Discounted Cameras Points To Shrinking DSLR Market

I was browsing through the news today when I came across the headlines that almost all camera manufacturers were offering significant discounts in the United States amidst the strong dollar, slow camera sales and upcoming Black Friday. Frankly, Black Friday or any other festive days are just opportunities for brands like Canon and Nikon to clear their surplus inventory. The question we would like to tackle today is, ‘Why are Camera Manufacturers clearing their inventory?’

We wrote a series of articles on camera trends which you might like to read below before continuing on with this article.

Shrinking DSLR Market : The Background

It Started With A Bang

Everyone thought the Digital Single Lens Reflex (or better known as DSLR) would be here to stay. Even when its replacement, the mirrorless camera was first launched by Olympus with their Olympus Pen, many passionate DSLR users and those who worked in the industry felt that the DSLR market would be impervious to change. After all, back in 2010 the demand for these large cameras with expensive lenses were the rage. Everyone wanted one and carrying around a DSLR in town was a cool thing to do. Plus, it was rewarding to upload beautiful photos taken with fast lenses which gave beautiful bokeh.

Sales of cameras at one time was like moving hot cakes. Back then camera dealers like YL Camera and FotoEasyCam were so popular that there would be a queue even before the shop opens. And even if you were to visit in the afternoon, the place would be crowded.

There were many reasons to be happy if you were in the industry, as sales of interchangeable lens cameras and their accessories was increasing every quarter. Even the second-hand market for lenses and camera bodies had a demand, especially among the budget conscious hobbyist who did not want to spend so much on the latest, brand new item. Shops that specialised in these segments of the market kept seeing a great demand and growth.

And Then Came The Problems

The rapid growth of the camera market led to a bunch of problems. Namely, anyone could approach a wholesaler of Canon or Nikon and obtain stocks or even better, they could import grey sets in from Hong Kong.  Now, that’s not bad except that it causes some shopping malls to have multiple camera shops selling the same thing; Mid Valley even had seven camera shops at one stage, leading to price wars between the various stores as customers walk around the mall while comparing prices. Some stores even banned suppliers from selling to other stores.

It was common to find dealers selling cameras and lenses for a price of RM 8000 with only a margin of RM 50 (or 1-2% margin) due to the competitive nature of the business. In times of desperation to hit their target and snuff out competition, some shops even sell at 0% margin, only to rely on the 1-2% incentive that Canon and Nikon gave for hitting their target for the year. The rise in production capabilities China also caused imitation and copycat brands to surface.

In hindsight, Canon and Nikon could have regulated the market better (like Apple) to better preserve the longevity of the market, rather than trying to squeeze in more sales per quarter.

And Surprising Decline

No one expected the decline to come nor to come drastically. I recall having meals with different camera shop owners about two years back, when I asked them about their feelings on the market. And most of them said that they were waiting for the market to turnaround. A few months later, they mentioned that the market did not pick up but they were still hopeful that it would pick up the next month or so. But the market turnaround never came.

Dealers who previously upsized, had to downsize. There were cases of dealers closing shops over night and going missing with the stocks and debts of the company, while one even committed suicide. Knowing that the market was bad, some dealers even made the distributors go on a price war with each other.

‘How much can you give this to me?’ asked one dealer in Penang
I looked at my cost and said, ‘150 is the least I can do’
After all, going below RM 150 means I would be losing money. And that camera accessory was going for RM 450 at retail value. The shop owner looked at it for awhile, narrowed his eyes and then said,
‘I will take it for 95. Take it or leave it’
‘But 95 is way below my cost!’ I protested
‘Well, but XXXX and YYYY are selling me these items for this price’
And he showed me their invoice. Indeed, the other distributors were so desperate that they sold way below cost. Was it stupidity or desperation, I wouldn’t know

But is camera and photography as a whole losing its popularity or is it just something we at TechGarage are making up? Is it worse in Malaysia than in countries like US and United Kingdom? If yes, why and what is causing the lack of purchases for cameras? Again, we fire up Google Trends to see if the trends matches our theory.

DSLR Trends 1
The trend for Malaysia saw a dramatic rise and drop in interest for DSLR and photography in general. Take a look at the graph for Nikon (red).
DSLR Trends 2
Singapore’s DSLR sales has been steady since 2013, though interest in Nikon continued to drop until mid 2014.
DSLR Trends 3
The DSLR’s popularity doesn’t seem to have reduced, though interest in Nikon as dropped.

If you noticed the trends above, interest in the DSLR in Malaysia and Singapore dropped dramatically from 2011 till 2013, with Malaysia’s graph looking more worse. The interest in Nikon shows a dramatic drop between those years as well, with Malaysia looking more pronounced. The United States remains as a DSLR stronghold however, showing a steady, but slight drop from 2011 till 2013.

 

Shrinking DSLR Market : CIPA Report

Another good way to check the validity for camera sales trends would be to check out CIPA, the Camera & Imaging Products Association that tabulates sales of cameras worldwide.

DSLR Trends 9
The Global trend for DSLR and mirrorless cameras doesn’t look good. Notice that mirrorless sales has not improved since January 2012, while DSLR sales worldwide dropped almost 50% (1.6 million vs 700k)
DSLR Trends 10
The table doesn’t show the full picture for Malaysia, as it includes places where the DSLR market are growing (e.g.: India, Indonesia and possibly China)

If you have noticed CIPA’s month to month report, global sales of the DSLR has been on the downward trends worldwide since 2012. At its peak in June 2012, camera sales volume was 1.6 million units worldwide. However, after hitting another peak in October 2013, DSLR sales experienced a massive drop in sales in January this year, moving only six hundred thousand units instead.

Camera sales to Asia has shown a decrease except in countries like India and Indonesia which showed improvements instead (via Google Trends). As such, due to these countries’ large population base, improving economies and the fact that the DSLR camera might be a new thing to some of them, have seen them gain an increase in sales.

But since CIPA does not differentiate between the annual camera sales of the country, we will need to remove the countries mentioned to get a clearer view of the market in Malaysia.

 

Shrinking DSLR Market : Dying Photography Brands

We have looked into the popularity of cameras and Nikon (not Canon because Canon sells more than just cameras in Malaysia. Don’t forget the awesome printers). But how about the brands? If this theory was to hold water, photography accessories should drop in popularity as well. Let us consult our big brother, Mr. Google Trend.

DSLR Trends 13
Even major photography accessories brands are not spared the drop in popularity. Are people no longer keen?

Over here, we have listed down Lowepro and Manfrotto, two household names among photographers. We have also thrown in Phottix and Yongnuo, popular radio trigger manufacturers from Hong Kong, and Kenko, the filter company. We have left out Hoya and B+W, because the search engine will pick up Black and White or BMW instead of B+W; Hoya because there is Hoya Optical, which makes lenses for spectacles.

You see, the drop in popularity started earlier then the slide for DSLR and Nikon. It was driven by camera shop owners who pushed their customers to buy China brands which they had marked up for a high margin. After all, who would want to sell the customer a RM 500 camera bag for RM 120 margin, when they could get the bag for RM 80 and sell it for RM 400?

In our humble opinion, plain greed negated the massive ad spend of distributors and brand owners as the brands haemorrhaged in terms of popularity and sales.  But at the end of the day, people were just no longer interested in photography.

 

Shrinking DSLR Market : Dead Photography Communities

Another way to gauge the popularity of the market is to gauge how vibrant the community is. After all, if people are keen, the community will flourish. Let us look at three of the largest photography community that graced Malaysia and how popular they have become. We have thrown in the most popular camera online store, Shashinki as well.

DSLR Trends 11
The popularity of the three communities and the online store dropped badly as well. Notice how the graphs correspond to the popularity of the DSLR and Nikon.

At one time, these forums had numbers from hundred to a thousand plus active visitors at any single moment. Even at ungodly hours like 3am, there will still be a bunch of visitors and members trawling the website. However, notice the death of these communities and the dropping traffic for the online store. Never has an industry been so badly hit as the photography industry.

It seems that interest in photography was a trend and similarly, interest in buying camera products. But is interest in these websites dropping because they are already popular, or is it really true that the market no longer exist nor keen for these sites? Let us find out more by firing up Google Trends.

DSLR Trends 12
Websites like Lowyat, Lazada and Lelong remain popular while PhotoMalaysia and Shashinki saw a drastic drop in traffic

Notice that Lowyat (the geeky forum), Lelong (the marketplace) and Lazada (the German company with RM 2 billion in funding) all are seeing massive amounts of interest, way above PhotoMalaysia, ShutterAsia, Photokaki and Shashinki. Also note that Lazada’s popularity has continued rising (yea, we know we’re not there yet).

This points to the fact that the trend doesn’t drop because the website became popular, but conversely the drop comes because the lack of interest. Why did the consumer lose interest in photography and cameras? We will address this in our next post.

 

Shrinking DSLR Market : The Conclusion

The photography market, in particular the DSLR one, has withered. People are no longer keen on buying a brand new DSLR, save for some hard core enthusiast with tons of money in the bank or some professional photographer. To us, it is a sad demise that will keep getting worse.

What do you think about what we have spoken? Let us hear your thoughts below 🙂