kshapero
South Florida Man
Why Leica Is Opening So Many Stores
By Cotten Timberlake on June 14, 2012
Selling a $27,000 camera is no snap—especially when that hefty price doesn’t even include the lens. For Leica Camera, the challenge is compounded by the fact that it has lost more than a third of its U.S. dealers, who have fallen victim to competition from the likes of Best Buy (BBY) and Costco Wholesale (COST). So at a time when an increasing number of brands are bolstering their ability to sell online, the German camera maker is rolling out its own stores to woo serious photography buffs.
Leica’s first U.S. outlet opened in Washington, D.C., last month, and the company is rolling out two more stores in Miami and New York this summer. By March 2016, Leica says its current roster of 37 stores will have grown to 200 worldwide. They’ll stock a range of models from the entry-level $700 V-Lux 40 point-and-shoot camera to the top-of-the-line $27,000 S2. “It is a high-risk strategy,” says Walter Loeb, president of retail consulting firm Loeb Associates. “Leica needs to establish itself more directly in the U.S., but it’s a small market for high-priced cameras, and it’s highly competitive.”
Leica is opening stores at a time when U.S. consumers are buying fewer cameras, given the quality and convenience of taking photos with smartphones such as Apple (AAPL)’s iPhone. Last year, Americans spent $6.2 billion on cameras, down 8.3 percent from 2010, the Consumer Electronics Association estimates. The average price per camera was $173. Leica says it has less than 1 percent of the U.S. market, while Canon (CAJ) and Nikon together command 42 percent, says researcher Mintel.
The retail rollout is the latest step in Chief Executive Officer Alfred Schopf’s turnaround strategy for the Solms (Germany)-based company. In 2004 the company dodged bankruptcy; two years later, French luxury handbag maker Hermès International (RMS)sold its 36 percent stake. Sales have since recovered, as Leica managed to merge its engineering prowess with new digital technology.
Leica’s new stores are luxurious and minimalist, like its cameras. The outlets feature black leather furniture from Germany and gray tiles from Italy. The sole color accent: the red featured in the Leica logo. Stores include a retail space, a studio area to demonstrate products, and a gallery—to exhibit photographs shot with Leica cameras—that can be converted into a lecture room for the company’s Leica Akademie photography courses. “We stand for a certain image of quality, and this is something we wanted to show in this environment,” says Schopf, who wouldn’t say how much Leica is spending on the stores. “We are showing a dedication to the quality of photography.”
Leica’s compact cameras, introduced in 1925, were revolutionary compared with the heavy plate cameras of the day. In 1932, about 90,000 Leicas were in use; by 1961, a million. Leica cameras, popular with photojournalists, went on to capture many an indelible image, from Alberto Korda’s portrait of Che Guevara to Huynh Cong Ut’s “Napalm Girl” to Jim Marshall’s iconic photo of Janis Joplin with a bottle of Southern Comfort.
By the time it introduced its first digital compact in 1998, Leica had lost customers to Canon and Nikon. Sales rallied after it introduced digital versions of its 1950s-era M camera, and today digital models bring more than 90 percent of sales. Revenues last year surged 57 percent, to €248.8 million ($309.7 million), while income leapt tenfold. Managers says the stores will draw more customers. Says Roland Wolff, director of corporate retail for Leica’s U.S. arm: “We want to share what people can do with the product.”
The bottom line: Mimicking luxury clothing designers, pricey camera maker Leica will open 160 of its own stores by 2016 to sell the allure of photography.
By Cotten Timberlake on June 14, 2012
Selling a $27,000 camera is no snap—especially when that hefty price doesn’t even include the lens. For Leica Camera, the challenge is compounded by the fact that it has lost more than a third of its U.S. dealers, who have fallen victim to competition from the likes of Best Buy (BBY) and Costco Wholesale (COST). So at a time when an increasing number of brands are bolstering their ability to sell online, the German camera maker is rolling out its own stores to woo serious photography buffs.
Leica’s first U.S. outlet opened in Washington, D.C., last month, and the company is rolling out two more stores in Miami and New York this summer. By March 2016, Leica says its current roster of 37 stores will have grown to 200 worldwide. They’ll stock a range of models from the entry-level $700 V-Lux 40 point-and-shoot camera to the top-of-the-line $27,000 S2. “It is a high-risk strategy,” says Walter Loeb, president of retail consulting firm Loeb Associates. “Leica needs to establish itself more directly in the U.S., but it’s a small market for high-priced cameras, and it’s highly competitive.”
Leica is opening stores at a time when U.S. consumers are buying fewer cameras, given the quality and convenience of taking photos with smartphones such as Apple (AAPL)’s iPhone. Last year, Americans spent $6.2 billion on cameras, down 8.3 percent from 2010, the Consumer Electronics Association estimates. The average price per camera was $173. Leica says it has less than 1 percent of the U.S. market, while Canon (CAJ) and Nikon together command 42 percent, says researcher Mintel.
The retail rollout is the latest step in Chief Executive Officer Alfred Schopf’s turnaround strategy for the Solms (Germany)-based company. In 2004 the company dodged bankruptcy; two years later, French luxury handbag maker Hermès International (RMS)sold its 36 percent stake. Sales have since recovered, as Leica managed to merge its engineering prowess with new digital technology.
Leica’s new stores are luxurious and minimalist, like its cameras. The outlets feature black leather furniture from Germany and gray tiles from Italy. The sole color accent: the red featured in the Leica logo. Stores include a retail space, a studio area to demonstrate products, and a gallery—to exhibit photographs shot with Leica cameras—that can be converted into a lecture room for the company’s Leica Akademie photography courses. “We stand for a certain image of quality, and this is something we wanted to show in this environment,” says Schopf, who wouldn’t say how much Leica is spending on the stores. “We are showing a dedication to the quality of photography.”
Leica’s compact cameras, introduced in 1925, were revolutionary compared with the heavy plate cameras of the day. In 1932, about 90,000 Leicas were in use; by 1961, a million. Leica cameras, popular with photojournalists, went on to capture many an indelible image, from Alberto Korda’s portrait of Che Guevara to Huynh Cong Ut’s “Napalm Girl” to Jim Marshall’s iconic photo of Janis Joplin with a bottle of Southern Comfort.
By the time it introduced its first digital compact in 1998, Leica had lost customers to Canon and Nikon. Sales rallied after it introduced digital versions of its 1950s-era M camera, and today digital models bring more than 90 percent of sales. Revenues last year surged 57 percent, to €248.8 million ($309.7 million), while income leapt tenfold. Managers says the stores will draw more customers. Says Roland Wolff, director of corporate retail for Leica’s U.S. arm: “We want to share what people can do with the product.”
The bottom line: Mimicking luxury clothing designers, pricey camera maker Leica will open 160 of its own stores by 2016 to sell the allure of photography.
Sell the allure of photography? I think it's the allure of the red dot and brand name.
kshapero
South Florida Man
Well it is all out of my league but anything that keeps them in business is OK with me. That is if it does.
Mackinaw
Think Different
The Apple Store has been a resounding success for Apple, BMW-exclusive dealers have worked for decades for BMW, so why shouldn't Leica-only stores work for Leica?
Jim B.
Jim B.
Jockos
Well-known
I don't get why they need stores when they don't build anything anyways.
The wait time for the products is ridiculous, maybe they should focus on production instead of events, marketing and stores.
The wait time for the products is ridiculous, maybe they should focus on production instead of events, marketing and stores.
Keith
The best camera is one that still works!
I think this is the way a company can protect it's products from poor retailing ... particularly if they are at the top end of the market.
I remember walking into a largish Brisbane camera store several years ago and spotting an M8 on their shelves ... I had just bought one so it caught my eye. When I asked the salesman what he thought of the M8 his response was ... "You'd have to be an idiot to pay that much money for something like that!" These people had a Leica logo in their shop but obviously were more entrenched in the Canon Nikon thing because that's where the salesman tried to take me straight after his remark ... to the cabinet with all the DSLR gear from those two manufacturers.
I remember walking into a largish Brisbane camera store several years ago and spotting an M8 on their shelves ... I had just bought one so it caught my eye. When I asked the salesman what he thought of the M8 his response was ... "You'd have to be an idiot to pay that much money for something like that!" These people had a Leica logo in their shop but obviously were more entrenched in the Canon Nikon thing because that's where the salesman tried to take me straight after his remark ... to the cabinet with all the DSLR gear from those two manufacturers.
paradoxbox
Well-known
I am not sure that this strategy is going to pay off. Time will tell, but I suspect there will be some firings a few years down the road when this doesn't pay off.
Leica used to sell an experience.
I have a lot of CEO and exec friends here in Japan. One of them is an exec at Harley Davidson Japan which is just establishing itself here. He mentioned to me that HD motorcycles are basically inferior to its competitors in one way or another - could be price point, speed, handling, size, useability, etc. If you think about it, it's hard to understand why anyone would buy an HD motorcycle!
But even with those shortcomings, people still buy HD motorcycles because they like the idea and experience of riding a big loud bike into the sunset wearing shades and leather and some saddlebags full of gear.
Leica used to have this kind of marketing in the 50's and 60's. They need to try it again.
Leica used to sell an experience.
I have a lot of CEO and exec friends here in Japan. One of them is an exec at Harley Davidson Japan which is just establishing itself here. He mentioned to me that HD motorcycles are basically inferior to its competitors in one way or another - could be price point, speed, handling, size, useability, etc. If you think about it, it's hard to understand why anyone would buy an HD motorcycle!
But even with those shortcomings, people still buy HD motorcycles because they like the idea and experience of riding a big loud bike into the sunset wearing shades and leather and some saddlebags full of gear.
Leica used to have this kind of marketing in the 50's and 60's. They need to try it again.
paulfish4570
Veteran
i think leica IS using the HD model. modern HD stores (there seems to be one in every third county in the usa) are plush as far as motorcycle stores go, with really good service.
dcsang
Canadian & Not A Dentist
I think this could work as well.
I just look at all the other "high end" products out there. When I was in France, I think it was the place that probably "invented" those high end brand stores - Coach, Louis Vuitton, Hermes etc. - it seemed every manufacturer had their own retail distribution arm.
As it's been said here already, Apple has perfected it.
I think what Leica wants to do is control the entire process from manufacturing, to distribution, to the retail sale. With that level of control, you can likely expect a certain "experience" to be sold to you (as was stated above in the comments) as well.
Mind you, these will be boutique stores and you're likely going to have low traffic but the people who go in there will be either gawkers or buyers. I don't see a lot of "hmm.. maybe I'll buy it.. " type folks wandering in.
Cheers,
Dave
I just look at all the other "high end" products out there. When I was in France, I think it was the place that probably "invented" those high end brand stores - Coach, Louis Vuitton, Hermes etc. - it seemed every manufacturer had their own retail distribution arm.
As it's been said here already, Apple has perfected it.
I think what Leica wants to do is control the entire process from manufacturing, to distribution, to the retail sale. With that level of control, you can likely expect a certain "experience" to be sold to you (as was stated above in the comments) as well.
Mind you, these will be boutique stores and you're likely going to have low traffic but the people who go in there will be either gawkers or buyers. I don't see a lot of "hmm.. maybe I'll buy it.. " type folks wandering in.
Cheers,
Dave
benlees
Well-known
Indeed! I think you might be right. Had a very similar experience in a local shop. I wanted to touch an M9 and they said "oh yeah, great camera but you can get similar quality for something 1/3 of the price over here!" pointing to their selection of Canon and Nikon.
bean_counter
Well-known
HD and Apple work because they're already "elite" cultural icons; EVERYBODY knows who they are and what the products are, even if they don't use them. They draw in more people who want the 'experience'. While the product is more expensive, it's not prohibitive for the masses to strive toward.
My thinking is that this is more akin to high-end fashion. Appealing to and pampering the vanity of those who can afford it. Prices are so far above the alternatives that it's simply out of reach for all but a few.
My thinking is that this is more akin to high-end fashion. Appealing to and pampering the vanity of those who can afford it. Prices are so far above the alternatives that it's simply out of reach for all but a few.
If I was the owner of that store, I'd be pissed. That is unless the store knew you were not going to buy.
sanmich
Veteran
Why?
Don't mean to start a fight here, but if Leica is using a luxury line to keep in business and continue to supply gear to the mere mortal (me) good stuff at high but, at the end, affordable, price, I would be really happy.
from their last moves, it seems they simply want to compete in the luxury goods business, and get rid of the rest.
I'm not angry or anything (maybe disappointed), but realistically, THAT leica company is just irrelevant to me (and I guess quite some others), and seing their products just being discontinued, or priced as they are now is just the same for me.
paulfish4570
Veteran
luxury is the point, i think. one could buy an HD sportster for much less than a monochrom ...
Lss
Well-known
Most sales people recommend whatever gives them (not the store, the sales person) the best cut. Well, most of those who recommend something.
At least you got an honest advice.
The problem Leica has is that there are not many independent camera dealers left. There used to be several photo stores in Austin, and more than one Leica dealer. Now there is just one store, and only three Leica dealers in the entire state of Texas.
For this to work, Leica must fix their availability problems.
For this to work, Leica must fix their availability problems.
Stefan Wood
Established
Wouldn't the real risk come from not having full stock? I'm thinking the lenses. They don't mass produce, and with more stores, how will they jack up the supply?
EdwardKaraa
Well-known
I think it's a very sensible strategy. I would have more confidence buying from a Leica boutique. I assume they should have priority in product allocation and servicing. Given the choice I would certainly buy from them.