July/August 2007� Graphic impressions

Harold’s Photo Centers, Inc. began printing photo-based

greeting cards on xerographic digital printers in the mid-

1990s, to advance the eight-store chain’s regional photo

finishing leadership.

Barksdale School Portraits acquired its first xerographic

digital press last year to expand its yearbook printing busi-

ness as a complement to traditional school portrait busi-

ness.

And just this year, Filmet brought in the first xerographic

digital press for its professional image processing business,

to broaden its line of photo specialty products.

These are just three of the many, recent local decisions

that quickly are creating a new market space for digital color printing

of photo specialty products, which include just about any alternative to

a standard, one-sided print on photographic paper. The most popular

today are photo cards and specialty prints, such as enlargements, framed

photos and collages. The specialty products projected for the greatest

growth, according to market-research firm InfoTrends: photo books and

calendars.

Driven by increased use of digital cameras, the new

market space cuts across traditional industry segments

such as retail and professional imaging services, com-

mercial photography and commercial printing. It addresses

an opportunity for specialty products in North America

that is projected to grow at an impressive compound

annual growth rate of 24.5 percent through 2010, accord-

ing InfoTrends.

A closer look at the transformations under way at

Harold’s, Filmet and Barksdale follows, offering insights

into this rapidly developing opportunity.

Retailer Becomes PrinterTraditional film processing peaked at Harold’s in 2003, according to

Bob Hanson, president, and fourth-generation family owner of the Sioux

Falls, South Dakota-based chain with stores in South Dakota and Iowa.

“The transition to digital happened more quickly than people predicted,”

he said. Film-processing revenue subsequently has dropped by about 20

percent annually, to less than half the peak volume.

But Harold’s had a head start on producing the specialty products cus-

tomers now demand. Having long relied upon photo finishing as its cash

cow, supplemented by portraits and merchandise sales, Harold’s expanded

its finishing services in the mid-1990s by experimenting with xerographic

digital printing of greeting cards. When film processing nose-dived,

Hanson said, “We jumped in (to digital printing) with both feet.”

From 2005 to 2006, digital print volume doubled, leading Harold’s to

add a second Xerox DocuColor® 250 Digital Color Printer/Copier, invest

in a variety of finishing and binding equipment and remake a warehouse

into a print production facility. “Now we’re a short-run print shop,” he

said, as well as a retail photo center.

Harold’s customers use in-store kiosks or the firm’s Web site to submit

digital files and order a range of photo products. All-occasion greeting

cards are the most popular. Calendars, once outsourced, are now printed

more profitably in house. And books are the next — and current — big

growth item, he said.

Digital Printing Is Transforming the Business of

Processing PhotosConvergence of Digital Photography and Digital Printing

Creates an Exciting, High-Growth Market Space for Digitally Printed Photo Products

by Brian Segnit

Brian Segnit

Harold’s Photo Centers’ eight retail locations — including this one in Sioux Falls, South Dakota —

are “going digital.”

July/August 2007 Graphic impressions �

Film processing is so lucrative that digital

printing alone isn’t replacing the revenue lost

from film processing. But growth in portraits

and merchandise sales coupled with the upside

of new photo specialty products are keeping the

chain competitive, Hanson said.

Bridging Two MarketsFilmet of Tarentum, Pennsylvania, near

Pittsburgh, long-ago morphed from film proces-

sor to printer. Formed in 1910 as a commercial

photo lab, today the firm’s display printing

division has 20 presses and accounts for about

75 percent of the company’s business.

On the photo side, Filmet processes images

for about 1,000 professional photographers,

and provides specialty services that include

greeting cards, acrylic ornaments and framing.

To improve those offerings, Filmet acquired its

first digital press for imaging services in May, a

Xerox iGen3® 110 Digital Production Press.

“A lot of people today, especially young kids,

look for more of a magazine-like print quality in

their photos,” said Michael Hoffay, vice presi-

dent of marketing and sales, Filmet. “They want

a baseball card that looks like the real thing, not something shiny. High

school seniors want memory books with all of their senior photos, not just

an 8x10. Even wedding albums are moving to more of a contemporary

look that ties to the whole scrap-booking trend.”

That’s where digital printing plays. “The iGen3 image quality has more

of that offset-print look that our customers want,” Hoffay said. It also has

strengths that are critical in the display business, including its capability to

handle a wide range of plastics, vinyl and thick card stocks, and a large,

14.3x22.5-inch sheet size, for point-of-purchase displays.

But most of the digital press’s volume will be dedicated to the photo

business, Hoffay said. Existing applications like proof books and sports

posters are being transitioned to digital printing, lowering costs, and new

applications, such as photo books, should be on-stream when the firm

acquires binding equipment later in the year, he said. Anticipating higher

volumes, Filmet’s plant already has added a second shift.

Portrait Maker to Service Provider

A new path to success at Barksdale School

Portraits, Aston, Pennsylvania, near Philadelphia,

is to provide not only photos, but also photo-based

services, such as ID cards and yearbook printing.

Barksdale School Portraits, which began operation

in 1922 as what is believed to be the oldest school

portrait company in service, today counts about 600

elementary and middle schools as customers.

“A few years ago, we began outsourced printing

of school yearbooks, not so much as a money-

maker, but to keep the competition out of our

accounts,” said Wayne Barksdale, director of

marketing and fourth-generation member of the

company’s founding family. “We recognized pret-

ty quickly that mistakes put our whole business at

risk. We needed more control of our destiny.”

So Barksdale acquired a Xerox iGen3 press

in August 2006. Yearbook production quickly

grew from 55 outsourced projects in 2005-2006

to 97 in-house jobs this year. Barksdale expects

to produce 200 yearbooks next year, and 500 the

following year.

A new twist is that the company has developed

additional iGen3 applications, which are the basis

for its new, services approach. A personalized mailer delivers photo proofs

to students more elegantly and at considerable savings over the previous

windowed-envelop package. Desk-blotter-style calendars and digitally

printed photo ID cards add to the menu of services Barksdale offers. “We

want to be providing four or five items to our customers, so we become

more valuable as a partner,” Barksdale said.

So far, the strategy is paying off with a strong customer retention record

and growth of about 30 percent last year, which “is practically unheard

of in this industry,” Barksdale said.

True, but in the emerging market space for digitally printed photo

specialty products in which Barksdale, Filmet and Harold’s now play,

such growth rates are closer to the norm. ■

Brian Segnit is manager, Digital Photo and Book Printing Marketing

of the Worldwide Graphic Communications Industry, Xerox Corporation.

He can be reached at brian.segnit@xerox.com.

These three yearbook covers and the inside page on the upper right were printed by Barksdale School Portraits

on its Xerox iGen3® 110 Digital Production Press. In-house production gives Barksdale more control,

enabling the business to grow.

Among the photo specialty products Filmet produces on its Xerox iGen3 Press are

sports cards, greeting cards, calendars and puzzles.

Harold’s produces greeting cards year round on its Xerox xerographic digital printers for occasions such as births, weddings, holidays and graduations — and for simply saying, “Thank you.”

Barksdale School Portraits produces calendar desk blotters in two sizes — 14.33”X20.5”

and 12”X16” — on its Xerox iGen3 Press.