More and more people I know who get photos printed are using online services rather than in-store kiosk printing. Talking with a work colleague recently he said that doing it online was more convenient than going to a retail shop. You upload your photos, they’re printed and posted to you.
A search on Google shows plenty of businesses promoting photo printing services at highly competitive prices. It’s not an easy space for a start-up given the intense competition from so many national retailers already.
Photo printing works for national retailers because they can use the customer database for marketing other items. Newsagents are less likely to do this.
While I can see photo printing working for some newsagents, I’d expect this to be the minority given the floorspace and other costs and given that major players are already well-established in this space.