Ritz Camera Files for Chapter 11 Bankruptcy Protection

Ed Lee, Alan Bullock and David Haueter
Feb 24, 2009

ritz-logo1InfoTrends predicted in its 2009 Digital Photography Road Map analysis that retailers would be hurt as the digital camera market takes a tumble. Alas, it appears that Ritz Camera will be one of the first victims in 2009.

On Monday, February 23, Ritz Camera announced that it had filed for Chapter 11 bankruptcy protection. This announcement will send ripples across the imaging industry. With almost 800 stores, Ritz Camera is the largest photo specialty retailer in the U.S. The company blames the recession and consumers’ shift to digital photography for part of its losses. Ritz is seeking court permission to obtain $85 million of financing to keep operating while it restructures, and it hopes it may eventually emerge from Chapter 11. We wish them the best of luck.

As a result of this event, winners and losers will emerge. From the near term, here is a partial list as we see it.

  • The immediate losers are those imaging vendors who are owed money. According to the bankruptcy filing, Ritz owes Nikon $26.6 million, Canon $13.7 million, and Fujifilm $4 million. These companies may end up with pennies on the dollar or may even have to write off the whole amount.
  • Ritz Interactive, which is a separate e-commerce company that licenses the Ritz Camera name and runs the RitzCamera.com website, could end up a loser if it does not make it clear to its customers that it is not involved in this bankruptcy filing. News of bankruptcy can scare away some customers. Ritz Camera is a major supplier to RitzCamera.com, so the e-commerce site is going to have to rely on its other suppliers or find new ones.
  • LifePics operates the RitzPix.com online photofinishing site for Ritz Camera, offering mail delivery and print-at-store services. While LifePics’ customer base is diversified across several hundred retailers and more than 20,000 retail storefronts worldwide, InfoTrends believes that Ritz is among its largest retail partners. The loss of Ritz would not be insignificant.
  • There is a Kodak Picture Kiosk in many of the Ritz stores. If Ritz is unable to continue operations, this large installed base of kiosks will be idled, along with the related consumables business.
  • Other losers will be the malls in which Ritz Camera operates. If the company closes its stores, malls who are already suffering from a down economy will have another vacant storefront to fill.

If Ritz Camera closes its doors:

  • The winners will likely be the big retail chains, like Wal-Mart and Best Buy. These retailers very likely have stores located within an easy drive from a Ritz camera location, making it easy for consumers to switch buying locations.
  • Some smaller photo specialty stores may see a slight increase in business, too. Smaller photo specialty stores that may have not had the resources to compete with Ritz Camera in the photofinishing business may be able to pounce on this opportunity, particularly as there are many options now on the market for kiosk and/or dry minilab photofinishing equipment.
  • The online photofinishing business is likely to go to other retailers and established big-name sites such as Kodak Gallery, Shutterfly, and Snapfish.

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