Pentax leading the way of camera retail?

[musings]

<p>Having seen the previous thread on the demise of Wolf/Ritz in the US, I wonder how long it will be before Canikon pull out from the box retailers as well. Maybe Pentax was ahead of the game when it started to withdraw from Jessups in the UK, and Circuit City and Best Buy in the US...I suppose only the future will know for sure.</p>

<p>I can't see people choosing box retailers in the US for their DSLR purchase much longer. My family loves electronics and shops at Best Buy a *lot*, and I never see anyone buying DSLR's there -- maybe a P&S or two, but not DSLR. The retail model will likely favor the B&H and Adorama's of the world, so perhaps Pentax will not have to fight for shelf space much longer. Ad expenditure is another thing entirely, but box retailing may be a losing battle across all fronts.</p>

[paul_noble]

<p>I don't know if Pentax made a conscious decision to "withdraw" from retail stores. It may well have been the case that they were simply unable to extend the kind of trade credit that Nikon and Canon did.</p>

<p>I doubt that the $25 million that is owed to Nikon will cause them serious injury, although its got to smart a little bit. If they don't collect much of that, it may impact Nikon USA's profitability for this year. What it may do is cause them to rethink their policy regarding trade credit. Especially in this weak economy, they may decide to cut way back.</p>

<p>I think that, if they do that, the net result will be to put even more of a squeeze on local brick and mortar camera stores. I'm sure that many of them depend on not having to pay for their inventory of canikon equipment until it is sold. If that well runs dry, what are they going to do? This lack of trade credit may be one of the reasons that Pentax gear is so hard to find in local stores.</p>

<p>I think you're right though, in that Pentax may have looked at the situation after the Hoya takeover and realized that they could either invest a lot of money in extending trade credit to retail stores, or they could rethink their distribution strategy. They seem to have chosen the latter, although we can't know for sure why they did this. Given that, even with all that credit, brick and mortar stores have a very hard time competing with online and mailorder retailers like B & H and Adorama (yes, I know that they have stores, as well), Pentax may well have decided to take the road less travelled, so to speak.</p>

<p>But then, what do I know?</p>

<p>Paul Noble</p>

[musings]

<p>Good input and perspective, Paul, thanks. In taking the road less traveled, Pentax's moves may look like pure genius in hindsight. The LOC with Canikon and Wolf/Ritz is the tip of the iceberg. Circuit City has already cratered (wonder what the financial impact of that was on Canikon?) and I suspect that Best Buy will eventually drop their DSLR line soon. Liquidating whatever inventory Canikon can't buy back will be expensive.</p>

[andrewg_ny]

<p>I'm guessing that Pentax already found it expend enough credit to fill large numbers of retail shops even before the more recent credit crunch. Pentax was already de-emphasizing retail presence well before the recent economic downturn.</p>

[michael_elenko]

<p>Paul,<br>

You pretty much wrote everything I was going to say and better too.</p>

<p>I'm sure there always will be someplace a customer can get their hands on a DSLR prior to purchasing. Unfortunately Pentax most likely will not be in that lineup. Which is a shame because a DSLR is one product that one really should get physical with. The core technology on all the DSLRs being marketed is pretty much the same; it's the interfaces of buttons, grips, menus, and size factors that add to product distinction.</p>

<p>Though I've purchased three Pentax DSLRs via the Internet, the first time through I went to the local Ritz store (I am still mourning the demise of Cameras West) to compare all the cameras. Having all the choices laid out there really helped me decide which way to go.</p>

<p>There are a lot of good business reasons for Pentax to pursue in Internet-based marketing and distribution strategy, but it tends to limit sales to people who already know about the brand and products.</p>

<p>ME</p>

[musings]

<p>ME -- Nikon and Canon will go the route of Pentax in due time. The *only* models I can find of either manufacturer at Best Buy or elsewhere are low-end entry models. People give them a sniff (if that) and then move on to the 46" LCD TV's. You can see the wheels turning in their heads ("Why would I buy a DSLR for $500 when I can buy this little Casio camera for $200? It's so tiny and cute, too!"). Serious amateurs and pros buy their gear online. DSLR's will eventually disappear altogether from brick & mortar stores.</p>

[shaloot]

<p>And then Nikon goes and does this which is very smart:<br>

<a href="http://www.tradingmarkets.com/.site/news/Stock%20News/2191681/">http://www.tradingmarkets.com/.site/news/Stock%20News/2191681/</a><br>

They are pumping cameras into stores in one of the most brand conscious markets in the world. And you can bet with Ashton's face all over the place, it might end up being a easy sell. When I was there last year, I would go to all sorts of little camera stores and only see Nikon and canon, and I think the only place to get anything Pentax was in New Delhi.<br>

So maybe investing in brick stores is not the best thing here, but I do think it can still can reap huge benefits elsewhere.<br>

Just my marketing $0.01... yes, even lower than the usual street price of 2c!</p>

 

[michael_kuhne]

<p>Rather than the usual camera and electronic/appliance stores, I have seen a pretty fair representation of Canikon as well as Sony, and others, in large warehouse type chains like Costco. Not just the cheapest models, either. Just looked at a D90 there recently. Can't recall the kind of deal offered. I'll have to take another look. Since those places buy in volume, I wonder what their business arrangements are?</p>

<p>And yes, what may sensibly apply here may be a different story in other countries. </p>

[paul_noble]

<p>I'm not sure about Costco, but I do know that Walmart has exactly zero dollars invested in inventory. Absolutely everything on their shelves is on consignment. The vendor doesn't get paid until the item goes out the door. Since Walmart owns Sam's Club, I would imagine that the policy is the same there, as well.</p>

<p>While Walmart is in no real danger of declaring bankruptcy, they might decide to reduce their stock of dslrs, if sales drop off.</p>

<p>I know that a lot of buyers who decide that they need a "good" camera, simply say to themselves "I want a good camera. I've heard that Nikon (or Canon) is the best. Therefore, I'll get a Nikon (or Canon). Besides, I've seen Ashton Kutcher on all the TV commercials. He MUST know what he's talking about." I think that this type of buyer is just the type that may decide, in this economy, that $1,000 or more is a little too much to spend on a camera, just now.</p>

<p>Serious Nikon or Canon users/buyers will still buy the D300/D3/D700's. But they may see a falloff in sales of their entry level dslrs. I'm sure that Pentax is not immune to this, but may not suffer as much for two reasons: 1) they (Pentax) have a much lower market share and 2) I don't think that Pentax buyers are knee-jerk buyers like some canikon buyers are. Pentax buyers are there because they have researched the camera or have prior experience with the brand. I don't mean to disparage canikon users or cameras, but I really think that they are more likely (at the lower price range) to buy a C or N, because their brother-in-law has one, or because they have seen a TV commercial. Face it, almost nobody's brother-in-law has a Pentax and I can't remember the last time I've seen a Pentax commercial or Hollywood product placement. So, if someone buys a Pentax, its probably because they really want a Pentax, not because a friend or store salesman told them it was the best.</p>

<p>OTOH, Canon or Nikon could probably withstand a loss of sales that exceeds twice Pentax' entire annual sales and not bat an eye.</p>

<p>Paul Noble</p>