September 13th, 2010

PMA Magazine – Ritz Revitalized

A year after bankruptcy, the Ritz Camera & Image team looks ahead

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Cover Story
By Gary Pageau

There’s no question the Ritz Camera name evokes powerful emotion. Whether as a partner or a competitor, the Beltsville, Md.-based photo-specialty chain commands a formidable presence in the United States. In this exclusive feature from PMA Magazine – Connecting the Imaging Communities, the chain’s new management team discusses the future.

Ritz Camera, PMA Canada Expo and 6Sight conference headline the new issue.

The Ritz Camera troubles were well-documented throughout the extensive bankruptcy process in 2009. Its troubles began in February 2009, when it was more than $60 million in debt to Nikon, Canon U.S.A. Inc., Fujifilm Corp., and other creditors. Ritz closed about half of its 800 camera shops and all 130 of its Boater’s World Marine Centers stores.

At the time, Ritz Camera chairman and CEO David Ritz said: “The extensive 2008 downturn in business, beginning with $5 gas prices earlier in the year, a tightening in consumer credit on new boat purchases, and less dollars to be spent on luxury items, had an early, large, negative impact on our Boater’s World division.”

Eventually, the chain was put up for auction; an investor group led by David Ritz outbid other suitors. The “new” Ritz Camera now goes by Ritz Camera & Image (RCI). Initially, the chain closed 375 stores, but it has also reopened others.

Since then, RCI has brought in Stephen LaMastra, a former Wolf Camera executive with experience turning around retail chains, as company president. Ritz remains chairman and CEO of the new RCI.

“Steve is really responsible for running the business, taking on what we have conceptualized as the new imaging world we are living in,” says Ritz. “We don’t really see it is a camera store anymore; today, it’s all about imaging.”

Even at one-third the size of the previous incarnation, RCI is in most major markets.

“We’re in what I would call large- to mid-size markets around the country,” says Ritz. “Whether that is Dallas; Houston; Boston; Washington, D.C.; San Francisco; Atlanta; or Charlotte, N.C., we believe we have very strong coverage, not only in the hardgoods side of our business, but also the imaging side. As we look at the world going forward today in photography, you can’t be a camera store anymore; it’s more about what we call ourselves – Ritz Camera and Image.”

Ritz adds cameras are still a big part of business for the company, but so are many other products customers can use to take, make, share, or display pictures. These products range from digital frames to televisions and from smart phones to netbooks.

“Anybody who has been in what we used to call the camera business and also was in the one-hour processing business really has two businesses,” says Ritz. “They have a hardgoods business and a service business. We are about making imaging products for sharing, displaying, and saving, whether that’s photo books, prints, enlargements, calendars, photo gifts, etc.

“In our case, as a national chain with approximately 300 stores across the country, we offer all these products, not just prints, in one hour, whether you come into the store to our print bars or go online to www.ritzpix.com. We have created what we think is a pretty sophisticated, complex network, so you can order any of these products online, pick a store, and go pick them up in an hour.”

Ritz explains it’s about being relevant to the digital world today.

“Today, it is really all about content, and we are still lucky to be in the photo/imaging business because it’s really about personal content,” he says. “We’re not the book business or the music business, which have pre-produced products in large quantities. We still are, if you will, a publisher of everybody’s personal work. That’s the business we’re in.”

LaMastra agrees: “In the first year of RCI, we’ve grown imaging products as a percentage of our total revenue fairly dramatically. We’ll continue to do that over the next couple of years. Imaging will increasingly be a larger and larger portion of what we do in terms of overall revenue. We’re also growing our hardgoods sales, but imaging is growing at a faster rate.”

While LaMastra’s last position with Raving Brands involved reviving restaurants for later sale, he says he’s at RCI for the long haul.

“Our core objective here is to create value,” says LaMastra. “We’ve stabilized the business, and we’re growing again. [RCI] is taking a leadership role. David Ritz and our owners, as well as the rest of the management team and I, are committed for the long haul.”

LaMastra has reorganized some of the top management, including bringing in Raving Brands executives, but he has meshed them with experienced Ritz staff.

This new thinking has led to an expansion of services, including the testing of a new “On-Location” photo service, through which RCI staff employees can be booked to provide on-site photography and portrait services.

Another change is the high-profile relationship with Verizon Wireless; while Ritz Camera has offered cell phones for many years, LaMastra says the Verizon arrangement is much more strategic.

“We believe, over the next few years, imaging will be an increasingly important element of the mobile experience for customers, and mobile devices will be an increasing part of our business,” says LaMastra.

A new print model

Richard Tranchida, executive vice president of RCI, admits maintaining equivalent services across a broad retail network will be a challenge. Unlike analog photography, where the number of output sizes and surfaces were comparatively few, digital photography provides a multitude of options for the consumer. That presents a challenge to retailers, especially one with 300 locations committed to offering services in one hour.

“It is a challenge at times,” says Tranchida. “Every store can do wide-format printing, video transfer to DVD, laminating and mounting of the wide-format prints, and D-and-P.”

An Atlanta, Ga.-based central provides fulfillment services for those products not produced in-store. “We’ve taken books to another dimension in the past year, offering our premium books that have a cover with an image on it and inkjet printing,” says Tranchida. “We also have an inkjet-quality, lay-flat book.”

Another piece of the developing RCI service portfolio is the RitzPix.com business, now headed up by Peter Tahmin, vice president of RitzPix.com and Online Retail. Tahmin is an industry veteran, most recently with Ritz Interactive. What’s the difference between RCI and Ritz Interactive?

“Ritz Interactive is a completely separate legal entity selling hardgoods to consumers online,” explains Tahmin. “RitzPix and RitzPix.com are part of RCI, the retail chain. [RitzPix.com] is a website dedicated to consumers, allowing them to share, display, and save their images. That gives them the ability to create albums; and from those albums, consumers can email photos, build photo books, create greeting cards, order prints, and order all the photographic products we offer online.

“Consumers have the option of going into the 300 retail stores and picking those products up, or, if they would like, we’ll produce them out of our Atlanta wholesale facility and mail them to the customer,” he says.

Part of the expanded vision of RitzPix.com, however, is to be more a part of a consumer’s social experience, says Tahmin, adding the new Access Photo service provides links to Facebook photos and Picasa. This is part of Tahmin’s goal to make accessing photos on RitzPix easier than ever.

“We want to enable our consumers to get their images easily and pull them into their accounts,” he explains. “Behavior is always changing, but one of the things that struck me is people have images on a number of different sites. Wouldn’t it be nice to enable customers to begin to pull all of those images into a common repository, and we thought it would be fitting to be RitzPix.com.”

Ritz also offers customers free storage through its LifeSync desktop application.

Driving customers to retail is an objective of RitzPix, and this now includes handhelds. RCI provides access to RitzPix via iPhone and Android apps and is also looking to tie into location-specific services like foursquare.

The next step, according to Tahmin, is to become more involved with consumers’ lives. “We’re doing lots of things to suggest to consumers that special occasions can be commemorated in a photo book or a distinct product. We’re constantly looking at the site, looking at occasions, and looking at how and why people use images to try and present different ideas to them to instill some different thought processes.”

Tranchida agrees.

“Every day, somebody’s having a birthday or celebrating an anniversary,” he says. “In essence, could [RCI] be making gifts every day? We’ve had quite a bit of success making 5-by-7 photo cards with our toner machines. We never thought the card business could be a 12 month-a-year business; I’m now convinced it certainly can be and will be. People buy cards every day, don’t they?

“There is almost a reason to give a gift every day besides Mother’s Day, Father’s Day, graduations, and certainly the holiday time,” says Tranchida. “We’re going to take a little stronger shot at the gifting products that are not necessarily photos and see what we can do with that.”

The new paradigm

The reinvention of RCI faces some reality checks that David Ritz agrees are table stakes in the retail environment today.

“My own personal opinion is: It is not feasible in the world of digital photography to have the number of stores that existed in the film world,” he says. “In the film world, it was all about convenience and about having locations that catered to ‘X’ number of thousands of people because they had film. Today, that isn’t true. In most cases, retail today is about bringing people to destinations. You don’t have to have 60 stores in a city; 20 stores in a city probably will suffice – in the right spots.”


“We, as an industry, are in a new, golden era of imaging”

Stephen M. LaMastra, President, Ritz Camera & Image


One thing that hasn’t changed is the need for constant innovation in the photo category, according to Ritz, despite the fact the recession has impacted consumer spending.

“You have to have a demonstrably different feature to get people to go from what is already a good product – whether it’s a television, a camera, or a phone – to a new, better product. I don’t think they will just go buy it because it’s the newest thing out there. One of the examples is the new, smaller, interchangeable lens cameras from the last few months. Some consumers are looking at that [category] and saying, ‘This is demonstrably better than the old $300 point-and-shoot camera because it does have better lenses, which means a better picture.’

“I don’t think a person would buy another point-and-shoot camera because it has two more megapixels, which probably did happen four or five years ago. That’s why manufacturers have to come up with products that are demonstrably different.”

Being “demonstrably different” is also the objective of RCI, according to LaMastra, citing the online presence of the company as an example.

“RitzPix.com is unique in the industry, both from an imaging standpoint and from an online imaging standpoint, in that at RitzPix.com, we offer an incredibly deep and broad offering of imaging products, nearly all of which are available in one hour in the store,” says LaMastra. “That is pretty powerful. That is what differentiates us. That’s not something our competitors can replicate.”

He adds, however, the company has a broad vision of the future.

“Any product or device used to create, share, display, or save an image is something we need to be interested in as a company, something we need to offer to our customers, and something we need to be educated on to be able to engage our customer base,” says LaMastra. “When you look at our stores, cameras are obviously a centerpiece of that – always have been and always will be. We’re more committed to the camera business than Ritz has ever been; but at the same time, we realize operating in this ‘imaging umbrella’ we operate under has given us the opportunity to move forward into other product classes – from televisions to netbooks, to the Verizon Wireless relationship, to all the cool, new products available in the video category. These are all products people use to access and share their images, and those are businesses we want to be in. Our stores have a holistic approach to imaging.”

For LaMastra, the revitalization of RCI coincides with the opportunity for the photo-specialty channel as a whole.

“We believe, for the foreseeable future, there’s a place for an imaging specialty retailer like RCI and others,” he proclaims. “There’s always a place out there connecting consumers with their treasured images and their treasured memories. We have no doubt there’s a place for RCI over the long term and there’s a place for imaging specialty retail.

“In addition, we do know 5-10 years from now, when you come into a Ritz Camera & Image store, it will look different than today. Our stores look very different today than even a year or two ago. With a leadership role in the industry, it’s our job to make sure we stay out in front of technology.

“We, as an industry, are in a new, golden era of imaging,” says LaMastra. “I have no doubt about that. There will always be a powerful connection between our customers, both now and in the future, and their memories, their lives, and their images. People will always want to share, display, and save those images because what they’re really doing is sharing, displaying, and saving their cherished memories. And as long as there’s that connection, people will want what we in the imaging business have to offer.”

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