Have Leica gone mad or just lost the plot?

[avril]

I have just returned from a few days in Berlin.I ventured to the

nearest Leica dealer who was sporting a huge Leica symbol outside the

shop. Whilst purchasing a spare battery for a D-Lux 2, I inquired as

to whether they could demonstrate to me a Digilux 2 .To my amazement

the retailer said that as from April 2006, Leica would not send the

retailers in Belin any more stock. They were opening a new Leica store

where only their products would be on sale.Have I been in a dream or

didnt Leica nearly go bankrupt last year and needed much re-

organisation.So now they don't want to sell their goods in many shops

just ONE in Berlin.Wow, what a sensible idea!Whose to know that I

wouldnt have bought the Digilux 2-another sale they lost.

[kevin m.]

They're cutting out the middlemen, it seems. Not a bad idea.

[kai_griffin]

It worked for Apple, though I'm not sure that my analogy holds well to a completely different industry.

[harvey_trautenberg1]

It makes some sense. The old camera store is gone. The sales help today can't sell - they wait

for things to be bought. The Mac analogy is good. Place your wares in a controlled

environment, sold by knowledgable employees and have sufficient broad inventory on hand

plus increased profit margins. It might work.

[EricM]

it is a dumb idea. making an item like this exclusive when the masses aren't aware of Leica is death. they need to be there beside the other brands in a display case and have a salesman sell, not an empty boutique store on high street with even higher prices. idiots.

[thomas_sullivan]

"...The old camera store is gone..."....true enough....so Leica opens up another one? The old camera store is dead because the internet stores sells stuff cheaper. Are they planning on not letting internet dealers sell Leica's also?

 

yeah, that'll work!?

[peter_white2]

Not idiots. They can't sell next to the Casios, Canons, Nikons and Kodaks because they're too expensive. The boutique is their best shot at survival. They eliminate the middlemen and keep all of the margin for themselves. They aren't going to do the big volume anyway. So for whatever business they do, they're smart to keep all of the income for themselves.

 

They should also do it with the M system as well as the R system. Sell it all via the web from their own site and shops in large cities. Every city over 1 million people should have a shop downtown or in a major high-end mall. For intenet sales, have knowledgeable people available via telephone, IM and email for sales and tech support. Keep everything in house.

 

It's now a niche product so it may as well be sold as such.

[frederick_muller]

In some ways promising, but in other ways concerning. Promising because if they follow this model everywhere, it means a change in distribution strategy, and a stronger focus on marketing. This is something Leica has not done well at all in the past - Leica has traditionally been an engineering company, not a marketing company. So a change in focus is a good sign.

 

It's also worrisome, though, because they are going to concentrate customor flow rather than broaden it. At least initially. Are they going to sell used equipment as well or just new equipment? It almost sounds to me like a Hermes model. Unless it's combined with a marketing strategy that broadens their customer base, it could end up reducing their sales even further.

 

(As an aside, I don't think Leica is anything like Apple.)

[EricM]

"They eliminate the middlemen and keep all of the margin for themselves. "

 

any idea what this margin is? or how much mark up there is at the retailer? it isn't much. i know how much wiggle room the retailers have on camera bodies and lenses and the "savings" from effiecient distributorship will not be less than the overhead and marketing of boutiques. making an unkown exlcusive item even harder to attain is just silly. with the excellent rep that Leica optics has it should be a marketing dream, and easy, to out sell all the other coolpix and g5 and finepix this and that and be right next to them as an alternative. the masses are not going to say in the middle of Costco, "gee, that's a great price on that coolpix, but lets stop by the Leica shop and see what they have instead...".

 

guess what happens now in the camera stores when a customer is checking out different cameras and the salesman starts feeding the guilable? yep, little fibs about Leica and why not to purchase them.

[david j.lee]

...an ipod-M,mmmmhhh, that's a good idea. of course, it's gotta be digital !

[vinay_patel]

Leica's old guard customers will find them wherever they are. They don't need to be "sold", in fact many if not most will buy a new Leica product sight-unseen, on faith. Most (not all) who bought a DMR never handled one before (this based on dealers who delivered them from waiting lists to customers without ever having demonstrated it...there was one or two that made a brief circuit in the USA prior to delivery but people were not permitted to download images from a card). During the past 3 years Leica USA has recinded a substantial number of dealer franchises due to lack of willingness to purchase inventory. Leica feels it's more damaging to have dealers who have no stock to show customers and ask large deposits or prepayment for merchandise, than to shrink or eliminate their dealer network. They may be on to something.

 

As far as attracting a "new guard" of customers, there they have a real problem on their hands. The perception of Leica as a relic, "Grandpa's Camera", is pervasive among the age-group who can afford Leica's prices. That group buys fine workmanship and exclusivity, but not at the expense of cutting-edge performance. In the past, they could do that with state-of-art optics alone. Many feel that Leica's decision to go with sub-35mm chip size and not offer the highest # of megapixels conflicts with their image of offering the highest level of performance.

[michael j hoffman]

I think the decision to limit - or altogether eliminate - the number of retailers selling Leica products could be beneficial. Leica already demand a minimum number of units to be ordered annually by any retailer carrying their products. That's why no shops in my native Baltimore sell Leica. Leica buyers generally do not decide to purchase on a whim. Most in the market for a Leica know what they want and why they want it. Leica should sell directly from the website, similar to what they already do with the a la carte program.

 

The ultimate undoing of Leica, perversely enough, may be their decision to wade into the digital pond. Photo equipment purists don't like the partnerships they are making with electronics companies, such as Panasonic. Their digital cameras offer nothing unique to potential customers because you can now buy a Panasonic digital camera with a Leica lens, or an Epson rangefinder. The digital M rangefinder may meet with some initial success, but will ultimately fail for these same reasons.

 

Leica should have reamined the last of the high quality 35mm film camera producer. I believe that, had they done so, their business would ultimately have increased as those who stayed with film would eventually have gone with Leica. They might even have cornered the market on film if they were able to acquire or partner with one of the European film manufacturers (Bergger, Foma, Forte, or even Ilford). I have no doubt whatsoever that Kodak will have stopped all film production by 2010.

 

As an aside, the Bergger BRF200 film is very nice for those who really enjoy(ed) the look of old-school Tri-X.

 

Michael J Hoffman

[anthony_brookes5]

This is how markets used to be before chain retailing intruded on the scene. Most sellers of Leicas now have to sell other products so fewer knowledgeable and dedicated staff selling a lesser volume makes economic sense. Far from going mad Leica are employing a classic downsizing strategy to maintain profitability. The car manufacturers are doing it as well. There are many fewer Mercedes-Benz dealers now but they are better stocked etc. Good luck to Leica this is a good sign as far as I can see.

[EricM]

i heard Kodak is pulling all their film from all the retailers and drug stores and camera shops and to get it, you have to drive to the one and only single outlet per large city which happens to be in the busy shopping district in order to get it.

 

so a retailer is dealing with a company that demands pre-payment for an ultra expensive item that isn't a hot seller? is that how Leica works it? meanwhile Canon/Nikon/Fuji et al just ship and invoice per 30 days like every other manufacture/supplier? i wouldn't carry Leica either, why would i, as a shop owner, pre-pay and hold up my cash flow in a product that hardly sells?

[terry_rory]

Leica should sell direct via this website only in the USA....

 

http://www.ada.org/

 

152,000 members is a huge market-place and goes to the very root of their core demographic.

[ellis_vener_photography]

Boutique brands like Sinar in the USA are doing this already. Sinar is down to just 4 authorized retail sales centers in the USA. I'm not sure they gain much in profit margin as cameras are generally not profit engines for camera stores these days, but they do reduce distribution costs substantially.

[michael s.]

<< ... any idea what this margin is? or how much mark up there is at the retailer? it isn't much. i know how much wiggle room the retailers have on camera bodies and lenses ... >>

 

This has been my impression, namely, that these margins are very skinny. It surprised me when I was told about this a few years ago, since I'd have guessed that mark-ups would look like they do on men's shirts.

 

And I can certainly understand the reluctance on the part of a retailer to stock up on expensive and glacially slow-selling Leica bodies and lenses, whether it's cash in advance or net 30 days or whatever it is. Makes more sense to advise their Leica-using customers: 'Look. I just cannot realistically stock Leica and display it. But when you see something you want, come on in: I'll get it for at a very competitive price.'

[raymond_tai]

It is just another type of marketing. You have a flag ship store on an expensive

neighborhood with your logos everywhere in the front and shiney display cases inside with

tasteful lighting and large posters of Oskar and famous endorsements on the walls like

you are walking into an adidas shop. In one way it is free advertisement and second you

have your entire range of products in one place to show off your wares and third it

differentiates your brand from the others. It is a wise marketing move for a niche brand

that has been attracting more of a luxury clientel lately the type of cliental who don't mind

paying huge mark ups so the brand can survive. They should probably start marketing

accessories such as t-shirts, keychains, etc as long as they are tasteful and not hurt the

luxury brand image.

[avril]

Thanks to all for their replies. Incidentally, the store itself has been selling Leica for 40 years and aren't impressed with the idea. The store was stacked with collectibles, M cameras, rangefinder etc.-a real sight to behold.

[terence_mahoney1]

<i>Have Leica gone mad or just lost the plot?</i?</p>Yes.

[carlos_ramos1]

Avril,

 

I bought my leica from a local retailer that sold all the brands, new and used. The sales person impresed me with his knowledge of the rangefinder system, and the quality of the Leica product. Yes its a lot of money. You get what you pay for, and it holds it value over the years.

Marketing is the key, and your best hopes of success is converting SLR users. You can only do this in multiple brand stores, not boutiques.

As a side note, I have not seen post from Leica reps here. I wonder if they are looking?

[piotr_panne]

They give up the fondle factor.

[piotr_panne]

and when you\'re done turn the italics off

[terry_rory]

<i> Italics off </i>

 

I hope

[terry_rory]

<i> begone </i> Damned Italics