Business

Photography stores shrink on taxes, technology

Four remain open in Iowa, down from peak of 25

Certified photographic consultant T.J. Ravn helps Bret Atwood pick between two zoom lenses at Photo Pro in Cedar Rapids on Wednesday, June 27, 2018. (Cliff Jette/The Gazette)
Certified photographic consultant T.J. Ravn helps Bret Atwood pick between two zoom lenses at Photo Pro in Cedar Rapids on Wednesday, June 27, 2018. (Cliff Jette/The Gazette)
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Dave Johnson, who’s owned Photo Pro in Cedar Rapids for 37 years, believes last month’s Supreme Court decision requiring online businesses to collect sales tax should be a game changer.

“I can’t wait for it to be implemented,” Johnson said. “We don’t have many issues when someone comes along and buys a $750 Canon Rebel. You get above $1,500 to $2,000 and people want to avoid paying the sales tax.

“Legally, people are supposed to declare the sale tax and pay it, but who does? The states are losing billions of dollars and we wonder why our roads are broken and education budgets have to be cut.”

His concern for stores like his is not unfounded. Technology, which revolutionized photography with digital cameras, also has played a major role in sharply reducing the number of photo supply retailers.

At its peak in the 1970s, there were more than two dozen photography stores in Iowa — many of them locally owned and operated. That number has fallen to four — Photo Pro in Cedar Rapids, the Camera Corner in Davenport, Christian Photo in Des Moines and Alexander’s Photo in West Des Moines.

Customers who previously bought cameras, film and related products at brick-and-mortar stores either use their phones to take pictures — and don’t need film — or have taken advantage of technology to shop on the internet. That had allowed them to skip paying sales tax unless the online business had a physical presence, such as a store, distribution center or warehouse, in their state.

The U.S. Supreme Court on June 21 ruled by a 5 to 4 vote that states can require online businesses to collect sales tax even regardless if they have an actual presence in the state. The decision, in a case brought by Wayfair Inc., Overstock.com and Newegg Inc. challenging a South Dakota law, was hailed by Main Street businesses who have complained about the lack of a level playing field.

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Ted Doty, owner of the Camera Corner in Davenport, said the Supreme Court ruling does not go far enough.

“I had someone come into my store recently who wanted to buy a $12,686 lens for his camera,” Doty said. “He wanted to know what I could do about the seven percent sales tax and I told him that I needed to collect it or go to prison.

“He said that he would buy it online and save the $888 of sale tax.”

Doty favors a 12 percent “convenience tax” on all online purchases.

”That would cover the state’s five percent sales tax as well as all local option taxes,” he said. “The additional money would be distributed to the cities, schools and other taxing bodies, but the question is, would they repeal the local option taxes?

“My experience with government is that they never repeal any tax, so the answer is probably ‘No.’”

The U.S. Supreme Court ruling came too late for two Eastern Iowa photographic retailers.

University Photo in Iowa City closed earlier this year after 48 years as a camera retailer. Roger Christian, who along with his wife bought the business in 1984, cited the impact of shoppers buying online and difficulty attracting foot traffic downtown as reasons for shuttering the business.

Porter Camera Store in Cedar Falls shut down in February 2013 just a year shy of its 100th anniversary. The company, which had experienced declining sales of cameras and lenses, also closed a location in northeast Cedar Rapids that it opened in 2005 after buying a former Linn Photo store.

While the sales tax issue has been cited in the closing of some photography stores in Iowa, other factors have played a role.

“Decades ago, manufacturers had some ethics and integrity and would not sell directly to the public. They sold through the distribution network,” said Steve Alexander of Alexander’s Photo in West Des Moines.

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“Now the manufacturers are selling directly to the public. How does that support the customer and how does it support the distribution network and local stores?

“We have become the demonstration site for people to come in and put their hands on the equipment” — a practice known as showrooming in the retail industry. “Then they can buy it on the internet without paying sales tax and get free shipping.”

Johnson said camera manufacturers offer rebates that reduce the price to compete with online sales. But retailers need to file paperwork and wait two months to receive only 80 percent of the rebate.

“We make a 10 percent margin (profit) on most cameras,” he said. “On a Canon lens, we only make 5 percent. I lose 3 percent to a credit card, so my profit just went out with the credit card fee.

“When they run a rebate on some Canon lenses, I am convinced that I’m paying customers to take them out the front door.”

Another factor that has reduced store foot traffic and potential sales is the availability of product information on the internet. While customers in the past relied on the knowledge of photography store owners and their employees when buying a camera or accessories, today they can look online.

But, Johnson said, “Even though the world has changed, we feel like there is still opportunity. We build relationships with our customers.

“We try to educate them so they can make the best choice for their particular needs. That is really a different experience from buying it online.”

Alexander gives out his personal cellphone number as part of the store’s customer support.

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“We like answering questions and serving our customers, guiding them and helping them make the best choice,” he said. “When you buy your camera here, I support you every day from anywhere in the world. I’ve received calls from every continent as well as emails.”

The advent of smartphones that take increasingly higher quality photos has slashed sales of cameras.

The entire market — cameras with interchangeable lenses (digital single lens reflex) and non-interchangeable lenses (point and shoot) — saw an 80 percent drop from 2010 to 2017, according to the Camera and Imaging Products Association.

With that statistic in mind, Iowa photography store owners have worked to diversify their income streams beyond camera sales.

“Last year, we put up a new website and started doing equipment rental, which people have embraced,” Johnson said. “We have added some new offerings to our lab and installed digital printing kiosks for our customers.

“We are getting ready to expand the number of kiosks from six to eight. We also are going to rearrange the store so we can offer photography classes on site.”

Alexander has continued to offer paper and chemistry for black-and-white photography. He also operates an in-store lab to process black-and-white photos and handle custom work.

“We offer photo restoration, scanning slides and movies for modernizing through digital preservation, and photography instruction,” Alexander said. “We have always had rental equipment, so we have a dedicated rental program that does not sell equipment, meaning it will always be available.

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“We have operated a used equipment consignment sales program for 30 years. We are increasing exponentially our purchase and resale of used equipment.”

Doty said the Camera Corner, which he purchased in 2013, has added prepress work for business cards.

“We also do banners and we are just finishing up some vehicle decals,” Doty said. “We found that the large print shops don’t want to do a small order, so we kind of specialize in those orders.

“The large print shops want to do a minimum of 500 business cards, where we will print 24.

“We get a premium price for it, but the customer is better off not throwing away half of the cards.”

The Camera Corner also continues to operate an in-house color film and photo processing lab, a rarity that most photography retailers phased out with the widespread adoption of digital photography.

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