HP to Roll Out Kiosks That Print Photos, Customize Mementos While You Shop
Hewlett-Packard Co. helped make dropping off rolls of film at the drug store seem so old-fashioned.
Now the computer and printer maker that spearheaded the shift to processing digital photos at home is focused on making the drug store fashionable again.
HP is expected to announce today that it is setting up kiosks in supermarkets and drug stores where shoppers can order prints, greeting cards, calendars, posters and photo albums and pick up the finished products in less than an hour.
Longs Drug Stores Corp. is launching the kiosks in 100 stores in Southern and Northern California from April to July. Albertson’s Inc. is testing them at five locations in the San Diego area, and the Bashas’ supermarket chain in Arizona plans to introduce them in an undisclosed number of stores.
HP seeks to change the economics of the more than $35-billion retail photo-printing market by trying to capture revenue that has been migrating to competitors such as Shutterfly.com, Fuji Corp., Kodak Corp. and its online service Kodakgallery.com, and retailers such as Costco Wholesale Corp. and Wal-Mart Stores Inc.
Any strategic shift by HP has repercussions throughout the digital photo industry.
Palo Alto-based HP is the world’s largest manufacturer of computer printers and ink, the owner of photo website Snapfish.com and a maker of digital cameras, color laser printers and photo paper. Printing and imaging accounted for 29% of HP’s $86.7 billon in revenue last fiscal year and 57% of its operating profit.
HP also is trying to adapt to the new profile of consumers for its photo products.
“Digital photography used to be male-dominated; all images ended up in cameras and on hard drives, and the guy would take care of it,” said Larry Lesley, HP’s senior vice president of digital photography and entertainment services.
“Now it’s shifting to the ‘iMom’ who used to drop off film, then do shopping,” Lesley said. “She’s taking back control of the family memories.”
American Technology Research analyst Shaw Wu said the kiosks were an interesting experiment for HP.
“I’m not sure if it moves the needle, but it’s definitely a step in the right direction to differentiate itself,” Wu said. “But it doesn’t sound like the barrier is that high to competitors like Fuji and Kodak. The most important thing is getting the retail space.”
HP is launching two kiosks: the PhotoSmart Express that prints photos automatically from memory cards or from files sent to the kiosk by e-mail, and the PhotoSmart Studio, which lays out photo albums and books, greeting cards and calendars with choices for borders, and poster-sized prints on heavy paper in three large sizes.
“People involved in printing are looking for people to do more with their pictures than print 4x6 photos,” said Ed Lee, a digital photo analyst at InfoTrends. “Making calendars, greeting cards, etc., are another way to monetize images, with good profit margin opportunities.”
Using the HP equipment, Longs charges $6 to $26 for photo books, and $14 to $21 for photo posters. Matching frames are conveniently placed within arm’s reach, starting at $20.
As part of packages offered to retailers, HP is deploying color laser printers to produce calendar pages, and wide-format industrial printers for posters.
“From a retailer’s perspective this allows them to bring production of those items in-house, so they don’t have to farm it out to someone else, and can keep all the profits,” Lee said.
Photo processing sales have dipped in recent years as digital photography has gained popularity.
“We’ve had a very robust business in silver halide photos in both our food and drug stores, which is now migrating to digital,” said Nick Kormeluk, Albertson’s group vice president of center-store merchandising.
By offering more options to customers with the HP kiosks, “We’re closing the links in between,” Kormeluk said.
Albertson’s, which operates about 2,500 Albertsons and Shaw’s supermarkets and about 750 Sav-On and Osco drugstores, is entering the market cautiously with five test locations.
Neither Albertson’s nor Longs would disclose the financial details of their deals with HP. But the options include buying the kiosks outright, leasing them or striking a profit-sharing deal between HP and the retailer.
For photo gifts such as albums, books and calendars, most current services require laying out and ordering these products online, then typically waiting two weeks for delivery.
With HP’s kiosks, “you can really knock these out in 10 minutes,” said Eileen Glantz, manager of photo lab operations for Longs’ 476 drugstores, pointing to one of the kiosks, which are about the size of a slim ATM machine. “It doesn’t seem huge, but for us it’s a very big deal because we want to make use of every square inch we have to generate revenue.”
HP says the kiosks can generate as much as 40% more revenue per square foot compared with other kiosks that provide only photo prints.
Recently, at a Longs Drugs in Walnut Creek east of San Francisco where HP has been testing a PhotoStudio kiosk, Marie Kidwell brought in a memory card with photos of a friend’s wedding. In a few minutes she had chosen about 40 photos to be burned to a CD.
“It’s taught me a lot of new things, about brightness, or cropping,” said Kidwell, who works for the California State Automobile Assn. and who got her CD in about 10 minutes. “Before, I was just happy to get prints.”
