Ritz Cameras, once the largest photography chain in the US with over 1300 stores, filed for bankruptcy in 2009. The shift from analog to digital cameras disrupted Ritz's business model which relied on film sales and photofinishing services with high margins. Digital cameras have lower margins and are mainly sold in large retail stores instead of specialty camera shops. Similarly, transistor radios and pocket calculators disrupted existing sales channels, rendering obsolete the stores specialized in previous technologies. The demise of Ritz was due to the disruptive nature of digital technology, not management failure.
2. Christian Sandström holds a PhD from Chalmers
University of Technology, Sweden. He writes and speaks
about disruptive innovation and technological change.
3.
4.
5. The explosion
30
25
20
15
10
5
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Number of film and digital cameras
sold in the United States
6. The shift from analogue to
digital imaging created
huge problems for many
camera manufacturers.
28. … And made good money on its
photofinishing business.
29. The shift to digital imaging had two
unpleasant consequences for Ritz.
30. 1. People consumed less and less film and
thus, the photofinishing business became
very unprofitable.
31. 2. The margins are much lower on electronic
goods and their value diminishes rapidly.
Therefore you need huge volumes, you can’t
afford inventories and you can’t afford to have
a lot of employees providing service.
34. These stores can sell the large volumes
that are required to make a profit, they
have a lower overhead count, don’t make
money on film and are masters of supply
chain management.
35. The economics are simply not in favour
of smaller chains like Ritz anymore.
39. In order to sell transistor radios, Sony
had to create a new channel. The
Radio stores made money on
repairing furniture radios and were
therefore not interested in selling
small, cheap transistor radios which
did not generate service revenues.