This blog is somewhat of a follow up to Gurpreet’s most recent post, inspired by her exploration of the “Showrooming” phenomena in the world of retail (see also: Heard About “Showrooming”?). Within her article, Gurpreet included stats from the digital camera and laptop markets to illustrate her point on the growing trend of retailers offering store exclusive SKUs in their quest to corral “Showrooming.” While crunching camera data for Gurpreet’s article, I got to thinking more about the nature of these exclusive SKUs, what benefits they bring to shoppers, and which retailers/camera manufacturers have historically realized their unique potential.
While Gurpreet accurately observes that the number of exclusive SKUs in retail is increasing, within the digital camera market, the practice of providing exclusive SKUs to retailers is definitely not a new concept. Store-specific SKUs have long been a tradition for many camera makers, and introduce a number of benefits to the involved companies, as well as common shoppers. So what’s the big deal with store-exclusive digital cameras?
Exclusives cannot easily be compared to those placed at other stores.
Perhaps the biggest reason to stock unique SKUs, and the greatest combatant against “Showrooming,” is the average shopper’s inability to directly compare similar models across retail or the internet. This factor somewhat levels the playing field for those who do research and those who simply shop. The majority of exclusive camera SKUs are identical to those offered at other outlets, although feature product names/part numbers that we have never heard of, thus thwarting consumers who have done their research. By altering the base model, chains such as Best Buy, Costco, Target, and Walmart have historically enforced separate discount paths with their exclusives, which makes them appear more competitive by offing a 16-megapixel camera at a lower price point, for example, and helps them better adapt to the elasticity of various brands.
This practice began as somewhat of a seasonal activity, with companies like Kodak and Nikon traditionally introducing Black Friday SKUs that only remain for the holiday season. Perhaps the best examples of how impactful these camera models can be come from camera heavyweight Nikon. In 2009, 2010, and 2011 Nikon brought exclusive cameras to Target including a CoolPix S203, a CoolPix S205, and a CoolPix L105, respectively. These cameras were derivatives of aging members of Nikon’s line, offered at current shelf prices ($139, $139, $199), but with massive discounts that led to very aggressive net prices ($79, $79, $99). Shoppers’ perceived value and impulse drove these unheard of models to achieve sales numbers higher than the majority of cameras that spent an entire year within the channel!
Exclusives are offered in unique colors.
Notoriously catering to Best Buy, brands such as Canon and Sony will designate one specific color of a camera as a chain exclusive. While typically not discounted independently from other retailers, the ability to offer an exclusive color should not be underestimated, as purchases are often made based on shoppers’ desire for stylish camera gear. Best Buy loudly broadcasts “Exclusive Color” in its advertising, as a way to deliberately draw shoppers away from its competitors based on its exclusive offering of a model in pink or blue, for example.
Exclusives come with added incentives.
Exclusive camera models often come packaged as a bundle or with an added incentive for shoppers. Walmart is the first retailer that comes to mind, as the majority of its exclusive camera SKUs come with coupon packs for 100 free 4×6 prints from its 1 hour photo lab.
These coupons are worth $15 and give shoppers an increased level of value compared to purchasing a similar camera elsewhere. Among others, FujiFilm’s Walmart-exclusive cameras promote these coupons, which notably benefit both them and the retailer, as Walmart utilizes FujiFilm photo-processing equipment within its lab!
Another form of bundles are the single-box solutions that appear at certain chains. These include a camera paired with additional necessities such as memory cards, straps, and cases. Kodak was historically strong in this area, often times offering a free case, a AA-battery charger with cameras at OfficeMax, and a float-strap with its waterproof camera this year at Sears, while other chains featured the camera alone for the same price.
Exclusives provide brands with a foothold at new retailers.
Another major benefit of exclusive SKUs are the growth opportunities that they offer for various brands. A retailer that has historically shied away from a certain camera maker may be tempted to experiment with an exclusive offering. Walmart again illustrates this point, as Panasonic is ushered into the chain this year for the first time in 4 years on the back of an exclusive ultra-compact superzoom. Walmart’s $159 Lumix DMCSZ02 is a derivative of Panasonic’s Lumix DMCSZ1 ($179) and represents a non-US model that is not available to shoppers outside of the mass merchant.
Industry underdog General Imaging was similarly dealt a major victory this year with its first ever placement at Walmart with the $119 X400, an exclusive camera that breathes new life into an older member of its line (2010’s X5 = $149). FujiFilm has historically been very successful at leveraging its S-series bridge cameras as exclusives, with derivative models found at chains such as Best Buy and Staples, in addition to Walmart, who welcomed back the brand after a 1 year absence with the $199 FinePix S2940 last year (S2950 = $229). Not only do these types of placements grow brands’ retail product counts, but they also provide an avenue for global models that were not initially intended for widespread US distribution.
How everyday purchases may be exclusively influenced.
With the growing and undeniable appeal of stocking store-exclusive camera models, it seems logical for the same reasoning/benefits to carry over into product categories outside of cameras and consumer electronics as a whole.
One of the most dynamic elements of my job as Camera Analyst here at gap intelligence is our weekly retail store visits. As a huge Star Wars fan, one of my favorite things to do while visiting retail is to briefly steal away to the toy aisle, just to take a peek at which Star Wars toys are on the shelf. While I did just admit to collecting toys, I must add (defensively) that my scope is strictly limited to Astromech droids, i.e. the different color variants of R2-D2s. In my quest to “find the droids I’m looking for”, I am always doing research and remain on the lookout for unique models, although often times I feel driven to purchase multi-packs containing figures that I really don’t want, just to get one R2 unit.
While on a recent visit to Walmart, I came across a rarity, a dedicated Astromech droid multi-pack in a wild variety of colors that I had no knowledge of! This represented a perfectly catered Star Wars find that I had never imagined, never heard of, never seen online, nor done any research on… it was a Walmart exclusive!