Polaroid Hopes Plan Is Key to More Film Sales
Polaroid Corp. wants U.S. store owners to help unlock its film sales.
The maker of quick-developing film and cameras is pushing retailers such as Kmart Corp. to take Polaroid film out of the locked cases and other inaccessible areas where it’s usually stored and put it on open display racks. Fighting to overcome years of tepid sales and the onslaught of one-hour photo labs, Polaroid wants consumers to have the same easy access to its film that rivals Eastman Kodak Co. and Fuji Photo Film Co. now enjoy.
In 60% of the U.S. stores that carry Polaroid film, customers need a clerk to get it for them, said Jerry Noonan, general manager of Polaroid’s North American consumer business. Only 15% of the stores that sell Kodak film keep it locked up, he said.
“If you need help getting the product, that’s a problem,” Noonan said.
It’s a problem Polaroid can’t afford, given that its sales rose an average of just 2% in each of the past five years. Revenue at the Cambridge, Mass., company peaked at $2.31 billion in 1994--its last profitable year--and fell last year to $2.28 billion. In the past two years, the company has racked up $181 million in losses, including charges. Since the start of 1995, the stock is up just 15% compared with 60% for the Standard & Poor’s 500 Index.
*
Polaroid estimates that film sales are 30% lower in stores where the product is in locked cases or behind sales counters than in open racks and displays. The company estimates it has about 10% of the U.S. film market.
The campaign to make its film easy for consumers to get their hands on is part of an overhaul started by Gary DiCamillo, the former No. 2 executive at Black & Decker Corp., hired as Polaroid chief executive in late 1995.
DiCamillo, the first outsider to head Polaroid in its 65-year history, brought on other consumer-products veterans on the premise that better marketing is central to the company’s recovery.
Noonan, for example, was with the Nabisco food unit of RJR Nabisco Holdings Corp. before joining Polaroid. He reports to Sandy Posa, formerly with the Kraft Foods unit of Philip Morris Cos. Posa is in charge of worldwide consumer product sales, marketing and manufacturing.
These marketing veterans understand that consumers tend to buy what’s easy to reach, which means Polaroid’s film is at a big disadvantage to the competition. Noonan’s job is to persuade stores that Polaroid deserves the same prominent display as film from Kodak or Fuji. This is crucial for Polaroid because film sales have higher profit margins than camera sales.
While the company doesn’t disclose any numbers, Prudential Securities analyst Alex Henderson estimates that Polaroid breaks even on camera sales and has gross margins of 65% to 70% on film.
It was a marketing miscue that got Polaroid into this mess in the first place. In the 1960s and 1970s, many retailers put more and more merchandise under lock and key as shoplifting increased, said company spokesman Robert Guenther. Because top management was dominated by scientists and engineers in the past, Polaroid never spotted the drawback of having its product behind the counter. Meanwhile, Kodak and Fuji film are on racks next to the chewing gum and tabloid newspapers in check-out lines.
To help get retailers on board, Polaroid will offer them theft-resistant displays for the film and electronic security tags in the packaging. The displays, for example, might have an opening that lets consumers remove just a couple of film packs at a time, Noonan said. This deters a thief’s ability to grab handfuls of film in a quick rush to the door, he said.
Kmart will begin putting some of Polaroid’s film in more accessible displays right away, Noonan said, with a bigger push expected in late summer when the retailer does its annual review of product placement in the stores.
