Ritz Camera filed for bankruptcy again on Friday. The company exited its previous bankruptcy less than three years ago. A double dip into the courts like this is nicknamed a Chapter 22 (because it's two Chapter 11s; lawyers aren't very funny, are they?). In the new proposed restructuring, the company plans to close about half of its 265 store locations across the country. Once again Nikon is listed as one of the primary creditors, as were Sony and Fujifilm.
Ritz is not a small operation, with US$250+ million in annual overall sales (though that's less than a million per store), and last time they declared bankruptcy it left NikonUSA on the hook for millions of dollars of accounts receivable, some of which apparently was eventually collected back as returned inventory.
While some might posit that it is declining sales that are the root of the problem--we've had other small camera stores and multi-store operations declare bankruptcy in the US in the last year--the real culprit appears to be lease arrangements. As margins tightened and the high-profit processing and printing businesses dwindled, locked-in leases on commercial property have proven to be a thorn for quite a few dealers.
Curiously, in my region the two main local stores have expanded and opened new stores across the Lehigh Valley. Still, you have to run a very tight ship to operate a profitable camera store at the moment. I'll give one example: those flyers with all those instant rebates. For Canon Powershots, the net to the dealer is negative on many models, meaning that they pay Canon more than the cash they'll take in from the customer and from Canon's eventual payment to the dealer. So, for the privilege of being able to sell the more expensive models in the line, you have to take a bath on the low end.
Which makes me scratch my head. Because if you look at Canon's compact camera market share (Powershots), it's under pressure and going down. You think there might be a connection? Why would a dealer order those models (other than being forced to)? Cause meet effect.
The camera business has gotten crazy in the last five years, partly because the days of high digit sales growth that disguise real problems are long gone. Some, like Fujifilm and Panasonic, have pinned their hopes on distribution outside one or more of the big camera markets (Japan, US, Europe). Others are squeezing every dollar they can. Some have just left the keys under the mat and left the building (HP, Kodak).
Unfortunately, it's not going to get better. There simply isn't enough room for the number of companies that all claim they want a significant share of the camera market. You can't squeeze the retail chain (and Big Box and online for that matter) much harder than they've already been. I'm surprised that Best Buy hasn't cut back the square footage of the camera displays, but then again, the weakness in camera sales isn't any worse than they're experiencing in some other key categories in the store, so what would they replace the footage with? A bigger Apple mini-store? (Ugh. It just struck me: Sony and Samsung mini-stores.)
I've written it before this whole slow-down scenario became writ large: we'll have a Big Two or Three winners (choose between Canon, Nikon, Samsung, and Sony) and the rest will be forced to go rogue or go under. One of those others will go all-direct (online) I'll bet. The right communicating, programmable, modular camera would find a nice rogue niche, too.
One thing is clear. The days of piling boxes of consumer electronics onto the floors of stores is over. Cherish the stores you have.