in the in the UK and France, you've got some very powerful photo brands, you've got some newer photo apps that are really driving that web to web or app to home behavior. So So yeah, I guess, again, when you start looking at some of the the vagaries of the actual channels in photo prints, and they vary, again, a little bit market by market. So when you put it all together, you can get these kind of these free up those free downloads, the overall trend is kind of sort of leveling off now, I think.

Gary Pageau  36:24  
Yeah, no, I the reason I mentioned that is because I think it's one of those things where I think there's still some opportunity for photo prints like we were discussing earlier. There are people who, you know, tend to overlook prints when they're creating their apps right now they're looking at, you know, they want to have a gift app or a book app. And the photo print specific apps tend to just go to the value consumer, right? Yeah, cheap or free, or what have you. And I just, you know, I just wonder if there's a place for a, a more premium print experience. You know, and I'm not sure what that is and what that would look like. But I, I always felt that the devaluing of the photo print hasn't been a benefit to the industry.

Jeremy Wills  37:11  
I mean, I do wonders, just be thinking out loud here that, as we see this at the back end of the market, and it's the early days, but we've got no one print service provided both in the US and here in Europe, which is now producing any summaries prints on digital press, rather than just using the silver Halo, I've made that process if you know that some of these guys can't be savvy like they've done with photo books and say, This is a photo paper because often silver halide doesn't mean anything to consumers. If you say to them, this is a fact they pay per photo book, bang, their pay premium for it. So right photo pay per photo prints versus versus non-fan A paper photo prints. And again, I don't want to get into the the arguments of quantity and perceived quality and depth between these prints but maybe that's a way to go forwards with with adding some value.

Gary Pageau  38:05  
Yeah, because because that is one of the things you can do. If you are prints on digital press, you've got the opportunity to try different substrates right and that is an opportunity there. But again, without people interacting with the prints physically in a retail store, or then I can order that online. So moving on to the wild and wooly world of photo merchandise. You've got a chart here breaking down the categories of categories and again as you mentioned all you've got posters, you got photo gifts, you got calendars cards and Canvas seems like cards have been kind of a sleeper category for a few years and they're really coming on strong. Why is that?

Jeremy Wills  38:57  
I think there's there's two reasons you've got you I guess in in the six markets we're lucky Anyway, you've got two markets where greetings cards as as a phenomenon really big the UK we give cards for everything though, birthdays, weddings, christenings, and Christmas just generally I've sent like I use a web to print card company that for not for failure but just for stock images and I sent my sister is silly card the other day just to say hello, you know, we that's kind of what we do and the Dutch do a bit of that as well. And these are single folded cards that typically cost around about the equivalent of about sort of four GBP for maybe four euros 50 So they're they're quite a premium product and at a certain percentage our our photo cards within that are driven by you know the likes of Moon pig and other brands in the market. Then you've got some other European countries where that multipacks of either flat cards almost postcard type cards or or fold the cards are more popular like can often be more event driven wedding christening Christmas, those kind of things, particularly in Spain and Italy. Bit of both going on in France, not really that sort of, sort of greetings card mentality that the Dutch and the British have. And the Australians for that matter. It's another way beyond Europe has another market. That's pretty mad on greetings cards. We're seeing you seeing some of these web to print, which includes photo card brands gain more momentum in, in Germany, I think planet photo, the French company bought German company for years ago called Bonny twins when they carton and that's continued to accelerate not to the levels that we're seeing in, you know, in the in the UK and the Netherlands. But, but but there's some popularity there, I think a lot of people pivot into that in 2020, because they can buy cards, a retail, it may be a little bit more expensive. But when people are time poor and have the money, if they can just clicks on an app, or a website, and you're done. And then somebody else prints and posts it then and again, photo or mug photo, we have to bring cars and that that I guess for some of them, it's a benefit as well. So, so we saw, I think a bit of a spike happened back in 2020, that's really accelerated that that's that whole web to print to a non photo card sector, we're only looking at the photo element of it, but which is a subset of the sort of webs of print web to print them and cards well,

Gary Pageau  41:28  
another category that is still fairly large, from a, from a value standpoint, our calendars and that just perplexes the heck out of me. Because you're talking. I mean, in the data you shared, you know, it's almost a 200 million euro category within the Western Europe that you cover. And I'm thinking everyone has a calendar on their phone. And it still people are printing calendars or putting on their walls. Why

Jeremy Wills  42:03  
are they I think there's two things, I think that there's two big things as the young families and the female demographic that purchase a lot of further products. And there's the gifting element. q4 is generally the big gifting season for photo products, but big calendars, November, December is the real, real peak season for them. And they are a massive Christmas gift. I make a photo Canada, my parents every year with the pictures, you know from that year, and I think that's what continues to drive it and the PSPS continue to innovate is only so much you can do with a camera. But But papers substrates designs, a lot of a lot of it is software, and the you know the way that you can formulate the calendar, as opposed to the actual physical printing and the cat in there. But a three, a four desktop, little apex, whatever it may be. And we see we see great brands like Vistaprint, for instance, always come in really strong. And again, I'm not not promoting any specific brand, but you know. Yeah. So any any just every time I think maybe it's gonna peek it doesn't it just keeps on rolling and rolling and rolling. And I guess more people just keep cutting the cannon because I've never really looked at what the penetration rate is on that it's the penetration rate on most photo products is relatively low. But there's potential for more customers to come to that. Overall. I mean, again, I've sorts of vegans years ago on personalization, as a market, I can't remember but I know it was just ridiculously high number that somebody like PWC had calculated for, I think for either for Europe or the US. And Fado is just part of that that Juggernaut, I guess.

Gary Pageau  43:44  
And finally, let's talk a little bit about Canvas because that I think was a category that again has been around a long time but just in the last few years has just shown continuous growth and makes you wonder about like when are people going to run out of wall space I know in the US I've talked to some of the vendors and you know they think well listen if we get this price down low enough people will be swapping out their cameras every year they'll just replace that thing and won't be you know, and I just don't think people do that. And it does concern me when people say hey we just drive the price down low enough we can just you know I because I do think the perceived value of a canvas can be very high are what do you think is driving the growth on that because it is not that new of a product Madden cameras made you know 1516 years ago what happened?

Jeremy Wills  44:39  
I think some of it's a bit of a push from the production side of the industry because you've got you've got Canvas you've got to create like you've got added I bought last word that they're saying many different substrates one or a better word now for for all deck or and then and then you've got got the consumer demand now in Western Europe, the level Linz and UK are quite densely populated. Houses are expensive spaces at a bit of a premium. France and Germany and Spain, Italy, a much larger countries, people tend to have more more room in their homes. I think you're right. You know, people don't go on changing and changing and changing these products but But again, there's something that if you have a holiday if you have a good experience on family events, that people may sometimes make a product like that. And at the lower end, we've seen things like wall tiles, which arguably sort of sit into that deck or space, although people might argue they're a gifting product, rather than will deco products come in to that as well magnetic stick on ones that you can stick on paintwork, and remove without them ripping the paintwork off, and all those kinds of things. So yeah, the caveat I put around that is that the carpet effects are more DECO, it's been a massive boom, in 2020, in Western European markets, where a lot of people had time, like buying further books, they, they decided to order wall DECO, right, and maybe even in 2021 as well. And it was something that's a bit of a vacuum after that, where so much of that has been done in the last few years that that that was definitely what I'm hearing. So later on last year to this year seen that, that tail off a little bit. So we still think it's got legs but with kind of Greyfriars sharing of single single digit probably now growth over the next few years. But it's struggling a bit just because of the sheer amount that was produced an order in the last couple of years or certainly 2020 and 2021 the margins as you say are on Wall Deco. And from from both the producer and reseller point, in particularly reseller point of view are are phenomenal. Absolutely phenomenal. As with many personalized products, I think, you know, I've seen prices and things on on non fake type paths like websites that have made my eyes water, but people pay for it. So good luck.

Gary Pageau  46:59  
Best wishes for those people. And so So Jeremy, people wanted to learn more about you and future source, where would they go? And how would they go about contacting you

Jeremy Wills  47:11  
that the Futuresource website is you just source-consulting.com. I don't know if I could give you my email address or not over this. That's too much detail but mine is Jeremy.wills W I L L S at futuresource-hq.com. So I'm the Lead analyst for flat photo service covers these these markets in Western Europe as part of the sort of wider sort of focus on on technology, software solutions hardware at the outset each source as well.

Gary Pageau  47:46  
Thank you Jeremy for your time and best wishes for continued success. And we'll be touching base with you I'm sure when you release your annual data probably next fall.

Jeremy Wills  47:57  
Thanks, Gary, lovely to speak again. Thank you so much.

Erin Manning  48:01  
Thank you for listening to The Dead Pixels Society Podcast. Read more great stories and sign up for the newsletter at www.thedeadpixelssociety.com

Transcribed by https://otter.ai