This is the first time that MAPS has reported on the UK market for Photographic Equipment. Included in the scope of this report are the markets for Still Cameras, Photographic Film and Photo processing Services, and Photographic Accessories. Not included is the separate market for camcorders and video cameras, or the specialist sectors of large and medium format (professional) cameras.

The total market for photographic equipment in 1996 was worth £1,079 million, with photo processing accounting for the largest share of this total at 40 percent, followed by still cameras and accessories which account for 38 percent and photographic film which takes 22 percent. The total market has grown by 15 percent in value terms at current prices since 1992.

The largest sector is that of photo processing in terms of value, with this market worth £430 million in 1996, an increase of just 5 percent since 1992, as pressure on prices has been intense. The volume of films processed in 1996 was 92 million rolls, broadly the same as in 1992. This figure is expected to rise as the economy continues to recover in 1997. The fall by volume, whilst the market grew by value, may also be due to people having fewer films processed but using more 36 exposure films as opposed to 24 exposure film.

The second largest sector is that of still cameras and accessories, with sales of £415 million in 1996. Within this, the largest sector in the market is the still camera sector, worth £317 million in 1996, or 76 percent of the market. The accessories sector is very much a niche market, and confined mainly to specialist hobby photographers, being worth £98 million in 1996. The still cameras market grew by 33 percent in value terms between 1992 and 1996, whilst the market grew by 100 percent by volume to reach 6.4 million units. It should be noted here, however, that the market size takes into account the rapidly growing single use camera sector, adding in effect another 3 million onto the market size figure for 1996. This has been the most rapidly growing sector in the photographic market since the product' launch in 1989. If the single use sector is disregarded, growth in the still cameras market is more modest, at 8 percent in volume terms between 1992 and 1996.

The still cameras market is very much dominated by sales of 35mm compact cameras, which in 1996 accounted for 73 percent of the market by value, with SLR cameras taking 17 percent and single use cameras (SUC) 7 percent (owing to their low unit prices of around £5-9 on average). If the market is split in volume terms with single use cameras included, it can be seen that this is the largest category with 57 percent of all camera sales with 35mm compacts taking the next largest share at 40 percent followed by SLR Cameras with only 3 percent of the market. Growth in the 35mm compact cameras market was 41 percent by value between 1992 and 1996 to reach £231 million, and 8 percent by volume to reach just over 2.6 million units. Growth has been greater in terms of value due to consumers trading up to higher priced and specified zoom compacts in particular.

The SLR 35mm market has declined very slightly in value terms between 1992 and 1996 and was worth £54 million in 1996. The market has recovered in volume terms however with an increase of 3 percent to 160,000 units in 1996. The market fell sharply between 1989 and 1994, partly due to the growth in popularity of compact cameras, but has since recovered as the economy has picked up and technology has improved.

The fast growing single use camera market has experienced very strong growth of 425 percent by value and 600 percent by volume between 1992 and 1996 to reach a value of £21 million in 1996, or 3.5 million units. This growth is from a very small base, with the products only launched in 1989, and with the entry of own label suppliers into the market as well as the market leader Kodak and Fuji, the market has taken off rapidly, helped in part by the recession that may have delayed purchase of 'proper' cameras whereas with their low prices single use cameras could be bought without too much prior planning.

The market for instant cameras remains a niche one, worth £9 million in 1996, growth of 29 percent since 1992, following new product launches and heavy product promotion by the sole supplier in the market, Polaroid.

The cameras market is largely dominated by Japanese companies, with a very high level, at virtually 100 percent, of imports either from the Far East or from Europe. The leading brands include Canon, Olympus, Minolta, Nikon and Pentax in the cameras sector, with the leading film manufacturers, such as Kodak, Fujifilm and Konica also having a growing presence in the cameras market, especially with the launch of the new APS cameras in spring 1996. Kodak hold the largest share of the patent licence for APS, which was jointly developed along with Canon, Fuji, Minolta and Nikon. There are a large number of brands in the cameras market, with own label quite a common feature of the compact and single use sectors in particular.

By contrast, there are far fewer brands in the photographic films market, which is heavily dominated by the US owned Eastman Kodak company, with Kodak taking the largest share of the 35mm colour print film and APS colour print film markets. The second leading brand is Japanese owned Fujifilm, followed by German brand Agfa and Konica (also Japanese). There is a high level of own label production in this sector, both for retailers and for mail order photoprocessors, with the US giant 3M providing a large proportion of own label film as well as selling under its own Scotch brand. Agfa also supply to own label, notably to Boots, as of November 1996.

The photo processing sector is split between the mail order firms, most of whom operate under several brand names, the high street retailer (where films are usually sent away for processing), and the mini-labs. Boots is one of the leading high street processors and also operates a one hour service, with SupaSnaps and Colorama important processors as well. Key mail order players include Truprint, BonusPrintBonusPhoto and Kodak Express.

Main media expenditure in the camera market was £9.9 million in 1996, or 3.1 percent of the total value of the retail sector, with expenditure having risen sharply in 1996 with the launch of the APS film and camera format. Main media expenditure in the films sector stood at £7.5 million in 1996, a slight decline since 1992 but this is expected to be much higher in 1997, with the publicity being given to the new APS film format.

Advertising expenditure is highest in the cameras market, with a high level of new product development leading to new product launches which are often accompanied by main media campaigns utilising TV, radio and consumer press as well as via the trade press. Reviews in consumer camera magazines are also important in aiding the promotion of new models. Main media advertising is lowest in the photo processing sector, with promotion more via the distribution of mail order envelopes in magazines, or via in store promotions.

Retailing in the photographic equipment market has become more diverse in recent years, with a move away from camera specialists in markets where expert product advice is not required. Products such as compact cameras, especially those in the sub £50 price range, single use cameras, and colour print film, are all products that can in effect be sold anywhere without the consumer requiring specialist advice. Therefore a high proportion of sales of compact cameras are via general high street variety retailers, such as Boots and Argos, with photo specialist multiple retailer Dixons also accounting for a high proportion of sales. The picture is similar for single use cameras, with the additional distribution channel via convenience stores and supermarkets, where they are often sold alongside photographic film.

Retailing of more specialised photographic products, such as 35mm SLR cameras and accessories such as lenses, are still biased towards the camera specialists as consumers usually need better advice when deciding on a model to suit their needs. As such the camera specialists, both multiples and independents, account for around three quarters of sales.

Photographic film is the most widely distributed photographic product, available via traditional camera shops, high street variety retailers such as Boots, WH Smith and Argos, high street photoprocessors and mini-labs, chemists, convenience stores, CTNs and supermarkets to name just a few.

In terms of consumer behaviour, the most commonly bought piece of photographic equipment is, perhaps not surprisingly, 35mm colour print film, bought by 56 percent of all respondents questioned in February 1997. A relatively high proportion at 27 percent had also bought instant film, suggesting a high rate of usage and consumer loyalty for this niche product. The most commonly bought type of camera was any non disposable 35mm camera, with 17 percent having bought in 1996 or intending to do so, whilst a further 13 percent were purchasers of single usedisposable cameras.

However, it should be noted that whilst purchasing appears high for instant film in relation to retail sales, this is due to the fact that the survey does not take account of frequency of purchase, with 35mm colour print film buyers likely to buy much more frequently.

The overall market for photographic equipment has suffered from the effects of the recession with a period of stagnation in the early part of the 1990s which has been followed by renewed growth since 1994 in particular as the economy started to improve. Purchasing of cameras is closely related to the state of the economy and the fact that during a recession people generally take fewer holidays and so do not have as many opportunities to take pictures, thus also depressing sales of film and the processing market. The lack of product innovation during the late 1980s and early 1990s also restricted market growth.

With a return to economic growth in 1996 and 1997 the market is set to experience much stronger growth. This growth will also be helped by the continued strength of the single use camera sector and the launch of a whole new film format in 1996 with the introduction of APS cameras and films, which are designed to be easier to use, smaller and more compact than 35mm cameras with a range of additional features. The favourable exchange rate between the yen and sterling early in 1997 has also helped the market, allowing some manufacturers to reduce their retail prices and so boost volume sales.

Another new sector that will have a longer term effect on the cameras market is the development of digital cameras that do not need a film and are designed to be linked straight into a personal computer. Whilst prices are much higher at present than for compact cameras, starting at around £250-300, with inferior print quality, as this sector develops it will undoubtedly impact on the whole cameras market.

The total market for still cameras is forecast to grow from £329 million in 1997 by 38 percent to £450 million at current prices by 2001. This growth will be fuelled by consumers upgrading to better specified zoom compact cameras as well as to the newer APS format cameras, which are more expensive, relatively speaking, than equivalent compact 35mm cameras. It is expected, however, that prices of APS cameras will rapidly fall as competition in the market increases. The market is expected to reach 7.9 million units, a slightly lower rate of growth at 27 percent.

The market for photographic film is predicted to grow by 10 percent from £250 million in 1997 to £275 million in 2001. Prices are particularly competitive in the films market, with a high level of own label penetration that will continue to keep prices down. There is also an element of non-purchasing of film i.e. some processors give away free film with each processing request.

The photo processing market will grow by 8 percent between 1997 and 2001 to reach a value of £483 million. Consumers will continue to look for value for money when processing film and despite the expected growth in APS film, which is currently more expensive to process, market growth will be restricted by intense price competition, with prices for APS processing already coming down early in 1997.

The accessories market is forecast to achieve minimal growth of 3 percent between 1997 and 2001 to reach £100 million, with markets such as flashguns declining whilst sales of camera lenses are expected to increase slightly by value, mainly due to a move to higher powered, and higher priced, zoom telephoto lenses.

Overall, the outlook for the photographic market for the next five years is for stronger growth than in previous years, although price competition may restrict growth by value. The market should be boosted by the new APS film format that is likely to make inroads into the SLR market having been introduced initially onto compact cameras and single use cameras. The impact of digital photography has yet to be felt by the still cameras market, and it will be a few years yet before they are competing with compact cameras as products for taking family snapshots with. The earliest impact is likely to be on photoprocessors, with digital processors appearing to produce print outs direct from digital cameras or via a personal computer (PC).