C. Davis Fogg: How digital technology torpedoed a small RI business

The Early Years: It was an exciting time for Deedra and Norman Durocher in 1976. They had an idea: capitalize on Norman’s considerable expertise in photo processing and camera repair by purchasing a small photo shop on Main Street in Wakefield and renaming it Kingston Camera.

Owning their own business, they thought, would give them more control of their lives, and freedom from corporate restraints. With considerable enthusiasm and motivation, and knowing that they were novices at running a retail store, they opened their doors. They were make-it-happen people.

Their business model was fairly simple — take in film, send it to Kodak or another vendor for processing and printing, deliver the prints and sell replacement rolls of film. They also sold a few simple and single-lens-reflex cameras, and a range of accessories such as filters, tripods and frames.

The pictures processed were a slice of life of the community — birthdays, weddings, babies, vacations, holidays, parties and casual gatherings. The guts of the business, the profit-maker, was film and print processing. They had the competitive advantage that any business yearns for — a near monopoly, for their closest competitor was some 13 miles away in East Greenwich. They became a prominent part of the community because of their quality, service and caring staff. The store was a place to lean over the counter and chat about photography — or the weather, for that matter — as long as you wanted.

The Middle Years: To accommodate their successful and growing business, they ultimately moved into a large store in Wakefield’s Quo Vadis shopping plaza. By this time, film processing machines were required to handle the store’s volume and to provide the quick service now demanded by the market. This required a $180,000 investment, a big bite for a small business.

So far, so good. But in 1975, Kodak invented the digital camera, a development that would eventually revolutionize the industry. By 1998, the first point-and-shoot digital cameras were introduced and shortly skyrocketed in popularity to the point that, by the early 2000s, two-thirds of all pictures were taken on them.

This required an additional $380,000 investment in complicated new processing systems that could handle digital memory cards and CDs. The purchase ran Kingston Camera’s debt up to a very dangerous level. It would take a substantial increase in printing volume to justify such a burdensome investment. But the investment initially paid off. Sales grew substantially, and the store employed 16 people, nicely supporting Deedra and Norman. Buoyed by their success, they bought another store in Westerly. Why worry? Things are going well. Right? Wrong.

The Turning Point: The writing was on the wall, faint at first and then in blaring neon. Norman noticed that the business was softening in 2003. In 2004, digital photography had become mainstream, and their volume of business in film processing fell from 150 rolls per day to 50. Rather than get out of the business, the owners kept on with it, through momentum, sales from the portrait studio and the conviction that they could somehow still make the store work.

Then their sales fell rapidly. Drug stores such as CVS and Rite Aid, a few hundred feet from Kingston Camera, got into the business. Mass marketers such as Target and Walmart entered. Prints, cameras and accessories could be ordered at discount online. The crowning blow was when Walmart dropped the price of a print to 19 cents. The cost for Kingston Camera was 19 cents, meaning it could not turn a profit if it matched Walmart.

The End: By 2005, the rolls of film processed per day declined from 50 to 10. By April, the owners couldn’t make payroll. On April 29, 2005, they declared bankruptcy. After settlement, they both went to work for other organizations.

The Lessons: Kingston Camera was torpedoed by factors that can sink any business, large or small — a technological threat, not seeing and acting on early warnings, overwhelming competition, over-expansion and over-capitalization. They were not alone. Kodak and Borders went bankrupt because of their failure to adapt to the digital age.

As Andy Grove, the former CEO of Intel, once said: “Always run paranoid.”

C. Davis Fogg (davis.fogg@gmail.com) is a writer who lives in Wakefield.