Nowadays Elizabeth Street in Melbourne’s CBD could be likened to the “golden mile” of camera stores and the competition is fierce. Within a stone’s throw of Michaels is Ted’s, Camera House, and JB’s camera store. Michaels has largely dealt with this competition by consolidating its efforts into one location rather than dividing its key personnel and stock holdings between several outlets. The result – Michaels boasts a floor space of 2200 square metres, which is equivalent to five specialty camera stores. The store contains a larger than usual range of photographic equipment, a team of experts that have a wealth of knowledge in photography, a museum with an extensive range of photographic artefacts and seminar rooms for its photography courses.
All of these efforts haven’t gone unnoticed. As well as having a landmark photography store with a world-renowned museum, Michaels has twice gained recognition as “Australian Photographic Dealer of the Year”.
To find out more, The ARA Retailer’s Terry Strates went out to speak with fourth generation retailer Peter Michael and discussed what makes his business so distinctive.
Hi Peter. Thanks for your time. Can I start off by asking you what the effect has been having camera stores such as Ted’s, The Camera House etc in the same shopping precinct as Michaels, as well as a range of other retailers selling some of the same products in the area? How has Michaels managed to remain competitive against these players?
Peter: In Elizabeth Street there is a concentration of camera stores. It actually works in our favour because anyone who’s serious about buying a camera will come to this area to get a variety of advice, pricing, and service which gives prospective customers a choice.
Now…the market is segmented into customers who are merely buying product based upon price and those customers who require service and knowledge. Many of our competitors are in the price and volume market, whereas we have historically built our reputation on service and knowledge.
Although there are competitors also positioned in the service and knowledge segment, our retail environment, our school, our museum, and our enormous range of products, and the knowledge of our staff all send out the message that we’ve been established in the camera business for a long time and we know what we’re doing. As a result of that the business has grown enormously over the years.
Michaels is a large single store operation. You’ve said before that having one large store as opposed to several outlets has been integral to Michaels philosophy of expertise and specialisation. What has been the advantage of running one large specialty store?
Peter: One of the advantages of running a large single store operation is we don’t have to split our stock up between multiple stores, the knowledge (75 staff members) and management are in one location. This means that customers aren’t getting second-hand information or having to wait for answers because there will always be someone working within the store who can help them.
What have been some of the disadvantages/challenges of running one large retail specialty store? Peter: The key disadvantage of having a single store is that there will always be some people who are not able to come into the city. In saying that, our sales by phone, the net and mail are significant.
With large corporate chains increasingly dominating the retail scene, what do you see as some of the challenges facing small to medium retail business? How have you dealt with these challenges?
Peter: The challenge comes in the fact that they focus on price only, and their geographic distribution. Once again, we’ve dealt with this by focusing on our core business and being careful to concentrate on our area of knowledge.
We have a prominent retail location with a huge amount of window space. We could have easily added products lines remotely related to our business, but we’ve concentrated on imaging and imaging products. By diluting our core business, we would potentially confuse our customers who might ask themselves, “What do they stand for? Are they a camera store? Telephone store? Electronics store?”
I think it’s important to concentrate on what you do well but it’s also important to adapt to the changing market because products change and people will demand those products. We recently started a new division in our business selling professional lighting equipment, but we didn’t go into it until we had the knowledgeable trained staff, because the last thing we want is a customer asking questions about a product line we stock and our staff saying “umm… I’m not sure”. It doesn’t position us well as experts and we potentially could lose that clientele if we don’t deliver on what we promote.
What has been the impact of the proliferation of digital cameras onto the market? With even more retailers stocking these products, how has Michaels had to adapt to this change in the market?
Peter: The market has grown and the number of retailers stocking cameras has expanded. Sadly, the number of traditional camera stores has markedly declined. This leaves only the medium to large specialist retailers in the market. A portion of the market has gone to the mass retailers and bulk store retailers. Suppliers have seen an opportunity to broaden their distribution and have capitalised on this opportunity. You can now pretty much go into one of these mass retailers and get many of the same cameras as we sell here.
That’s all good and well, but what customers won’t get are the lenses, flashguns, filters, tripods, microphones, editing equipment, camera service, and accessories as well as the advice from people who actually know something about them. So that knowledge part is what glues all these bits and pieces together because without the knowledge all you have are components. We emphasise that we sell the ability to create great images, not just equipment.
In line with that philosophy and to assist customers in understanding how to use digital cameras you now run a number of photography and media courses. Can you tell me a little about these?
Peter: We started the courses 16 years ago. They really differentiate us because our customers are receiving more than just a piece of technology. There’s a massive difference between just being able to turn on a camera and to simply point and shoot, versus being able to get the full benefit from it such as transferring and editing images and being able to shoot sports photography or portraits. There’s a whole host of things you can do with your camera which you could learn, and it’s easier to listen to experts who can answer questions as opposed to reading an instruction book.
The problem with instruction booklets today is that they don’t necessarily cover everything that should be covered and they are not always that easy to follow. We find that once our customers do a course and are able to grasp the functions of their camera as well as the fundamentals of photography, they benefit immensely and can create far better images.
So many people buy their camera just before they travel and then they come back and do the course. What they usually tell us once they’ve completed the course is that they wish they had have done the course before they went away.
We’re quite unique in having courses with a properly structured system, top lecturers and a comprehensive syllabus. It gives us a competitive edge because we provide every customer who buys a camera with a complimentary course to ensure they get the most out of their equipment. And, because they come in here not only to buy their camera, they visit the museum, become familiar with our staff, and this confirms that we are the true specialists in video and photographic imaging.
Have your courses developed a reputation among photographers?
Peter: Not really. Our courses are generally aimed at amateur photographers who have got their first camera or digital camera. The courses aim to teach them how to get the best use out of their new camera. It’s been a real winner with our customers, because the technology in cameras these days is so complex and a little guidance goes a long way.
Where did the idea of the camera museum come from? Was it part of a positioning strategy for Michaels? Has the museum’s presence significantly affected the retail business? In what way?
Peter: The museum was something that evolved organically. We started collecting cameras in the 1950s. We received trade-ins of cameras with different makes, shapes and features and today we have over 8000 pieces.
At any one time, our museum displays about 2000 of these pieces featuring cameras dating back to the late 1800s through to early digital cameras. The museum also displays lenses, movie cameras and projectors, darkroom equipment, microscopes and a vast array of literature on photography. We used to house the museum in an area away from most of the public. We anticipated that when we had enough space to provide a dedicated area, this would be something of great interest and would serve to further differentiate our store. It has become a real drawcard, is unique in Australia and is becoming a Melbourne landmark. The museum further confirms to the public that we have been established a very long time and that we are serious about the business that we are in. We have been quite surprised by the large numbers of visitors that it has attracted.
What direction do you see Michaels taking in the future? Do you plan to pass the business on to the next generation?
Peter: My children are still too young to determine what they want to do, but the opportunity would be there should they want to take it up.
In the short term as far as the business goes, we just want to build on what we’ve got and make the most of this landmark property. We’ve just expanded to four times the size of what we were. With a floor space of 2200 square metres, it will take us a few years to run out of room.
We have recently developed a unique new website that should be up and running by the time this article goes to print. The site features an array of vivid photographic images taken by our staff which is a reflection of what is possible with the products sold in our store. Many of which have been taken myself.
This is in line with our philosophy of selling an imaging solution, not photographic hardware alone. We are passionate about photography and we want others to get excited about it too. Our goal is for people to get great images with the same pleasure out of photography that we get from it. If we achieve that, then we are doing what we set out to do.
Well Peter, your passion for photography and your business is certainly evident. Thanks again for your time and best of luck in future ventures.
Peter: Thank you.
