Financial reports are usually pretty boring. But when they come with a summary and a Q&A sheet, they can sometimes be quite interesting. They can tell us things about companies and the industry at large that the numbers don’t.
The constant cry of “underestimated demand” from manufacturers since 2020 is starting to wear a little thin. But in Fujifilm’s latest financial report, they pretty much admitted that it’s a shortage made by manufacturers to keep prices and demand high.
Fujifilm is out of stock because it wants to be
There have been many reports about why cameras like the Fujifilm X100VI are still out of stock almost five months after it was announced. And while there is no doubt that the camera is in high demand, it’s a demand of Fujifilm’s making.
The Fujifilm X100VI, specifically, has seen a pretty phenomenal launch. It came to much fanfare and it’s been pretty much sold out as soon as it first hit the store shelves. But Fujifilm has driven the demand through intentional scarcity.
And it seems to be a trend throughout the entire industry.
Before 2020, I don’t remember so many occurrences of companies “underestimating demand”. It almost feels like the very real materials shortage and logistics issues of the plague showed companies that if they restrict the supply, the prices stay high.
Now, it seems to be the norm for most camera companies releasing new cameras and lenses, though. Once or twice a month, some new camera or lens will come from one of the big names like Nikon, Canon, Sony, Fujifilm, etc. and sometimes before the day’s even out we’ve received a notification of shipping delays due to underestimated demand.
But it all seems to be companies trying to create scarcity in order to keep prices high and drive up demand.
Fujifilm wants to be Leica
In Fujifilm’s most recent financial report, and spotted by Fuji Rumors, the Q&A sheet includes a lot of the usual information about the company’s finances and position, but tucked in at the very end is this question from Mr. Shimamoto of Okasan Securities to Fujifilm President & CEO, Teiichi Goto.
Shimamoto [Q]: I have another question about the Imaging. Although your company performed well from January to March, there were some companies, such as Canon, whose performance was difficult due to inventory adjustments. In your camera business, is there any change in the inventory adjustment and market for digital cameras and INSTAX, respectively, this year? I think you have a reasonably strong plan. Can you tell us about your current situation?
Goto [A]: Thanks to your support, our Imaging business has achieved very good results in FY2023, with revenue in the upper JPY400.0 billion range and a profit margin of a little over 21%.
It was particularly strong until Q3. In previous years, the usual pattern was for demand to drop in Q4 after the Christmas season. This time, we introduced various new products before that, and with back orders, we were able to achieve good results in Q4 and achieve such a good full‐year result.
You said that it was an aggressive plan, but other analysts commented that it was somewhat disappointing at the last medium‐term management plan briefing.
The most important point is how much brand strength to create and how to maintain it. Therefore, it would be quite unfortunate to manufacture too much and lower the price. What Fujifilm has been trying to do for a long time is finally coming true now.
One is a camera with features. The GFX series, for example, is equipped with the world’s largest CMOS and has earned tremendous trust from professional users and advanced amateurs. The price is quite high, but customers are still waiting for back orders. The lenses accompanying them are also selling well.
We intend to drive the entire imaging business, including INSTAX, while concentrating on building brand strength and not reducing the value of the properties purchased by our customers. For example, as I say internally, Leica, a well‐known German manufacturer, still maintains a very high value for both their old cameras and the cameras they sell now, and this is our goal. Our goal with mirrorless cameras is to fundamentally change the way Fujifilm has sold cameras in the past.
Shimamoto [Q]: I understand. Let me confirm one point. Is the inventory situation normal?
Goto [A]: Yes.
It’s understandable for a company to not want to drive the price of their own product down, but it’s starting to feel like a lot of manufacturers are taking a bit of a liberty in limiting the amount of product they produce and then blaming the customers.
The humblebrag of “we underestimated demand” creates more demand. It makes people think it’s special and it’s in limited supply. They’re half right. It definitely is in limited supply. But that’s intentional, at least on Fujifilm’s part. Fuji wants to become as exclusive as Leica and be held in the same regard.
I don’t think that’s going to happen, but I wish all of the camera manufacturers would stop playing games – including lotteries. They know exactly how much demand they’re going to get, and the excuse is getting very old.
At least one company has finally come clean. There must be something in the air at the moment. Maybe the others will start to grow a conscience and be more honest with their marketing in the future.
[via Fuji Rumors]
