Zooming in on growth

When Kanika Gupta, a Delhi-based teenager wanted a digital compact camera, her mother took her to Jumbo Electronics at the Great India Place mall in Noida.

Gone are the days when a photo studio was the first port of call to buy a camera. Large-format retail (LFR) is fast emerging as a big sales channel, says Sajjan Kumar, General Manager, Imaging Division of Nikon. “Photo studios and consumer electronic stores together account for 80-85 per cent of our sales, but LFR is already 10-12 per cent and growing very fast,” he says.

Growing availability and accessibility is just one of the reasons for the stupendous growth that the digital camera market is seeing in India. In October-December 2010 alone, unit sales recorded 69 per cent year-on-year growth, according to CyberMedia Research's India Quarterly Digital Camera Market Review .

According to Anirban Banerjee, Associate Vice-President, Research and Advisory Services, CyberMedia Research, “Multiple market forces have converged to drive the rise in sales of digital cameras in the India market. The most important ones are — increase in availability and sharing of digital content, increase in ‘real' spending power and reduction in average selling values.”

The Distribution Dividend

Nikon's Sajjan Kumar points out how in the last 3-4 years the imaging industry in India has seen an explosion in the distribution channels. This has happened, he says, because a lot of companies such as Sony, Samsung and Panasonic, which are big in the durables space, started using the consumer electronics stores (CES) as their distribution channels for cameras. Imaging majors such as Nikon and Canon, which had been relying on the photographic channels, followed suit and now according to Kumar, a sizeable chunk of sales comes from CES.

In 2009, Nikon had just 5 per cent share of the market in the point-and-shoot compacts. Today, with initiatives such as Cool Pix zones within retail showrooms, it has over 20 per cent and is at second spot in the category behind Sony.

Sony India's General Manager (Marketing), Tadato Kimura, also credits the wide sales network (over 5,000 channel partners) as one of the factors for Sony's top position in the compact camera segment.

Nikon's Kumar thinks it is a critical factor and reveals how it is putting great efforts in beefing up channel reach. “We have 30 distributors. Last year, we had 1,800 channel partners — this year we have increased it to 2,500 channel partners,” he says.

Tier-2 and 3 cities are also coming into focus. According to Nikhil Khurana, Lead Analyst — India Digital Products Research, CyberMedia Research, the move to B and C towns is expected to help the penetration of digital cameras rise from the current level (below 5 per cent) to 10 per cent by 2015.

While online is a significant sales channel in developed markets, in India, Kumar says it yields less than 600-700 units for Nikon.

Breaking the grey market bugbear

Till recently, the grey market had the biggest market share of digital cameras. For instance, an IDC research in 2007 showed that one in four Indians shopped for their cameras in the grey market. At that time, the price difference was nearly 30 per cent.

“We have now reduced the price difference to 10 per cent,” says Sajjan Kumar. Camera vendors are also now throwing in a lot of freebies by way of camera bags or SD cards to attract the customer.

Social network push

The frenzy to shoot and then post pictures on social networking sites such as Facebook has jogged camera sales along nicely. It's the mobile phone camera that really ushered in this trend — but the imaging industry has been very quick to capitalise on the trend and ride on it. Mushrooming of photo-sharing sites such as Picasa and Flickr have also helped push sales.

Seasonal Highs and Promotions

Camera vendors say sales of digital compacts peak just before the summer holiday season begins. With competition intensifying in the sub-Rs 10,000 price category, which accounts for 75 per cent of sales, camera vendors have taken to advertising heavily.

“Last summer was our very first TV campaign,” says Kumar. This summer, it has used film star Priyanka Chopra to push its camera with projector capability. “Using a celebrity for this category makes a lot of sense,” says Kumar. Nikon has a Rs 120-crore promotional budget for this year.

Sony too has used a celebrity – Deepika Padukone – for its promotions. Sony's Kimura says, “The total marketing budget for Cyber-shot cameras was Rs 50 crore for FY 2010-11 and total marketing spend for the cameras in the interchangeable lens category is Rs 25 crore by end of FY 2011-12.”

Apart from summer months, the celebration months from Diwali to Christmas are also peak periods of sales, says Sajjan Kumar. This is because, he says, cameras have now become big gifting items.

Blurring categories

The compacts and the DSLRs are two distinct categories in the digital camera market — but tech innovations, and the rising affluence of young Indians together with a growing craze for photography has seen the boundaries blurring.

Take the Nikon D5100 or the D3100 series — which are aimed at novice photographers who want to shoot with higher performance cameras, yet don't want to invest a lot. This is where such cameras, costing Rs 27, 250 or Rs 31,950, fit in neatly. At the top end Nikon's D3X costs as much as Rs 5.23 lakh.

At the other end, compacts, which start at Rs 5,000 or so and go up to Rs 30,000, are getting more and more features added to them. “Latest technologies including 3D and HD are becoming a rage both among viewers and capturers and hence, Sony plans to integrate these technologies increasingly in the compact camera segment,” says Kimura.

To fuel the photography craze further, Nikon opened a school in Gurgaon last year, which has expanded to Mumbai and Kolkata. Each photography class, conducted on weekends, costs Rs 500 but for Nikon camera buyers, it is subsidised at Rs 250.

While the Japan earthquake is bound to create some ripples in the high-growth camera market, it's clearly not stopping the imaging industry from aiming high in India.

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