The main results of Conference
“Russian Imaging Business: Essential Aspects and Development Prospects”
Press-release
Moscow, 14th, April
From 9 through 12 April the “Crocus Expo” ICC (Moscow) opened its doors for the participants and visitors of the major event in consumer electronics in Russia – Technoshow-2009 that unites 3 leading international exhibitions such as Photoforum-2009 – consumer and professional imaging, HDI Show – audio-video technique and home entertainment systems and Mobile & Digital Show – mobile and digital devices and entertainment.
The main event for specialists conference “Russian Imaging Business: Essential Aspects and Development Prospects” was held on 10th, April. Panel Discussion on crucial issues in photo business was carried out in the frameworks of this event.
Orginizers of the Conference: PMA - The Worldwide Community of Imaging Associations, MIDExpo company and the Association of trading companies and manufacturers of consumer electronic and computer equipment RATEK.
The Conference was held in the frameworks of Photoforum 2009 and PMA Russia-2009. Sergey Savenko, President of the SAVA-Digital company grouping and a member of PMA board, was the Conference moderator.
The first session was devoted to general issues of development of consumer electronics market and analysis of those events which have severely influenced the market for the latest year.
Alexander Onishuk, President for RATEK, introduced the listeners his survey paper about market condition and key news. First of all, he underlined the importance of opening of Samsung factory in Russia (Kaluga city). The first mobile wide-band access network based on WiMax technology was launched in Aprelevka. The law about trade corporate raid that’s finally recognized to be unconstitutional in our country was passed in the first reading. Customs prices on mobile phones never fell this year. Besides, this year iPhone has officially entered the Russian market. Russian market of mobile network was noted for a number of M&As, which led to major cell operators’ control over retailers. For example, Beeline company has acquired “Evroset”, MTS company has taken over “Betalink” and “Telephone.Ru”, Megafon company has become the owner of “Cifrograd”. Megafon and MTS own “ION”. According to Alexander Onishuk, our mobile market and foreign ones have become very much alike, the system is almost the same: at first you sign a contract with a cell operator and then can buy a cell phone as an addition to it.
Among negative events there is a FAS recognition of “parallel” import, absence of Trade law, Evgeniy Chichvarkin’s walkoff from business, customs transfer from Moscow to the Russian frontiers. New economic conditions have also influenced the Consumer electronics market: Electrolux factory has been closed, building of Indesit factory has been stopped.
In his speech Alexander Onishuk enlightened the issues about the existing custom duties on various groups of consumer electronics goods.
Custom duty on digital camera is set at the rate of 0%, on processors is at the same rate but only for 9 months, video games without a LCD-monitor – 10%, modules for LCD and PDP – 0% for 9 months. Custom rate on import on LCD and PDP TVs has increased from 10% up to 15% - it’s the first advance in customs for electronics for many years!
He described a number of threats for domestic consumer electronics market: the main one is crisis that forces customers to look for cheap goods and ask spins for such products what leads to business struggle, victims of which can be major companies. Nontariff regulation also limits import of goods not related to taxes and duties. Especially it may concern goods with wireless technologies. Import of radioelectronics devices (Wi-Fi, Bluetooth, babyphones, navigators, etc.) to Russia seems to be a tremendous problem, that’s why a Russian consumer always gets novelties 6 months later than the western one.
Mr. Onishuk described the ways out RATEK found in such circumstances. He offered to take out or at least regulate control of import of radioelectronics products and tighten control over their usage. To reach this aim, it’s necessary to abolish statement about radioelectronics devices in Government decree of Russian Federation dt. June, 5th, 1995 #643 “About an order of production, acquisition, import to Russian Federation and their usage on the territory of Russian Federation”. The main thing is to understand which institution has a right to let import and whom one can beefing.
As for the Consumer protection law, RATEK works on its improvement and including a number of goods in group called “technically complicated”, i.e. multifunctional wireless equipment, multifunctional digital electronics, equipment with LCD display, HDTV and others. Though it will restrict consumer rights when returning the goods, nevertheless, such an action will improve price policy of companies by means of reduce of a number of faulty products. Onishuk supposes that the project will be accepted during the next three months.
Japanese Research Institute NOMURA reported about change dynamics of customers’ preferences on the electronics market. The first speech was given by Mr. Nonaka, a senior consultant of the institute, who introduced characteristics of common customers in Russian Federation. Buying power of the Russian population rapidly grew in 2000-s and mainly went forward among other countries, and now we can expect further growth. On February, 2009 the Institute carried out a research with household questioning in 10 major cities of Russia. It showed that a Russian average customer even in current conditions belongs to “premium” class. Today the majority of buyers has a down on quality of products. Here we should take into consideration the fact that the service in Russia hasn’t been developed enough and in the future customers will pay more attention to it. It means that the companies which want to be a success on the Russian market, should not only import high-quality products but also pay more attention to service development.
His collegue Andrey Rodionov, executive director of Moscow representative office of Japanese Research Institute NOMURA, showed the results of another survey project carried out in the beginning of last year in 6 Russian cities. It told about customers’ preferences of medium class in Russia. The first place contains goods made in Germany (45-36%), Japan, South Korea and Italy. Among audio-video home appliances Japan took the leading place (a preference level in different cities varies from 63% to 50%). Germany took the second place. As for definite categories of products, the leaders are automobile, computer techniques, digital photo and video techniques.
Another research was aimed at printing market, mainly on printing service organization as one of the ways of customers’ attractiveness. Nowadays an average number of photos taken by Russian amateurs – 35,9 pictures a month. 70% people go to photo shops to print their pics, about 30% do it at home. The important factors here are quality, closeness to house and printing speed. Consumers say that it would be great if they could print pics in retail shops, including home appliance shops and cell phone shops such as Evroset, Svyaznoy, Ashan, Eldorado, Perekrestok, MVideo, 36.6, etc.
Viktor Larionov, managing partner of MOST Marketing company,raised the questions of business development in the crisis time, told about the best foreign and Russian practice of anti-crisis strategic management. According to Larionov, only those distributors who will manage to cut constant expenses and balance credit terms with their customers, will survive in current situation. He supposes that those retailers which are not specialized centers (such as Ashan, Metro, Karusel), including markets and networks which work on their own money, are in the best conditions.
Viktor introduced the 10 “tables” developed by Most Marketing the company should follow in the crisis time: it’s necessary to be aware of the fact that the crisis won’t last forever and one mustn’t cut expenses without any reason, to concentrate on the main field of own business and develop it freezing the projects developed in better economic conditions, it’s necessary to manage moods and expectations of employees, improve communications between key managers and adopt management principles at the instable time. The mistake is to work with a full information protection what can lead to partners’ distrust, to follow a wait-and-see method and to lay aside all the inner and external projects till better days. Companies should cut planning programs and adapt their management system to make and realize prompt decisions. what can lead to partners’ distrust, to follow a wait-and-see method and to lay aside all the inner and external projects till better days. Companies should cut planning programs and adapt their management system to make and realize prompt decisions.
The second session was devoted to current issues of photo business development. In the first part the representatives of such companies as HP, Kodak, Sony, Lomond, Libroff, Tallann informed about new products, technologies, services, special offers, interesting both for specialists and end-customers.
The important topic for discussion was a new format of a photo shop. Oleg Vostrikov, General director of PhotoPro company, examined work of a modern professional photo center, new opportunities of cooperation with photographers, partner programs and usage of internet technologies. Oleg told the listeners about the main mode of operation of PhotoPro company – credit of trust and a vast system of bonuses and discounts for photogtaphers. A client can get a full set and a cycle of photo services beginning with a photo session up to pgoto finishing and courier delivery. The center maintains the level of attention to quality of its production. PhotoPro company works for not only private photographers but also develops partner programs for the companies which work on an advertising market and work out an interior design. Partners can get all the new kinds of photo services at their disposal: scanning on Imacon Flextight 949, a further image correction on modern workstations, an image output on a laser analog-digital complex DURST Lambda 131 and multi-format photolab Durst Theta 76 CS, printing on different kinds of photopaper and display photo materials, printing of posters and canvases, fillet and finishing processing, etc.
Vladimir Borovikov, General director of Amurphoto company (Khabarovsk), also shared his success experience. His photo saloon’s figures made up 6,5 millions of photo prints for year 2008! The main motto of “Amurphoto” – “quickly, at a fair price, of high quality”. Vladimir told about his shop’s work: there are 40 monitors which receive photos on 2 floors, there are 10 employees in a shift. When receiving an order, the operator edits colors and takes the order to print. A client usually waits for not more than 15 minutes. An average price for a print is 5 roubles, but in case a client has a discount card, he can save 30% and pay only 3.5 roubles for a picture. The saloon prints all the formats, from 10x15 up to 30x90 on any paper (mat, glossy, silk, metallic) and offers to make photo albums, vignettes, etc. Borovikov noted, that 80% of clients are women, the most important thing for which is an easy interface and good work of consultants. Vladimir considers discount cards to be the best marketing mix. He also underlined the fact that it’s very necessary to have own territory to open a shop, that’s why he doesn’t open any branches in other Russian cities. An annual shop’s turnover is 40 000 000 roubles a year.
Svetlana Morozova, Director of retail department of “Yupiter” shop (Moscow) shared her opinion about a photo shop of the future. “Yupiter” shop has a 45 anniversary in 2009, its situated in the historical center of Moscow, on Novy Arbat street, and is a symbol of history of photo industry in Russia. At the same time, “Yupiter” today is a modern shop, that represents not only all the Russian manufacturers of photo technique, but also major foreign vendors, including the most rare and expensive models. According to Svetlana, they try to run ahead the time, thus, a modern digital photo-examining laboratory works in this shop. It enables to print photos from any digital carriers, clients can order large printing, printing on a canvas, souvenir products, copying, binding, take an urgent photo. Though the price for a print is not cheap (7 roubles and 9 roubles for an urgent photo), the shop makes an accent on quality, quick printing and attention to every client. In the near future they plan to make large printing on the latest laboratories Noritsu Durst Tetra for interior scenes, exhibition decoration, etc. There is an internet cafe in the shop. All the products and services are available via Internet shop. A monthly average turnover of the shop is from 10 to 30 million roubles, 70% of which are goods and 30% - printing.
Then the participants passed to discussion of worldwide situation in photo industry. Wolfgang Abendrot, General manager for CeWe Color AG & Co. OHG company, enlightened novelties and key trends of the world digital photo market. CeWe company provides photofinishing services in 24 countries for retail shops, networks and online shops. It’s famous for its services on photography personalization (photobooks, photo presents, photos from movies, interior printing and others). According to Abendrot, today the market of photo books is rapidly growing, from 71 000 items sold in 2005 up to 2.6 million ones in 2008. By 2011 it’s planned that the turnover of this market will reach 2 500 000 dollars a year. Another perspective segment is an order to print digital photos via Internet. Compared with 2003, the growth made up 58.9%.
The main trend on the market is a transfer to dry printing. People print photos from digital carriers much more often, for example, it’s expected in Western Europe that people will print 17.9 billion photos “digital ones”, the majority of which will be made in retail shops and self-service kiosks. According to the CeWe data, 6 million cameras are sold in Russia. In the end of his report Wolfgang Abendrot concluded and mentioned the key photo trends in the worls: transfer from analog to digital, personalized photography is developing more and more, photo books become incredibly popular, photo kiosks become very popular and their share on the market will increase by 2 times by 2010, a traditional printing is dying together with an analog photography.
This session was ended up by Panel Discussion on crucial issues of photo business. Its moderator Sergey Savenko offered the participants to estimate the today situation on the photo market in our country and its profitability as far as investments are concerned. Ilya Zaycev, manager on business development for HP Indigo Digital Press company, was the first who took the floor. He noted a huge potential of the Russian market and a constant growth of digital cameras’ supplies. According to him, it’s connected with Internet and IT technologies development. It’s planned, that by 2012 29% of households across Russia will be connected to high-speed Internet networks, and not only in multi-million-strong cities, what will also increase the demand on photo printing and photo books order via Internet. Yuri Akilov, international marketing Director for Rekam Inc., Canada in Russia, supposes that the Russian market has already passed the stage of receiving incredibly high profits and is now at the stage of normalization, like in Europe and America. Though, it has potential for development for sure. Marat Fairushin, representative of Konica Minolta company, said that there was no anysole strategy for companies to invest money in what will bring great profits, though, he also added that it was no use to freeze any investments, balanced investments are always the positive sign for companies.
One of the important questions today is Russian photo business development specifics compared with other countries and marketing goals of companies in Russia. For Sony company, according to Andrey Kurganov, manager of Digital photography and video branch in Sony company, today it’s necessary to redistribute resources in a proper way to work with strong trade channels in Russia. Ksenia Gordeeva, senior product manager of Moscow representative office of Epson company, told that the Russian photo printing market is quite different from the world one, its peculiarity is in that a customer is oriented on technologies and sometimes knows about them more details than the salesman does. Another important factor is a price for the print. That’s why the main goals of the company are to fully provide information about its products and develop convenient and saving offers on expendable materials (sets for printing, paper, etc.). Evgeniy Dubnov, President of Tallann company, agreed with Ksenia. He confirmed that a Russian user knows a lot about technologies, programs and accessories. He considers that Marketing task #1 is to provide new decisions in the field of accessories, optics supplies, which will be at the same time ecological and have a safe-health level – it’s the accessories which are not subject to price fall. Andrey Kel’, Geneal director of “Libroff” company paid attention to such negative peculiarities of Russian photo business, like customs duties, absence of a normal customs regulation, business reliance on politics. All these factors often prevent western investors from their investments to the Russian photo market. Andrey supposes that today a company should pay more attention to its client and choose and train competent managers and salesmen. Yuri Akilov followed him and underlined the necessity of a social responsibility before clients. Today photography is a hobby, defense against stress, an attempt to launch new business. Rekam company noticed the growth of demand in fall 2008, what moved it to correct the marketing policy of the company for 2009 and to launch a TV show on O2 channel, where experts carry out master classes for amateurs. Fidel Errants, General Director of Kodak-Russia and CIS, noted that the Russian market is rather young compared with the western one. In the west the companies willingly invest into new technologies development, what Russia lacks. Kodak company is going to continue developing an entrenchment of new technologies in retail.
It was paid a separate attention to an organization and development of retail photo business in our country. Igor Shchurov, Director of consumer goods department in Canon company, informed that the specifics of the Russian retail system is that it experienced an explosion for the latest few years, that’s why it’s very difficult for the manufacturer now to control all the shops and conclude how much it’s effective to work with them. A range of goods and services of even major networks much varies depending on a city, where there is a definite shop situated. Now major networks actively overtake small shops, especially in the regions. Major retailers started paying more attention to salesmen training. Trade via Internet influences retail shops very much now. It takes away a number of clients that’s why it’s necessary to find additional instruments to improve service. According to Fidel Errants, Russian retail companies should use positive experience gained by western companies more and more.
During the Panel discussion the participants pointed out photo market segments which have the greatest growth potential. Andrey Kurganov noted that Sony company increased retail sales in reflex and HD video cameras. He said that the future belongs to video cameras with numerous flash-carriers and photo frames. Igor Shchurov told the listeners that Canon company places stake on not only those who want to take pictures but also on those who plan to print their photos that’s why the company provides ready-made decisions for printing. He confirmed the growth of sales of reflex cameras as well as expendable materials for photo printing. The market of compact cameras is also growing, especially comared with the West, but here the main thing is to segment photo cameras in a proper way, to offer new opportunities, for example, water-proof bodies, to introduce compact cameras of Premium class.
The participants underlined the pros and cons of different methods of photo printing. Ksenia Gordeeva told about advantages of ink-jet printing Micro Piesa from Epson. Though Ksenia marked that all the methods of printing have a right to exist: ink-jet, sublimatic heat transfer and traditional printings have their customer and face different challenges. Alexey Kryukov, Sales director in Noritsu company, agreed with her. He said that all the technologies must exist as this fact creates a competitive playing field on the printing market.
Dmitry Matskulyak, representative of Lomond company, reported about the possibilities to reduce price and a great number of materials in ink-jet printing. Price for paper and ink in ink-jet printing is almost the same as it is in a traditional printing, but the quality is not worse.
In the end the participants of Panel discussion talked about perspective trends in photo technologies development. All the speakers concluded that today popular are such things as usage of Internet to transfer and print pictures, usage of ink-jet printing to create unusual forms (textured photography, 3d models and etc.), ink-jet photo minilabs with an opportunity of two-side printing for photo albums and books, photo personification, orientation on new products, on advanced technologies and design. All these, together with marketing strategies, must lead to the increase of demand on goods and services, offered by companies – players on the photo market in Russia.
