WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 1
Clearer vision: Favorable demographics and demand for luxury brands will drive growth
IBISWorld Industry Report 44613 Eye Glasses & Contact Lens Stores in the US June 2014 Sarah Turk
2 About this Industry 17 International Trade 34 Regulation & Policy 2 Industry Definition 18 Business Locations 35 Industry Assistance 2 Main Activities 2 Similar Industries 20 Competitive Landscape 36 Key Statistics 3 Additional Resources 20 Market Share Concentration 36 Industry Data 20 Key Success Factors 36 Annual Change 4 Industry at a Glance 20 Cost Structure Benchmarks 36 Key Ratios 22 Basis of Competition 5 Industry Performance 23 Barriers to Entry 37 Jargon & Glossary 5 Executive Summary 25 Industry Globalization 5 Key External Drivers 7 Current Performance 26 Major Companies 9 Industry Outlook 26 Luxottica Group S.p.A. 11 Industry Life Cycle 27 National Vision Inc. 28 Highmark Inc. 13 Products & Markets 13 Supply Chain 32 Operating Conditions 13 Products & Services 32 Capital Intensity 14 Demand Determinants 33 Technology & Systems 15 Major Markets 33 Revenue Volatility www.ibisworld.com | 1-800-330-3772 | [email protected] WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 2 About this Industry
Industry Definition Establishments in this industry sell and lens processing services. The industry eyeglasses, contact lenses, sunglasses, excludes the manufacture of lenses, online safety eyewear and optical accessories. and mail-order retail of optical goods and These retail stores may also provide fitting sales at optometrists’ offices.
Main Activities The primary activities of this industry are Prescription eyeglass retailing Contact lens retailing Sunglass retailing Optical accessories retailing In-house lens processing Lens grinding
The major products and services in this industry are Contact lenses Eye examinations Frames Prescription lenses and lens treatments Sunglasses
Similar Industries 33911b Glasses & Contact Lens Manufacturing in the US This industry manufactures ophthalmic goods, including eyeglass frames, lenses and contact lenses. The industry also produces sunglasses and goggles.
42346 Glasses & Contacts Wholesaling in the US This industry distributes professional equipment, instruments and goods that retailers and optometrists sell or prescribe.
62132 Optometrists in the US Optometrists provide eye examinations to prescribe eyeglasses and contact lenses. They may also sell and fit prescription eyeglasses, contact lenses and sunglasses.
45411a E-Commerce & Online Auctions in the US This industry includes online retailers of eyeglasses, contact lenses and non-prescription eyewear.
45411b Mail Order in the US This industry includes retailers of eyeglasses, contact lenses and sunglasses via mail-order. WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 3
About this Industry
Additional Resources For additional information on this industry www.aoa.org American Optometric Association www.nei.nih.gov National Eye Institute www.thevisioncouncil.org The Vision Council www.census.gov US Census Bureau
IBISWorld writes over 700 US industry reports, which are updated up to four times a year. To see all reports, go to www.ibisworld.com WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 4 Industry at a Glance Eye Glasses & Contact Lens Stores in 2014
Key Statistics Revenue Annual Growth 09-14 Annual Growth 14-19 Snapshot $9.7bn 1.6% 2.5% Profit Wages Businesses $486.8m $2.3bn 7,403
Revenue vs. employment growth Consumer confidence index Market Share Luxottica Group 10 30
S.p.A. 15 49.5% 5 0
National Vision 0 −15 Inc. % change % change −30 9.5% −5 −45 Highmark Inc. −10 −60 8.8% Year 06 08 10 12 14 16 18 20 Year 08 10 12 14 16 18 20 Revenue Employment SOURCE: WWW.IBISWORLD.COM p. 26 Products and services segmentation (2014) 7.9% Key External Drivers Sunglasses Consumer Confidence Index 13.8% Contact lenses 32.4% Number of adults Frames aged 50 and older Demand from optometrists Federal funding for Medicare and Medicaid 17.2% Percentage of households Eye examinations with at least one computer External competition for the Eye Glasses & Contact Lens Stores industry p. 5 28.7% Prescription lenses and lens treatments SOURCE:SOURCE: WWW.IBISWORLD.COM WWW.IBISWORLD.COM
Industry Structure Life Cycle Stage Mature Regulation Level Medium Revenue Volatility Low Technology Change Medium Capital Intensity Low Barriers to Entry Medium Industry Assistance Low Industry Globalization Medium Concentration Level Medium Competition Level Medium
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 36 WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 5 Industry Performance Executive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage
Executive The Eye Glasses and Contact Lens Stores midforties to have issues seeing clearly Summary industry has exhibited growth due to at close distances. Furthermore, 60.0% strong demand for eyewear products from of industry revenue stems from sales of the burgeoning elderly population. While prescription glasses and frames, which many budget-conscious consumers have older individuals are more likely to use, lowered their demand for brand-name compared with younger demographics. eyewear and put off nonmedical eyewear During the five years to 2014, industry purchases, which has cut into revenue revenue is expected to grow at an growth, need-based demand for annualized rate of 1.6% to $9.7 billion, prescription glasses has buoyed the including 1.1% revenue growth in 2014. industry. Nevertheless, eye glasses and This increase can be attributed to a rise contact lens stores have grappled with in the number of optometrist visits, generating sales volumes in a mature which has caused more consumers to be market. Due to most potential consumers wary of changes in their eye already owning corrective lenses, new prescriptions, thus stimulating demand for eyewear from eye glasses and contact lens stores. Profit is The industry’s major market of senior adults expected to contract, from 6.1% of industry revenue in 2009 to 5.0% in will grow, driving industry demand 2014, due to high raw material prices, such as petroleum, which has made it sales have typically depended on changes more expensive for retailers to in an individual’s prescription or new purchase plastic lenses and frames. technologies, such as lowering individuals’ Over the five years to 2019, industry lens-related discomfort. However, while revenue is forecast to grow at an many individuals have received corrective annualized rate of 2.5% to $11.0 billion. eye surgery, which has constrained Many individuals will revitalize their demand for industry products, corrective expenditure on eye glasses and contact eye surgery does not correct presbyopia, lenses, particularly high-margin, brand- thus bolstering demand for prescription name eyewear. To attract time-strapped eyewear from individuals with age-related consumers, many eye glasses and contact vision impairment. lens stores will increasingly invest in The aging population has supported innovative technologies, such as lens demand for prescription eye glasses due measurement tools for stores that offer to age-related vision ailments, such as in-house ophthalmologists, optometrists presbyopia, which causes adults in their and licensed opticians.
Key External Drivers Consumer Confidence Index Number of adults aged 50 and older As the Consumer Confidence Index rises, An estimated 88.0% of individuals aged 55 this trend typically reflects more and older require prescription eye glasses or consumers revitalizing their discretionary reading glasses. According to Prevent spending. As a result, more consumers Blindness America, the four leading eye will purchase high-quality, brand-name diseases that affect Americans are related to eye glasses and contact lenses. The age, which has stimulated demand for eye Consumer Confidence Index is expected glasses and contact lenses from this to increase over 2014, indicating a demographic. The number of adults aged 50 potential opportunity for the industry. and older is expected to increase during 2014. WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 6
Industry Performance
Key External Drivers Demand from optometrists has been an increase in reports of continued Many patients that visit their optometrist eyestrain and vision complications. require some form of corrective eye glasses; However, while there is a lack of thus, growth in the number of optometrist definitive evidence that computer visits indicates an increase in the number of work affects eyesight, it ensures that potential customers for industry retailers. As people who suffer from a natural optometrists examine more patients, deterioration in eyesight are more demand for eye glasses and contact lenses is aware of the issue. With regular eye expected to increase in 2014. monitoring and eyesight tests, the understanding of the need for eyewear Federal funding for Medicare has increased. The percentage of and Medicaid households with at least one computer Government insurance programs, is expected to increase slowly including Medicare and Medicaid, fund a during 2014. significant portion of medical care in the United States. Although Medicare does External competition for the Eye not cover routine eye examinations, it Glasses & Contact Lens Stores industry covers the costs of cataract surgery as well Competition from warehouse stores and as basic frames and lenses for patients supercenters has increased during the post-surgery. As a result, as more patients past five years as these alternative receive federal funding, they typically will retailers have included eye glasses and demand more eye care products. Federal contact lenses in their product funding for Medicare and Medicaid is portfolio. Additionally, competition expected to increase during 2014. from web-based retailers has hampered demand for industry products from Percentage of households with traditional brick-and-mortar retailers. at least one computer External competition is expected to With a rising number of people using increase in 2014, thus posing as a computers at work and home, there potential threat to the industry.
Consumer Confidence Index Number of adults aged 50 and older
40 3.0
20 2.5
0 2.0 −20 % change % change 1.5 −40
−60 1.0 Year 08 10 12 14 16 18 20 Year 08 10 12 14 16 18 20
SOURCE: WWW.IBISWORLD.COM WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 7
Industry Performance
During the past five years, eye glasses and Current contact lens stores have benefited from the Industry revenue burgeoning elderly population stimulating Performance 6 demand for eyewear. Typically, older individuals have poor eyesight, thus the 4
aging of the population has supported 2 demand for eye glasses and contact lenses. Furthermore, as more individuals have 0
worked in visually intense environments, % change −2 the prevalence of myopia, or nearsightedness, has likely increased. For −4 example, according to the American −6 Optometric Association, about 30.0% of the Year 06 08 10 12 14 16 18 20 US population has myopia, which may be linked to the visual stress of many computer SOURCE: WWW.IBISWORLD.COM oriented work environments. Other factors, such as diabetes-related from 6.1% of industry revenue in 2009 to vision issues, have stimulated demand for 5.0% in 2014, due to rising oil prices vision correction products. During the five translating into high purchasing costs for years to 2014, industry revenue is expected plastic lenses and frames, coupled with to grow at an annualized rate of 1.6% to many alternative retailers or wholesalers, $9.7 billion; this includes revenue growth of such as Costco, including industry products 1.1% in 2014. Profit is expected to decline, in their portfolio.
Changes in While per capita disposable income has incited many alternative retailers to offer purchasing behavior revitalized over the period, many consumers low-cost industry products in order to are still wary of their discretionary capture a larger portion of demand. expenditures, particularly for nonmedical The number of visits to ophthalmologists, eyewear. Many consumers have either optometrists and licensed opticians has purchased fewer brand-name corrective determined demand for industry products, vision products and sunglasses, or have due to these visits translating to more looked toward alternative retailers that consumers being aware of changes in their provide lower priced industry products. As eye prescription. Prior to the five-year consumers increasingly focused on value, period, the recession constrained the competition has intensified, thanks to many number of optometrist visits, as an mass merchants and warehouses, such as estimated 52.0% of respondents to a survey Walmart and Costco, also offering in-store by the American Optometric Association cut optical departments. Although industry their optometrist visits to lower their retailers have maintained a majority share healthcare expenditures. While fewer of the eye exam market, alternative outlets individuals have visited their optometrist in are capturing an increasing portion of 2009, which caused fewer individuals to be eyewear sales by offering lower prices. For aware of changes in their eyesight and new example, according to 2011 data (latest data eye problems, more consumers visiting their available) from VisionWatch, the average eye doctor from 2010 to 2014 offset this retail price for a pair of prescription eye trend. Other revenue streams, such as glasses, including the frame and diabetes-related eye ailments, have prescription lenses, is $253.0, which has supported demand for prescription eyewear. WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 8
Industry Performance
Industry structure Over the past five years, slow demand and Due to high competition from mounting competition from alternative eye mass merchandisers, warehouse stores glass retailers, particularly online eyewear and online retailers, many operators retailers and contact lens outlets, has led are employing in-house optometrists many operators to exit the industry. As a to differentiate themselves on the basis result, the number of firms is anticipated to of convenience and services offered. decline at an annualized rate of 1.0% to Optometrists conduct eye exams and 7,403 companies during the five years to prescribe eye glasses, which 2014. Nevertheless, the surviving eyewear streamlines the process for consumers retailers have increased their visibility by to obtain eye glass prescriptions. As a opening new retail locations, which has result of this trend, the number of caused the number of industry establishments employees is expected to rise at an to grow at an estimated annualized rate of annualized rate of 1.2% to 75,782 0.4% to 15,898 during the period. during the five-year period.
Changing Changes in consumer demographics have demographics also driven demand for optical goods. As the US population has Eyesight deteriorates with age; been aging, demand for consequently, demand for eyewear products, such as bifocals, multifocals eyeglasses has increased and reading glasses increases in line with an aging population. According to market United States require long hours of research firm Jobson Optical Research, visually intense work at a computer 88.0% of US residents aged 55 and older screen. These jobs produce eye fatigue, require eyewear, which has supported eyestrain, blurred vision and discomfort, demand for eye glasses. According to symptoms that are collectively known as 2012 data (latest data available) from the “computer vision syndrome.” About US Census, about 26.0% of the US 90.0% of all workers using computers population is aged 55 and over. experience this condition to some extent, In addition to favorable age according to NAVCP, and corrective demographics, changing occupational eyewear designed specifically for trends have bolstered demand for computer work can relieve many of the industry products. According to the symptoms. These products are National Association of Vision Care Plans increasingly being sold through eye (NAVCP), about half of all jobs in the glasses and contact lens stores. WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 9
Industry Performance
Over the next five years, eye glasses Industry and contact lens stores will benefit Spending on eyeglasses Outlook from the aging US population, will return as disposable increasing demand for prescription lenses. As the number of visits to the incomes improve optometrist is expected to rise thanks to the growing incidence of eye During the five years to 2019, industry diseases and vision impairment revenue is forecast to grow at an associated with diabetes and heavy annualized rate of 2.5% to $11.0 billion computer use, demand for eyewear is due to growing demand for corrective expected to increase. While corrective eyewear from more individuals that have eye surgery will constrain demand for chronic diseases. Profit is expected to rise, prescription eyewear from many from 5.0% of industry revenue in 2014 to demographics, the industry will still 7.7% in 2019, due to more eye glasses and benefit from age-related vision contact stores including on-site impairment, such as presbyopia, optometrists, which will enable many eye which cannot be amended with glasses and contact lens stores to provide corrective eye surgery. both prescriptions and eyewear.
Industry landscape Over the next five years, many eye glasses Additionally, many small, and contact lens stores will continue to independently-operated eyewear retailers consolidate due to the industry will grapple with remaining competitive approaching high market saturation. with large players, such as Luxottica’s Furthermore, high competition from LensCrafters, which has vertically other eyewear retailers, such as online- integrated operations. For example, based retailers, will incite many eye Luxottica manufactures eye glasses and is glasses and contact lens stores to one of the leading brand licensors for consolidate. According to 2012 data sunglasses and vision wear. According to (latest data available) from Bain Capital an article by Vision Monday, the average regarding the future of independent reimbursement for eye exams from third optometry, an estimated 20.0% of party payers, thanks to healthcare contact lens sales have occurred online, reform, is expected to decline, which will which will likely increase over the cause managed vision care companies, five-year period. While this trend will optometrists and optical retailers alike to hamper industry revenue growth over the implement streamlined operations to period, many retailers will expand their promote growth despite reduced on-site service offering to attract reimbursement rates. Large chains, such consumers, such as Luxottica’s AccuFit as Luxottica, will continue to aggressively Digital Measurement, which provides price their eye-care plans, thus driving consumers with highly accurate lens growth despite downward pressure on fittings. During the five years to 2019, the reimbursement rates for exams. number of industry enterprises is Nevertheless, the industry will expected to decline at an annualized rate benefit from the expansion of pediatric of 0.8% to 7,102 companies, due to many eye-care. Many vision benefit eye glasses and contact lens stores failing companies, such as VSP Vision Care, to remain competitive with retailers that have included more pediatric vision offer on-site eyewear prescriptions. care as an essential health benefit. As a WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 10
Industry Performance
Industry landscape result, many eye glasses and contact prescription, thus stimulating demand continued lens stores will derive growth from for prescription eyewear. This trend, more pediatric patients visiting their according to Vision Monday, is optometrist, which will enable more expected to provide a boon to the patients to be wary of changes to their industry, particularly in 2015.
Consumer As the number of individuals aged 50 and demographics older continues to grow at an annualized Surviving stores will look rate of 1.5% during the five years to 2019, to open new locations and the industry will benefit from need-based demand for prescription eyewear. For hire additional employees example, according to the National Eye Institute, age-related eye ailments To cater to a time-strapped include Age-related Macular customer base, many retailers will Degeneration (AMD), cataracts, diabetic employ optometrists to provide eye disease and glaucoma, among other on-site prescriptions in addition to vision impairment issues. As a result, the eyewear products. As a result, the industry will benefit from strong demand number of industry employees is for prescription eyewear over the period expected to rise at an annualized as these ailments become more prevalent rate of 2.1% to 84,123 during the among the elderly. five-year period. WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 11
Industry Performance Life Cycle Stage The industry’s contribution to the economy is growing in line with GDP The number of industry companies is contracting due to the saturated nature of the market Since the development and commercial availability of contact lenses, eyewear has experienced only modest innovation There are no emerging markets for eyewear; in fact, the industry’s market is well defined
20 Maturity Quality Growth Key Features of a Mature Industry Company High growth in economic consolidation; importance; weaker companies Revenue grows at same pace as economy level of economic close down; developed Company numbers stabilize; M&A stage importance stable technology and markets Established technology & processes Total market acceptance of product & brand 15 Rationalization of low margin products & brands % Growth in share of economy in share % Growth
10
Quantity Growth Many new companies; E-Commerce & Online Auctions minor growth in economic importance; substantial 5 technology change
Glasses & Contact Eye Glasses & Contact Lens Stores 0 Lens Manufacturing Optometrists Glasses & Contacts Wholesaling Mail Order
-5 Decline Shrinking economic importance
-10 -10 -5 0 5 10 15 20 % Growth in number of establishments
SOURCE: WWW.IBISWORLD.COM WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 12
Industry Performance
Industry Life Cycle Eyewear stores operate in an established share. This growth has largely been at industry with moderate growth and the expense of independent operators modest technological development. and smaller chains. This industry During the 10 years to 2019, industry The industry’s mature nature compels is Mature value added (IVA), which measures the retailers to continually differentiate their industry’s contribution to the overall products and services, as reimbursement economy, is expected to grow at an rate pressure, coupled with many annualized rate of 3.1%; meanwhile, GDP consumers already owning prescription is forecast to grow at an annualized rate eyewear, has constrained industry of 2.5%. While the industry is growing at revenue growth. Additionally, retailers a faster pace compared with the overall are attempting to shape value changes in economy, this trend can be attributed to the market to encourage more eye-care industry consolidation. awareness, such as educational The industry is approaching high campaigns like the Foundation of the market saturation, which has facilitated American Academy of Ophthalmology’s industry consolidation over the ten- EyeCare America. Similar to technology year period. A wave of acquisitions by changes, these efforts to influence the the industry’s largest retailer, public’s perception on the importance of Luxottica, has led to a significant eye care help stimulate demand in an increase in the company’s market otherwise slow growing market. WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 13 Products & Markets Supply Chain | Products & Services | Demand Determinants Major Markets | International Trade | Business Locations
Supply Chain KEY BUYING INDUSTRIES 99 Consumers in the US Private households demand products from the Eye Glasses and Contact Lens Stores industry.
KEY SELLING INDUSTRIES 33911b Glasses & Contact Lens Manufacturing in the US This industry manufactures ophthalmic goods, such as prescription eyeglasses, contact lenses, sunglasses, eyeglass frames and reading glasses. 42346 Glasses & Contacts Wholesaling in the US This industry wholesales ophthalmic goods, such as prescription eyeglasses, contact lenses, sunglasses, eyeglass frames and reading glasses. 62132 Optometrists in the US Optometrists provide eye examinations and generate prescriptions for eyewear sales.
Products & Services Products and services segmentation (2014) 7.9% Sunglasses 13.8% Contact lenses 32.4% Frames
17.2% Eye examinations
28.7% Prescription lenses and lens treatments Total $9.7bn SOURCE: WWW.IBISWORLD.COM
Prescription glasses have generated the eyeglasses and lenses, many individuals majority of sales in the industry over the over the age of 40 will still require past five years. Prescription lenses and prescription glasses for reading. As lens treatments are expected to make up people age, their eye muscles lose some 28.7% of sales in 2014, and the of the elasticity that allows them to focus accompanying frames account for 32.4% on close objects, which will allow strong of sales. Given the nature of the product need-based demand for prescription and the rise in the age of the US glasses from this demographic regardless population, prescription glasses are likely of corrective eye surgery. to continue to account for a large portion of sales. Contact lenses Over the next five years, more Contact lenses account for an estimated individuals will receive corrective 13.8% of industry revenue. Over the surgery, such as Lasik. While corrective past five years, sales of prescription eye surgery typically limits demand for lenses and lens treatments are expected WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 14
Products & Markets
Products & Services to exhibit slight growth. This trend can Sunglasses and other continued be attributed to new products that have The sunglasses market is typically increased comfort and performance. distinguished by price and function, and New technologies include silicone classified into premium and value hydrogel materials for comfort, torics segments. The premium segment has for those with astigmatism and grown faster than the value segment in the multifocal lenses for blurred near five years to 2014. Premium sunglasses vision. Daily disposable lenses, which typically offer full protection from the offer a high level of convenience, have ultra-violet (UV) rays of the sun, while bolstered sales over the period, value sunglasses may not carry UV particularly due to more patients certification. While many consumers complying with doctor purchase sunglasses for functionality recommendations to dispose of purposes, many individuals also demand contacts more regularly, thereby this product segment for fashion reasons, generating more frequent purchases. which has contributed to shorter According to the Contact Lens replacement cycles for sunglasses. Spectrum publication, most patients The other category includes fees for eye with contact lenses wear daily-wear examinations that are only included for soft lenses full-time, and most use a stores that are not owned and operated by two-week replacement schedule. This optometrists, because these sales are trend presents an opportunity for new accounted for in the Optometrists industry and recurring sales, particularly with (IBISWorld report 62132). However, disposable lenses. Furthermore, the almost half of the stores that are members contact lens product segment will grow of Eye Care Centers of America employ over the next five years, as many optometrists. Their contribution to individuals have increasingly active revenue has increased as more people lifestyles. While this poses as an become aware of the importance of vision opportunity for industry revenue care. Other goods include contact lens growth, the industry is still exposed to solutions, treatments and accessories and high competition from mass eyeglass repair services. Over the past five merchandisers and online stores. years, many time-strapped have preferred Currently, mass merchandisers make to have their eye examinations performed up an estimated 13.9% of contact lens at eye glasses and contact lens stores, sales and online companies account for which has increased this product about 8.0%. segment’s share of industry revenue.
Demand The aging population, economic Disposable income and Determinants conditions, price and fashion trends are insurance benefits factors that influence the frequency, While prescription eyewear is a medical quality and type of eyewear purchased. necessity and accounts for a large Changes in fashion and technology are portion of sales, consumers’ disposable also important demand determinants for income often determine lens quality the eyeglass replacement market. Due to and the propensity to replace old eyesight deteriorating with age, the aging glasses with new prescriptions. US population has a positive effect on Increased sales of premium eyewear prescription lens sales, including bifocals, over the past five years has prompted multifocals, and reading glasses. industry revenue growth. WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 15
Products & Markets
Demand The level of eye-care and eyewear market by stocking high-end eyewear, with Determinants insurance benefits that are available to exclusive rights to brands like Prada, Ralph continued consumers also affect industry purchases. Lauren, DKNY, D&G, Bulgari and Chanel. This aspect determines the price that the While fashion plays a large part, consumer will pay for eye glasses and technological change is the major driver contact lenses. As many insurance in the replacement eyewear market. providers cover more industry products, Advances in ophthalmic engineering consumer demand for eye glasses and have led to the development of contact lenses will rise. Correspondingly, instruments, frames and lenses that use sales of non-prescription eyewear, new materials, such as titanium frames, including sunglasses and colored contact extended-wear contact lenses, and daily lenses, are not covered by insurance or disposable contact lenses. These vision plans and have suffered as a result of products enjoy high demand from consumers’ low per capita disposable customers who want convenience and income during the recession. Sunglasses comfort. This factor has been reflected and certain optical frame styles range in in the increase in the number of contact price from budget to designer brands. For lens users in the past few years, while example, the industry’s largest player, the number of people wearing glasses Luxottica, differentiates itself from the has decreased slightly.
Major Markets Major market segmentation (2014) 5% Consumers aged 14 and younger 13% 26% Consumers from 15 to 24 years old Consumers from 35 to 54 years old
15% Consumers from 25 to 34 years old
21% Consumers from 55 to 64 years old 20% Consumers aged 65 and older Total $9.7bn SOURCE: WWW.IBISWORLD.COM
Demand for eye glasses or contact eyewear replacement cycle and lenses varies by consumers’ age bolsters industry revenue. demographic. Typically, older market While prescription sunglasses sales segments demand more eye glasses have traditionally been driven by and younger market segments younger, female consumers of higher purchase more contact lenses. economic means, new types of lenses are Additionally, consumers aged 15 to 34 attracting other demographics in are more likely to purchase modern, sunglasses. For example, driving brand-name eyewear to follow fashion sunglasses, or glasses that sense and trends, which results in a shorter react to varying light conditions, have WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 16
Products & Markets
Major Markets been popular among male consumers. industry revenue. This age demographic continued Other segments of the prescription is also likely to respond to changing sunglasses market are also expanding. fashion trends and purchase modern Baby boomers, who typically have eyewear, which shortens the eyewear relatively high disposable income, are a replacement cycle and stimulates growing market segment that affects the industry revenue. This demographic, prescription sunglass market as well. similar to the consumers aged 15 to 24 This new demographic allows retailers market segment, is also likely to receive to sell to prescription sunglasses refractive surgery (lasik), which has customers whom they were not able to hampered demand for industry previously reach. products. However, strong demand for contact lenses and brand-name Consumers aged 14 and younger sunglasses will counteract this trend, The youngest market segment is expected thus increasing this market segment’s to comprise about 5.0% of market share share of industry revenue over the past in 2014, and has experienced slight five years. growth during the past five years. Individuals under the age of five are still Consumers aged 35 to 54 years old experiencing visual development, which The second largest market share is particularly makes eye health for this age anticipated to make up 26.0% of demographic vital. This market segment industry revenue. As vision deteriorates also experiences vision changes, which with age, this demographic has strong causes regular eye and vision care to be demand for eye glasses and contact especially important. The most common lenses, especially among individuals vision problem for this age demographic aged 50 to 54. Demand for industry is nearsightedness and myopia. products within this market segment has been driven by the aging of the baby Consumers aged 15 to 24 years old boomers, particularly individuals that Consumers aged 15 to 24 make up an have now entered the aged 55 and older estimated 13.0% of industry revenue. This demographic, which will cause growth to market segment typically prefers contact slow for this market segment during the lenses rather than prescription glasses. next five years. Additionally, this market Additionally, this age demographic is likely segment, especially individuals aged 45 to receive Lasik surgery, which has slightly to 54, are more likely to use eyeglasses constrained demand for eye glasses and than contact lenses. contact lenses from this market segment, due to corrective eye surgery resolving Consumers aged 55 and older vision issues. Nevertheless, this market The largest market segment, which segment is growing due to strong demand accounts for about 41.0% of industry for prescription eyewear, especially revenue, will grow during the next five brand-name products. Furthermore, this years as more baby boomers enter this age market segment is also prone to follow demographic. While Medicare does not fashion trends, which shortens the eyewear cover eye glasses or contact lenses, replacement cycle and prompts industry Medicare Part B partly covers the costs for revenue growth. corrective lenses, including one pair of eye glasses and one set of contact lenses, Consumers aged 25 to 34 years old following cataract surgery. This market The market segment of consumers aged segment is likely to use eye glasses rather 25 to 34 generates about 15.0% of than contacts. Additionally, more baby WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 17
Products & Markets
Major Markets boomers are purchasing prescription continued sunglasses, which has prompted growth for this market segment.
International Trade The Eye Glasses and Contact Lens Stores number of suppliers, with many that have industry supplies the domestic market links with international manufacturers. and does not engage in imports or However, the value of imports and exports. While the larger store chains exports within this industry are may have trade relations with overseas conventionally accounted for within the wholesalers, they account for a small related manufacturing industry, the fraction of their business. Products sold Glasses and Contact Lens Manufacturing by this industry are sourced from a industry (IBISWorld report 33911b). WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 18
Products & Markets
Business Locations 2014
West AK 0.2 New England
ME Great Mid- 0.4 Lakes Atlantic 1 2 NY 3 WA ND 10.4 4 MT 0.3 5 1.9 0.2 MN 2.1 WI Rocky 1.8 MI PA 6 SDPlains 3.4 5.1 OR 0.2 7 1.0 Mountains ID IA OH 9 8 0.3 WY 1.0 3.3 0.1 IN VA NE IL 1.6 WV 0.6 4.5 0.5 2.7 KY West NV 0.9 0.9 NC UT MO 2.1 0.7 CO KS 1.6 2.0 0.7 TN 1.4 SC CA 1.2 8.8 OK AR Southeast 0.7 0.3 GA AL 2.8 AZ MS 1.1 2.5 NM 0.5 0.6 Southwest LA TX 1.3 FL 7.1 8.7
West HI 0.7 Additional States (as marked on map) Establishments (%) 1 VT 2 NH 3 MA 4 RI Less than 3% 0.2 0.5 2.5 0.4 3% to less than 10% 10% to less than 20% 5 CT 6 NJ 7 DE 8 MD 9 DC 1.4 3.6 0.3 2.3 0.3 20% or more
SOURCE: WWW.IBISWORLD.COM WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 19
Products & Markets
As is common with a retail industry, the Business Locations Distribution of establishments vs. population location of establishments falls broadly in line with population trends. Revenue 30 distribution closely follows establishment spread, because optical services are
provided on a small geographical scale. 20 Typically, areas with a larger number of
residents have higher demand for optical % good stores to service expanding 10 residential areas. Industry activity is concentrated in the Mid-Atlantic and Southeast regions, with each accounting 0 for about 22.0% and 23.5% of total West establishments in the United States, Plains Southeast respectively. Participants often locate Southwest Great Lakes Mid-Atlantic themselves in regions where there is a New England
high proportion of the population that is Rocky Mountains more likely to require glasses or contact Establishments lenses, such as where there is a Population concentration of elderly citizens. SOURCE: WWW.IBISWORLD.COM New York alone accounts for about 10.4% of industry establishments. Florida also holds a large share of the Individuals in New York City typically market, accounting for about 8.7% of have high disposable income and are total establishments. While Florida’s fashion-conscious. They often buy several citizens make up a moderate portion of pairs of sunglasses and prescription the total US population, the state has one glasses to keep up with fashion trends. In of the largest proportions of elderly addition, many individuals in New York individuals in the United States. Within are employed in office work and use towns, factors affecting location include computers for long hours. Prolonged use proximity to ophthalmic doctors and of computers often leads to eyestrain and specialists and high-traffic areas that are may increase the requirement for glasses. easily accessed by customers. WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 20 Competitive Landscape Market Share Concentration | Key Success Factors | Cost Structure Benchmarks Basis of Competition | Barriers to Entry | Industry Globalization
Market Share The Eye Glasses and Contact Lens Stores industry remains fragmented through Concentration industry has a moderate level of market small retail chains and independent share concentration. About half of the locations. The advent of standardized industry’s eyeglasses and contact lens eyewear technologies has allowed Level retailers employ fewer than 20 people, independent retailers to successfully Concentration in this and the average enterprise employs about compete with larger players. Additionally, industry is Medium five people. However, the industry’s top regulation requiring prescription four players account for an estimated portability has enabled eyewear sales to 70.2% of total industry revenue in 2014, be unbundled from the fitting process, with Luxottica, the largest player, making which has allowed consumers to choose up about 49.5%. The level of among retail channels. While eye-care concentration has steadily increased over providers still control the prescription the past five years, which can be process, consumers often choose from a attributed to strong acquisition activity. retailer other than their prescribing Despite growing concentration among doctor when they purchase new or the top companies, the rest of the replace lenses.
Key Success Factors Ability to control stock on hand that have multiple convenient locations Adequate stock controls need to be in with flexible operating hours. place in order to reduce inventory costs IBISWorld identifies and increase inventory turnover. Maintenance of excellent 250 Key Success customer relations Factors for a Ability to franchise operations In the competitive eyewear market, the business. The most National chains can raise brand ability to provide an integrated, important for this awareness and reach a wide variety of comprehensive service offering through customers by using franchising. well-trained employees benefits stores by industry are: providing consistent customer traffic and Differentiated value strategy high levels of customer loyalty. A differentiated strategy, whether premium or value oriented, is necessary Ability to alter product mix in to distinguish a company in this highly favor of market conditions competitive industry. Stocking the appropriate mix of high quality, value and branded eyewear will Proximity to key markets encourage increased purchases and a Eyewear stores benefit from proximity to loyal customer base. Additionally, staying optometrists’ offices and areas of high current on fashion trends and foot traffic. A broad geographic reach also maintaining brand recognition are appeals to providers who seek retailers integral competitive factors.
Cost Structure Profit earnings before interest and taxes, Benchmarks Companies in the Eye Glasses and accounts for an estimated 5.0% of Contact Lens Stores industry have industry revenue in 2014. Typically, the various costs and profit margins. average profit for industry players Figures in this discussion represent the fluctuates from 5.0% to 7.0% of industry average. Profit, measured by industry revenue. WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 21
Competitive Landscape
Cost Structure During the five years to 2014, pressure Purchases Benchmarks from consumers for lower-priced frames Purchases account for the largest continued and lenses, coupled with steadily expense category for the industry, increasing input costs, has cut into accounting for about 39.5% of industry industry profit margins. While many revenue in 2014. This expense includes companies have implemented cost-saving the cost of buying, warehousing, methods, including store closures and distributing, shipping and handling the personnel cuts, profit has still declined product and lab and delivery costs. over the past five years. Many companies, Volatility in raw material costs, though like Luxottica, have offered high-end a small part of the total, can affect the products, which has caused many eye price that retailers must pay for plastic glass and contact lens stores to struggle eyeglasses and frames. Raw material with competing against low-cost retailers costs fluctuate seasonally, and retailers like Costco and Walmart. Although are often hesitant to change retail technological advancements are prices unless a sustained cost alteration necessary to maintain industry demand, is detectable. For example, many profit margins will be pressured as eyeglasses are manufactured with operators find it difficult to pass plastic lenses, which requires increased costs on to frugal consumers. petroleum as an input commodity. Nevertheless, consolidation and other Manufacturers without vertically cost-cutting efforts will help combat this integrated operations will be subject to effect and slightly prop up profit margins raw material volatility when purchasing during the next five years. frames, for example. Increases in the
Sector vs. Industry Costs
Average Costs of all Industries in Industry Costs sector (2014) (2014) 100 3.7 5.0 ■ P r o fi t 9.2 ■ Wages ■ Purchases 80 23.7 ■ Depreciation ■ Marketing ■ Rent & Utilities ■ Other 60 74.0 39.5
40
Percentage of revenue Percentage 1.5 7.0 20 10.0 1.1 2.1 3.8 13.3 0 6.1 SOURCE: WWW.IBISWORLD.COM WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 22
Competitive Landscape
Cost Structure price of raw materials and the expenses products increases with a growing Benchmarks related to handle the product over the population of aging baby boomers. continued past five years has led companies to spend more money on purchases. Depreciation and other expenses Industry companies typically purchase Wages optometric equipment, eyewear displays, Wages make up a significant portion of and accounting and customer database costs, accounting for about 23.7% of technology. Therefore, depreciation revenue in 2014. High wage costs are accounts for about 1.5% of costs. In some common for labor-intensive retail cases, franchise and royalty fees apply to industries, but the wage costs are companies in the industry, and these can higher in the eyewear store industry reach up to 10.0% of revenue. Rent than for other health and personal care makes up about 10.0% of revenue in the goods stores. Eyeglasses and contact Eye Glasses and Contact Lens Stores lens stores often employ optometrists industry. Most retailers do not own the who are well trained and receive higher stores from which they operate, but they salaries than sales staff. IBISWorld lease the premises instead. Rent expenses estimates that industry wages and can be substantial, because eyewear employment will grow over the next stores are located in high-traffic shopping five years, as demand for eyewear malls and popular retail areas.
Basis of Competition Consolidation among retail chains, or near ophthalmic specialists. The breadth coupled with the emergence of optical and depth of the product selection is also departments in discount retailers, has an important consideration. An Level & Trend heighted competition within the Eye appropriate product mix must be tailored Competition in Glasses and Contact Lens Stores to match the demographic composition of this industry is industry. Competition between industry the store’s market. Stores located in regions Medium and the companies depends on price, or states with a relatively higher income trend is Increasing convenience, product quality, product earning clientele should stock branded and portfolio and marketing. private label frames, lenses, accessories and sunglasses. Additionally, stores are Internal competition increasingly focusing on integrating Price is a particularly important services, such as eye exams, frame fitting competitive factor for nonessential and purchasing advice to adapt to goods, including fashion eyewear and consumers’ demands for one-stop shops. colored contact lenses. These purchases Geographic diversity and are typically not covered by insurance; comprehensive services also make stores therefore, as an optional purchase, they more appealing to managed vision care are subject to changes in consumer (MVC) plans. Being a partner of a sentiment and discretionary spending. successful MVC retail network offers a Consequently, stores with a product competitive advantage, because mix that is concentrated in consumers who are part of an MVC plan, nonprescription eyewear must compete which offers discounts on eye exams, more intensely on price. glasses and contacts, will choose retailers To provide convenience for consumers that are recognized providers for their and create brand awareness, retailers aim particular plan. Industry operators also to be located in high shopping traffic areas use advertisements in local and national WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 23
Competitive Landscape
Basis of Competition markets to market their product offering popularity of disposable contact lenses, continued and build brand recognition. Typically, which requires patients to buy replacement industry operators market their products lenses more frequently, has also to a specific market demographic to contributed to the growth of the direct attract clientele in a mature industry and marketing channel. According to the differentiate themselves from Federal Trade Commission, online retailers competitors despite eyewear products account for 8.0% of contact lens sales, being fairly standardized. which is comparable to the 9.5% of contact Marketing is increasingly aimed at lenses sold through retail chains and 64.3% specific target markets because the at independent optometrist offices. Online industry is mature, and differentiation stores offer lower prices, because they do between companies is minimal. Also, in not have substantial overhead expenses. To order to reduce costs, many companies attract technologically-savvy consumers employ a strategy of clustering stores in that prefer purchasing industry products targeted market areas to maximize the online, some existing industry operators benefit of advertising expenditures. have launched their own online stores. Optical good stores also face increasing External competition competition from warehouse clubs and The industry is undergoing changes in superstores. This category includes retail outlets. Traditionally, eye-care competitors like Walmart and Costco, practitioners have almost exclusively sold which can attract low- and mid- income eyewear to consumers, supplying patients earners in particular at the national level. with initial and replacement eyewear after These retailers may provide a range of providing eye exams. However, over the eyewear products, but the product mix is past two decades, a number of alternative typically narrower and lower priced. sellers of eyeglasses and replacement Optometrists can also stock prescription contact lenses have emerged, including and non-prescription eyewear; however, retail chains, discount department stores, their range is often limited and consumers online retailers and mass merchandisers. are increasingly buying replacement Direct marketers have entered the eyewear from separate retailers. industry and introduced low online pricing. Laser surgery poses a threat to the Competition from e-commerce has industry as a substitute for corrective intensified because of an increase in eyewear products. Typically, once the consumer awareness of the convenience procedure is accomplished, the patient and ease of online purchasing, and the does not need to wear prescription glasses passing of the Fairness to Contact Lens or contact lenses. Despite a significant Consumer Act in 2003. The Act requires all amount of time and money spent in trying eye-care practitioners to give patients a to build the market for laser surgery, copy of their prescription. The growth in eyewear sales still dominate the market.
Barriers to Entry The Eye Glasses and Contact Lens Stores Operators like HVHC, Luxottica Group, industry has moderate barriers to entry, and National Vision have grown by Level & Trend because these retailers are typically less acquiring and consolidating with smaller expensive to open. Market share is operators. As larger companies expand in Barriers to Entry growing among the industry’s top four size and geographical presence, they in this industry are major players, making it more difficult benefit from reduced per-unit costs such Medium and Steady for new companies to enter the industry. as advertising, personnel and product WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 24
Competitive Landscape
Barriers to Entry costs, making it more difficult for new continued operators to establish a market presence. Barriers to Entry checklist Level In addition, large operators typically Competition Medium dominate the industry by retailing Concentration Medium branded products. For example, Life Cycle Stage Mature Luxottica Group retails popular premium Capital Intensity Low brands like Ray-Ban, Dolce & Gabbana Technology Change Medium and Polo Ralph Lauren. Regulation & Policy Medium Industry Assistance Low Brand equity Brand equity is created by marketing SOURCE: WWW.IBISWORLD.COM activities such as product development, promotions and advertising. Brand graduates of post-secondary training loyalty among consumers can create programs. A license to practice is barriers to entry by creating a resistance currently required by 22 states. to trying new brands. Luxottica has devoted considerable resources to Regulation developing brand equity in its retail Eyewear retailers are subject to various chains, which include LensCrafters, legal requirements that regulate the Sunglass Hut, Pearle Vision and Oakley O relationships between licensed Stores and Vaults. As an example, optometrists, who perform eye exams Luxottica designs its Oakley stores to and prescribe corrective lenses, and immerse the consumer in the Oakley opticians, who fill the prescriptions and brand through innovative use of product sell eyeglass frames. Rules, like the presentation, graphics and original audio Federal Trade Commission’s separation and visual elements. The significant of examination and dispensing law, that marketing budgets of large companies make eyewear prescriptions the property such as Luxottica make it difficult for new of patients and transferable to any entrants to compete. optician have reduced the regulatory barriers to entry. Licensing Ophthalmologists, optometrists and Distribution opticians require distinct levels of Existing industry operators can build licensing that can make it difficult to strong relationships of trust and loyalty open a new location or begin dispensing with their suppliers over a period of time, for the first time. This factor particularly which can improve delivery of products applies to non-employers or single- and the ability to source quality items. location stores without prior licenses. Supplier relationships can prohibit a new Dispensing ophthalmologists and entrant from accessing low-priced, optometrists regard opticians as a high-quality merchandise. For example, substitute; accordingly, they favor the Eye Care Centers of America has enactment of barriers for opticians. developed strategic relationships with key Consequently, associations of these vendors. These relationships have resulted professionals lobby against easing in improved service and payment terms, licensing requirements for opticians. with 40.0% of the vendors supplying more Most dispensing opticians receive than 70.0% of the company’s lenses in training on the job or through 2009. On the other hand, private-label apprenticeships that last two or more and non-branded frames are typically years, but some employers seek sourced from a larger pool of suppliers. WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 25
Competitive Landscape
Barriers to Entry Also, the initial cost of establishing a using computers and cash registers to continued new store, which includes the purchase of capture transaction data at the time and optical equipment and display racks, can place of sale. prohibit companies from entering the The location of an eyewear store is also industry. This cost is a one-time expense integral to its success. Optical retailers spread over the life of the store’s often establish stores in high-traffic areas operation. Costs include shelving, cash and near optometrists to increase store registers with point-of-sale (POS) traffic. Because these locations are often systems, debit and credit card processing occupied, new entrants may find it terminals, inventory and the initial difficult to take up a desirable store training of staff. POS systems are systems position, discouraging some new retailers that are used at checkout in retail stores from entering altogether.
Industry With the exception of key player expansion of major players will Globalization Luxottica Group, participants in the continue over the next five years, Eye Glasses and Contact Lens Stores because of the limited scope for growth industry are mostly US-based and within the US market. Level & Trend derive most of their revenue within the In addition, optical products are Globalization in United States. However, many increasingly available for purchase via this industry is participants also have operations the internet, which has bolstered sales for Medium and the overseas. Large industry operators, globally-based internet retailers. trend is Increasing including HVHC and National Vision, Nevertheless, sales are generally confined have expanded their retail operations to items that do not require a beyond the United States, mainly to prescription, such as sunglasses, or to Mexico, Canada and China. IBISWorld products that are do not require fitting, expects that the international such as contact lenses. WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 26 Major Companies Luxottica Group S.p.A. | National Vision Inc. Highmark Inc. | Other Companies
Major players (Market share) National Vision Inc. 9.5% 32.2% Other
Highmark Inc. 8.8% Luxottica Group S.p.A. 49.5% SOURCE: WWW.IBISWORLD.COM
Player Performance Luxottica Group is an Italian-based strong licensed portfolio and proprietary company that is vertically integrated with brands (e.g. Ray-Ban, Oakley, Sunglass operations in design, manufacturing and Hut and LensCrafters) give it a significant Luxottica Group distribution for eyewear. The company edge against competitors. In 1995, S.p.A. operates in 130 countries and over 7,000 Luxottica acquired LensCrafters, one of Market share: 49.5% retail locations, including North America, North America’s largest optical retail Industry Brand Names which comprises about 50.0% of total chains, which maximized production and Cole National revenue and consists of 4,818 stores. The wholesale distribution of Luxottica’s LensCrafters company’s industry-relevant operations products. Historically, Luxottica has Sunglass Hut consist of the LensCrafters and Pearle focused on growing its store network, but Pearle Vision vision chain stores. In the sunglasses the company has recently shifted to retail business, Luxottica operates mainly cost-reducing actions, including closing through its Sunglass Hut and Oakley O underperforming stores and refining its locations. With a focus on mid- to brand portfolio in response to the poor premium-priced eyewear, the company’s economic environment. In 2013, the leading house brand is Ray-Ban, and it company acquired Alain Mikli produces eyewear under exclusive license International to strengthen its portfolio of agreements for luxury brands, including luxury brand eyewear. Prada, Dolce & Gabbana, Polo Ralph By vertically integrating its Lauren and Chanel. organization to produce, distribute and Luxottica benefits from its position as retail eyewear, the company can quickly global market leader and its high degree of change its product mix in response to vertical integration in North America and consumer preferences. Additionally, the Asia-Pacific region. The company’s Luxottica maintains a strong focus on
Luxottica Group (US retail segment) – fi nancial performance* Revenue Operating Income Year ($ million) (% change) ($ million) (% change) 2009 3,714.5 N/C 437.0 -30.6 2010 3,898.6 5.0 478.6 9.5 2011 3,896.2 -0.1 579.5 21.1 2012 4,467.5 14.7 633.4 9.3 2013 4,626.5 3.6 695.3 9.8 2014* 4,816.2 4.1 740.5 6.5
*Estimates SOURCE: ANNUAL REPORT AND IBISWORLD WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 27
Major Companies
Player Performance quality service, and this strategy has 5.3% to $4.8 billion. The company’s continued proven to be vital in an industry that is acquisition of Alain Mikli International highly saturated and competitive. Despite will likely generate more sales volumes this factor, the mid- and premium-price from the company’s luxury brand categories of the eyewear markets in eyewear segment, thus bolstering which Luxottica competes are industry-relevant revenue. LensCrafters particularly vulnerable to changes in has fared well over the past five years due consumer preferences and economic to many time-strapped consumers being downturns. Consequently, the company able to purchase their glasses in one has typically outperformed the industry hour, which has been an integral in growth years and underperformed in component in the company’s business slump years. model. Additionally, the company has invested in new technologies, such as Financial performance AccuFit Digital Measurement, which has During the five years to 2014, the helped provide customers with a lens fit company’s industry-relevant revenue is that is five time more precise than anticipated to grow at annualized rate of traditional methods.
Player Performance National Vision operates more than 700 acquired for $40.0 million in late 2005, retail locations and employs more than the company began operations under the National Vision Inc. 6,000 employees in 44 states throughout private equity firm Berkshire Partners. the United States and Puerto Rico. The Before the acquisition, the company was Market share: 9.5% company mainly operates through its publicly listed. Industry Brand Names retail divisions, including America’s Best In 2009, National Vision acquired the Vision Center Contacts & Eyeglasses, Eyeglass World Eyeglass World chain from Vision Care Optical Center and Vision Centers inside Walmart Holdings. Eyeglass World was founded in The Optical Shoppe stores, Fred Meyer locations and on 1988 and operates more than 60 stores Eyeglass World select military bases. Formerly Vista Eye across the country. Similar to National Care, the company began in 1990, when Vision, Eyeglass World is a freestanding it was awarded a contract to open vision chain that offers brand name and centers in Walmart stores. After being designer frames, and several of its stores
National Vision Inc. (US retail segment) – fi nancial performance* Revenue Operating Income Year ($ million) (% change) ($ million) (% change) 2009 558.0 21.3 48.3 31.3 2010 595.0 6.6 67.1 38.9 2011 685.0 15.1 79.2 18.0 2012 759.3 10.8 91.1 15.0 2013 861.0 13.4 103.9 14.1 2014 925.6 7.5 109.7 5.6
*Estimates SOURCE: IBISWORLD WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 28
Major Companies
Player Performance are equipped with in-store lab the planned closure of several stores and continued capabilities. Consumers increasingly the restructuring of existing stores embraced the “everyday low price” during the five-year period. This move concept as the recession lingered, helping has helped generate steady growth in boost the company’s sales. National sales, despite the reduction in vision Vision opened additional America’s Best centers inside Walmart stores. National locations and expanded the Eyeglass Vision has also relocated its vision World chain through 2011. centers from Walmart stores to freestanding stores and implemented a Financial performance strategy focused on the value segment of Due to the company being privately the optical retail industry, such as held, industry-relevant revenue is low-cost eyewear. Nevertheless, estimated. During the five years to 2014, National Vision plans on opening over industry-relevant revenue is expected to 40 new locations annually to generate grow at an annualized rate of 10.7% to sales and cater to growing consumer $925.6 million. In line with cost demand for eyewear due to higher reductions, the company has executed discretionary spending.
Player Performance As of 2006, HVHC, a subsidiary of vision reimbursements accounting for Highmark Inc., owns the Eye Care about one-third of revenue. Highmark Inc. Centers of America and Empire Vision HVHC emphasizes low to middle price retail operations. It also owns eyewear ranges and comprehensive service Market share: 8.8% supplier Viva International and the Davis offerings, including in-house lens Industry Brand Names Vision managed vision network. The processing, eye exams and lens treatment Eye Care Centers of company operates 550 stores in 39 states technologies. Their value strategy directs America under 15 retail brands. During the five the company’s selection of eyewear; Viva International years to 2014, HVHC has focused on a about 31.0% of sales are from goods Davis Vision growth strategy of opening new stores. under proprietary brands or private label Managed vision coverage through its frames, while just 11.0% of sales are sister division, Davis Vision, and outside generated from national brand names vision plans remains a key element of such as Nine West, Polo Ralph Lauren, HVHC’s retail strategy, with managed Guess and Tommy Hilfiger. HVHC’s
HVHC Inc. (US retail segment) – fi nancial performance* Revenue Operating Income Year ($ million) (% change) ($ million) (% change) 2009 673.7 19.1 94.1 16.0 2010 698.1 3.6 100.9 7.2 2011 729.2 4.5 109.5 8.5 2012 766.4 5.1 114.9 4.9 2013 807.8 5.4 122.6 6.7 2014 857.9 6.2 131.9 7.6
*Estimates SOURCE: IBISWORLD WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 29
Major Companies
Player Performance location strategy also demonstrates the out its subsidiaries’ performance continued company’s value-oriented target market. results; as a result, IBISWorld About half of the company’s stores are estimates that during the five years to located in regional malls, while one-third 2014, industry-relevant revenue is are located in strip shopping centers; the anticipated to grow at an annualized remainder are freestanding locations. rate of 5.0% to $857.9 million. HVHC’s retail operation added more The company achieved its strongest than 30 new locations during 2009 and increase in 2009, when revenue grew 2010. One key focus of attention for by nearly 19.1%. This performance can HVHC’s retail group has been its optical largely be attributed to its new store laboratories, which serve outside retailers expansion strategy, but the company and eye-care practitioners who are also generated healthy comparable providers for HVHC’s Davis Vision store sales. Additionally, HVHC has managed-care business. Furthermore, in slowly increased its prices for goods April 2013, the company announced and services, though they remain plans to open an optical manufacturing focused on a value image. The and distribution center in San Antonio, company’s profit margins have been which will become HVHC’s fifth center in bolstered by clustering its stores within the United States. Once fully operational, targeted markets to achieve cost the facility is expected to produce more savings in advertising, management than 2.0 million pairs of eyewear per and field overhead. Additionally, year, and it will custom make products profitability has grown as a result of the for Visionworks stores nationwide. sale of lower-cost frames purchased from China. An increase in the sales Financial performance mix of higher-margin premium lenses Highmark Inc. is a privately owned and the sales mix of high-margin company, and while it releases its private label and value frames have also year-end figures, it does not separate bolstered profitability.
Other Companies Refac Optical Group In 2014, Refac is anticipated to Estimated market share: 2.4% generate about $233.6 million in Refac Optical Group is a leading provider revenue. In March 2011, Refac was of optical products and services in the acquired by ACON Investments, an United States and Canada, including international private equity investment brand name and private label prescription firm that manages private equity funds eyewear, contact lenses, sunglasses, and special purpose partnerships. ready-made readers and accessories. Refac’s main operating subsidiary, US Walmart Stores Inc. Vision, is a leading optical retailer with Estimated market share: N/A more than 750 optical centers under a Mass merchandiser Walmart continues variety of brands, such as JCPenney, to expand in the optical business. With Sears, BJ’s, Boscov’s, The Bay, Macy’s and nearly 2,500 vision centers in its US Kmart. US Vision is the sixth largest stores across the country, Walmart’s optical retailer in the United States in total vision center is the second largest retailer revenue and the third largest in store of eyewear in the United States. Under count. The company also operates a the umbrella of Walmart’s health and state-of-the-art manufacturing laboratory. wellness segment, the company has more WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 30
Major Companies
Other Companies than six million patients each year and division of Costco Wholesale, growing to continued sells more than 11 million boxes of more than 500 locations within the US contact lenses (according to the most warehouse clubs. At the same time, sales recent available data from 2009), due have consistently grown to reach an largely to its early 2009 alliance with expected $651.9 million in 2014. 1-800 Contacts. In 2014, more than Membership is required to fill 2,500 independent optometrists and prescriptions through the optical 12,000 associates will work at the department. With about 58 million club company’s optical centers. cardholders shopping at Costco Walmart operates within the value Wholesale, the company’s optical segment of the optical retail market, as locations have a built-in traffic flow. the company provides economical Similar to other value-oriented eyewear eyewear and eye-care choices for retailers, the company benefited from consumers. The ongoing recession in the recession. 2009 fueled growth from this Costco Wholesale’s growing optical positioning, as new attitudes to cut costs business represents the movement of drove consumer priorities. The company eyewear retailing toward lower-priced further recognized demand for low goods and services with less qualitative prices in 2009, with new national differentiation. Costco Optical operates programs that dramatically reduce membership locations based on offering prices on contact lenses and children’s members low prices on a limited eyeglasses while simplifying the selection of products. The company purchasing process. For instance, focuses on operating efficiencies achieved Walmart’s vision centers offer pairs of by rapid inventory turnover, volume eyeglasses for children beginning at purchasing, efficient distribution and $39.0, which includes a one-year reduced handling of merchandise in guaranteed free replacement policy. The simple warehouse facilities. Despite company has also instituted price cuts Costco Wholesale’s high volume and from 12.0% to 50.0% on annual supplies no-frills emphasis, its optical department of contact lenses in a program that consistently ranks well in customer began rolling out nationwide in early surveys among large eye-care retailers. 2009. In 2008, Walmart partnered with According to JD Power and Associates, 1-800 Contacts in an effort to combine Costco leads the industry in costs as well savings and convenience with customer as choice and variety of eyewear. Costco support. The two companies plan to also has a high proportion of customers create efficiencies across their call who indicate they will repurchase and centers, websites and purchasing and recommend eyeglasses and contact lenses distribution operations. from a Costco Wholesale center.
Costco Wholesale 1-800 Contacts Estimated market share: N/A Estimated market share: N/A Costco Wholesale’s optical department Although 1-800 Contacts is the leading provides its membership customers with direct seller of disposable contacts, it is affordable prescription eyeglasses and not included under the Eye Glasses and other eye-care products. Each Costco Contact Lens Stores industry, because all Optical store employs an independent of its revenue is generated through sales doctor of optometry for eye exams. made via the internet or over the phone, During the five years to 2014, Costco rather than physical stores. Instead, this Optical has steadily expanded as a company is categorized within the WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 31
Major Companies
Other Companies Electronic Shopping and Auctions role in lowering prices and giving continued industry (IBISWorld report 45411a). consumers a greater amount of choices Growth in online eyewear sales was regarding where they can buy their vision stimulated by federal legislation passed products. The company stocks more than in 1978 that required doctors to release 20 million different pairs of contact prescriptions for eyeglasses to every lenses and delivers more than 150,000 patient. Prior to this requirement, pairs daily. In 2007, the company was patients were forced to obtain eyeglasses acquired by affiliates of Fenway Partners and contact lenses at the doctor’s office. LLC, a New York investment banking 1-800 Contacts has since played a key firm, for about $340.0 million. WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 32 Operating Conditions Capital Intensity | Technology & Systems | Revenue Volatility Regulation & Policy | Industry Assistance
Capital Intensity The cost of labor is the second largest expense item for the Eye Glasses and Capital intensity Contact Lens Stores industry, reflecting Capital units per labor unit Level the labor-intensive nature of the retail 0.5 The level of capital sector. For every dollar invested in labor, intensity is Low about $0.06 is spent on capital in 2014. 0.4 Staff employed in this industry perform a 0.3 variety of activities, ranging from simple manual tasks to lens grinding and optical 0.2 fittings for customers. Employees need to 0.1 be highly skilled because they are 0.0 involved in the assembly of prescription Economy Retail Trade Eye Glasses & glasses. Several of the major industry Contact Lens Stores participants often have a qualified doctor Dotted line shows a high level of capital intensity of optometry at each location in order to SOURCE: WWW.IBISWORLD.COM provide eye examination services. Capital investment in this industry and new lab equipment. Larger differs according to company size. Small participants also allocate a large part of operators invest in information systems their investments to opening new stores
Tools of the Trade: Growth Strategies for Success
New Age Economy Investment Economy Recreation, Personal Services, Information, Communications, Health and Education. Firms Mining, Finance and Real benefi t from personal wealth so Estate. To increase revenue stable macroeconomic conditions fi rms need superior debt are imperative. Brand awareness management, a stable and niche labor skills are key to macroeconomic environment product differentiation. and a sound investment plan. Capital Intensive
Glasses & Contacts E-Commerce & Online Auctions Wholesaling Labor Intensive Optometrists Glasses & Contact Lens Manufacturing Traditional Service Economy Mail Order Old Economy Wholesale and Retail. Reliant Eye Glasses & Agriculture and Manufacturing. on labor rather than capital to Contact Lens Traded goods can be produced sell goods. Functions cannot Stores using cheap labor abroad. be outsourced therefore fi rms To expand fi rms must merge must use new technology or acquire others to exploit or improve staff training to economies of scale, or specialize increase revenue growth. in niche, high-value products.
Change in Share of the Economy SOURCE: WWW.IBISWORLD.COM WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 33
Operating Conditions
Capital Intensity and remodeling existing ones. For spent on store maintenance and continued example, Luxottica’s capital expenditures remodeling, and the rest is divided account for about 5.5% of the company’s equally among new stores and upgrading revenue. Half of its capital investment is information systems and lab equipment.
Technology The industry has contended with rising Other technological systems that & Systems competition from warehouses and industry participants use include optical supercenters including optical services in lens grinding machines, which shape Level their product portfolio. As a result, many spherical lenses made of optical glass into eye glasses and contact lens stores have aspherical shapes by using grindstones The level of hired licensed optometrists for on-site revolving at high speeds. Technological Technology Change exams and fittings. Optometrists use advances in the area of optical grinding is Medium several machines during a typical eye machines include the development of exam. A tonometer is an instrument used automatic high-speed machines with to test for glaucoma. It sends a small puff nanometer precision. The industry has of air into the eye to test the interocular also benefited from technological pressure. An autorefractor is a computer- advances that affect the general retail operated machine that measures how industry. These advances include the light is changed after it enters the eye. introduction of computer scanning cash This instrument measures the registers and electronic data interchange prescription of glasses or lenses needed. (EDI), which transmit electronic The phoropter is a machine placed in documents between businesses from one front of the eyes that contains a range of computer system to another. lens options. The optometrist changes the Computerized retail point-of-sale options to come up with the best (POS) and inventory management prescription for the patient. A slit lamp is software systems allows participants in also commonly used in eye exams, the Eye Glasses and Contact Lens Stores typically alongside a biomicroscope. industry to manage their stock levels Together, these instruments provide a more accurately and improve their stock magnified view of the eye, which helps turns. These systems help track time of identify anatomical abnormalities within orders and eliminate duplicate data the eyes. Technological advances in these entries or orders. Advances in machines affect glasses and lens stores information technology also serve to because an increasing number of these redefine the relationship between operators house optometrists. distributor, retailer and customer.
Revenue Volatility The Eye Glasses and Contact Lens Stores despite economic conditions, individuals industry has a low level of revenue who require corrective lenses typically volatility. Nevertheless, the industry cannot delay or opt out of their Level contends with low demand for high- purchases. Furthermore, a large share of The level of quality, brand-name nonprescription eye the US population wears or needs glasses. Volatility is Low glasses during periods when consumers While sales for eyewear typically have low per capita disposable income. remain high regardless of the economy, However, prescription eyewear is consumers will purchase low-cost considered a medical necessity; therefore, eyewear products and curb their demand WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 34
Operating Conditions
Revenue Volatility for unnecessary expenditures, such as every 2.1 years on average; however, the continued sunglasses. Nevertheless, the frequency replacement market for eyewear can be of the replacement of eyeglasses by hampered as consumers delay their customers causes the industry to purchases by extending old prescriptions experience stable demand. Jobson during recessions. AOA’s survey revealed Optical Research estimates that that 36.0% of Americans have limited customers replace their eyeglasses once their doctor visits due to the recession.
A higher level of revenue Volatility vs Growth volatility implies greater industry risk. Volatility can 1000 Hazardous Rollercoaster negatively affect long-term strategic decisions, such as 100 the time frame for capital investment. 10 When a fi rm makes poor investment decisions it Eye Glasses & Contact may face underutilized 1 Lens Stores
capacity if demand (%) volatility* Revenue suddenly falls, or capacity 0.1 Stagnant Blue Chip constraints if it rises –30 –10 10 30 50 70 quickly. Five year annualized revenue growth (%)
* Axis is in logarithmic scale SOURCE: WWW.IBISWORLD.COM
Regulation & Policy Participants in the industry must comply devices. Under the FDCA, approval by with the Social Security Act, the Health the Food and Drug Administration (FDA) Insurance Portability and Accountability is required prior to the commercialization Level & Trend Act (HIPAA) and the Fairness to Contact of medical devices. In addition, all states The level of Lens Consumers Act (FCLCA). The Social have passed laws that govern or affect Regulation is Security Act applies to operators’ participants’ arrangements with the Medium and the participation in the Medicare and optometrists who practice in optical trend is Steady Medicaid programs. HIPAA governs the goods stores. All states require that firms’ participation in managed care optometrists obtain a license. programs, and it enforces privacy and The Eye Glasses and Contact Lens Stores security regulations. FCLCA established a industry also follows the general regulations national uniform standard for eye-care of running a business, including practitioners and marketers on the sale of government regulations that aim to contact lenses, requiring that contact maintain a free and competitive economy. lenses only be sold based on the seller Congress has passed the Sherman Antitrust obtaining a copy of the prescription or Act, the Wilson Act, the Clayton Act and the verifying the prescription with the Robinson-Patman Act along with various customer’s prescriber. other regulations regarding unfair The Food, Drug and Cosmetic Act competition. Also, several states have (FDCA) regulates the testing, enacted their own antitrust laws to ensure manufacturing, labeling, distribution, the general public is provided with the best importation and promotion of medical prices, quality and competition. WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 35
Operating Conditions
Regulation & Policy Healthcare reform essential health benefit within pediatric continued In early 2010, President Obama signed services, works to bridge the gap in vision the final elements of healthcare reform and eye healthcare for children in the into law. The legislation included a United States. Another important facet of number of provisions that affect vision the bill is the establishment of a level and eye health. Among these is a measure playing field for optometrists and that adds vision healthcare services as ophthalmologists in terms of insurance part of the school-based health clinics reimbursements for vision care. The bill program. This provision, combined with contains a provision under which parity a measure to include vision as an will happen in 2014.
Industry Assistance Tariffs do not apply to this industry, work for optical goods stores can join because retail sales are domestic. various professional bodies, such as However, items sold by this industry the American Optometric Association Level & Trend may be subject to tariffs at the or the Opticians Association of The level of manufacturing level. Tariffs vary America. These associations offer Industry Assistance depending on the product. For example, information to practitioners and aim is Low and the sunglasses are subject to a 2.0% tariff, to raise public awareness. trend is Steady goggles and optical frames are subject to Finally, industry companies depend a 2.5% tariff and glass lenses are subject on reimbursements for patients covered to a 3.4% tariff. by Medicare and Medicaid. The growth Industry participants receive in sales is attributable to the rising age assistance through managed vision of the population and facilitated by care (MVC) programs that give government health insurance programs. patients discounts on optical wear at In general, Medicare and Medigap participating stores. Ninety percent of (Medicare supplemental insurance) do independent optical goods stores not cover routine eye examinations belong to one of these networks, such (simple screening) or the cost of as VSP (with 22,000 members, which eyeglasses. However, Medicare will includes retail outlets and doctors’ cover the costs of cataract surgery or offices) and OptiCare Eye Health treatment of issues related to glaucoma, Network. The networks assist their blepharitis and dry eye syndrome. members with marketing, business Individuals who undergo cataract solutions and claims processing. Large surgery are also entitled to coverage for optical chains, such as Cole National, basic frames and lenses following the operate their own MVC programs. In surgery, which exclude bifocals, trifocals addition, optometrists who own or or progressive lenses. WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 36 Key Statistics
Industry Data Number of Industry adults over Revenue Value Added Establish- Wages Domestic 50 years old ($m) ($m) ments Enterprises Employment Exports Imports ($m) Demand (Mils) 2005 9,648.6 2,679.1 14,825 8,009 64,042 -- -- 1,931.1 N/A 87.4 2006 9,484.8 2,699.1 14,841 7,810 66,355 -- -- 2,040.3 N/A 89.7 2007 9,277.1 2,691.9 15,927 7,874 70,814 -- -- 2,129.5 N/A 92.1 2008 9,479.9 2,919.1 15,980 7,986 73,952 -- -- 2,156.0 N/A 94.6 2009 9,008.0 2,741.0 15,590 7,775 71,247 -- -- 2,118.0 N/A 97.0 2010 9,273.1 2,936.9 15,373 7,660 72,263 -- -- 2,173.9 N/A 99.6 2011 9,546.0 2,770.6 15,548 7,591 72,570 -- -- 2,143.5 N/A 102.0 2012 9,507.4 2,974.4 15,625 7,450 73,953 -- -- 2,235.9 N/A 104.3 2013 9,628.4 3,007.9 15,634 7,422 74,951 -- -- 2,285.7 N/A 106.6 2014 9,736.0 2,936.0 15,898 7,403 75,782 -- -- 2,303.2 N/A 109.0 2015 10,128.0 3,219.8 16,272 7,299 76,154 -- -- 2,366.0 N/A 110.9 2016 10,361.0 3,374.2 16,323 7,262 77,341 -- -- 2,421.0 N/A 112.5 2017 10,679.0 3,483.8 16,582 7,164 78,912 -- -- 2,512.0 N/A 114.2 2018 10,793.0 3,564.8 16,660 7,105 82,390 -- -- 2,615.0 N/A 115.9 2019 11,024.0 3,737.3 16,832 7,102 84,123 -- -- 2,679.0 N/A 117.5 Sector Rank 69/136 53/136 56/136 67/136 60/136 N/A N/A 50/136 N/A N/A Economy Rank 611/1288 609/1288 301/1287 372/1287 417/1288 N/A N/A 525/1288 N/A N/A
Annual Change Number of Industry Establish- Domestic adults over Revenue Value Added ments Enterprises Employment Exports Imports Wages Demand 50 years old (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) 2006 -1.7 0.7 0.1 -2.5 3.6 N/A N/A 5.7 N/A 2.6 2007 -2.2 -0.3 7.3 0.8 6.7 N/A N/A 4.4 N/A 2.7 2008 2.2 8.4 0.3 1.4 4.4 N/A N/A 1.2 N/A 2.7 2009 -5.0 -6.1 -2.4 -2.6 -3.7 N/A N/A -1.8 N/A 2.5 2010 2.9 7.1 -1.4 -1.5 1.4 N/A N/A 2.6 N/A 2.7 2011 2.9 -5.7 1.1 -0.9 0.4 N/A N/A -1.4 N/A 2.4 2012 -0.4 7.4 0.5 -1.9 1.9 N/A N/A 4.3 N/A 2.3 2013 1.3 1.1 0.1 -0.4 1.3 N/A N/A 2.2 N/A 2.2 2014 1.1 -2.4 1.7 -0.3 1.1 N/A N/A 0.8 N/A 2.3 2015 4.0 9.7 2.4 -1.4 0.5 N/A N/A 2.7 N/A 1.7 2016 2.3 4.8 0.3 -0.5 1.6 N/A N/A 2.3 N/A 1.4 2017 3.1 3.2 1.6 -1.3 2.0 N/A N/A 3.8 N/A 1.5 2018 1.1 2.3 0.5 -0.8 4.4 N/A N/A 4.1 N/A 1.5 2019 2.1 4.8 1.0 0.0 2.1 N/A N/A 2.4 N/A 1.4 Sector Rank 94/136 126/136 67/136 104/136 85/136 N/A N/A 88/136 N/A N/A Economy Rank 956/1288 1157/1288 566/1287 914/1287 736/1288 N/A N/A 856/1288 N/A N/A
Key Ratios Imports/ Exports/ Revenue per Share of the IVA/Revenue Demand Revenue Employee Wages/Revenue Employees Average Wage Economy (%) (%) (%) ($’000) (%) per Est. ($) (%) 2005 27.77 N/A N/A 150.66 20.01 4.32 30,153.65 0.02 2006 28.46 N/A N/A 142.94 21.51 4.47 30,748.25 0.02 2007 29.02 N/A N/A 131.01 22.95 4.45 30,071.74 0.02 2008 30.79 N/A N/A 128.19 22.74 4.63 29,154.05 0.02 2009 30.43 N/A N/A 126.43 23.51 4.57 29,727.57 0.02 2010 31.67 N/A N/A 128.32 23.44 4.70 30,083.17 0.02 2011 29.02 N/A N/A 131.54 22.45 4.67 29,537.00 0.02 2012 31.29 N/A N/A 128.56 23.52 4.73 30,234.07 0.02 2013 31.24 N/A N/A 128.46 23.74 4.79 30,495.92 0.02 2014 30.16 N/A N/A 128.47 23.66 4.77 30,392.44 0.02 2015 31.79 N/A N/A 132.99 23.36 4.68 31,068.62 0.02 2016 32.57 N/A N/A 133.97 23.37 4.74 31,302.93 0.02 2017 32.62 N/A N/A 135.33 23.52 4.76 31,832.93 0.02 2018 33.03 N/A N/A 131.00 24.23 4.95 31,739.29 0.02 2019 33.90 N/A N/A 131.05 24.30 5.00 31,846.23 0.02 Sector Rank 19/136 N/A N/A 103/136 14/136 71/136 52/136 53/136 Economy Rank 704/1288 N/A N/A 981/1288 483/1288 951/1287 1009/1288 609/1288
Figures are inflation-adjusted 2014 dollars. Rank refers to 2014 data. SOURCE: WWW.IBISWORLD.COM WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 37
Jargon & Glossary
Industry Jargon ASTIGMATISM An eye condition that causes a PHOROPTER An instrument containing various lenses disturbance in the way that light rays are focused within used to measure the patient’s eyeglass or contact lens the eye. prescription. AUTOREFRACTOR A machine used in eye exams that POINT-OF-SALE (POS) A system used at checkout in measures how light is changed as it enters the eye. retail stores using computers and cash registers to CATARACT SURGERY An eye surgery that involves capture transaction data at the time and place of sale. removing all or part of the lens and replacing it with an SLIT LAMP Used alongside a biomicroscope (a intraocular lens implant. microscope used on the body) to magnify the eye and ELECTRONIC DATA INTERCHANGE (EDI) The identify physical abnormalities. transmission of electronic documents between TONOMETER Used to test for glaucoma in the eye, this businesses from one computer system to another. instrument blows a small puff of air into the eye to test OPTOMETRIST Individuals that earn a Doctor of the pressure. Optometry degree, perform eye exams, write prescriptions and dispense eyewear.
IBISWorld Glossary BARRIERS TO ENTRY High barriers to entry mean that EXPORTS Total value of industry goods and services sold new companies struggle to enter an industry, while low by US companies to customers abroad. barriers mean it is easy for new companies to enter an IMPORTS Total value of industry goods and services industry. brought in from foreign countries to be sold in the CAPITAL INTENSITY Compares the amount of money United States. spent on capital (plant, machinery and equipment) with INDUSTRY CONCENTRATION An indicator of the that spent on labor. IBISWorld uses the ratio of dominance of the top four players in an industry. depreciation to wages as a proxy for capital intensity. Concentration is considered high if the top players High capital intensity is more than $0.333 of capital to account for more than 70% of industry revenue. $1 of labor; medium is $0.125 to $0.333 of capital to $1 Medium is 40% to 70% of industry revenue. Low is less of labor; low is less than $0.125 of capital for every $1 of than 40%. labor. INDUSTRY REVENUE The total sales of industry goods CONSTANT PRICES The dollar figures in the Key and services (exclusive of excise and sales tax); subsidies Statistics table, including forecasts, are adjusted for on production; all other operating income from outside inflation using the current year (i.e. year published) as the firm (such as commission income, repair and service the base year. This removes the impact of changes in income, and rent, leasing and hiring income); and the purchasing power of the dollar, leaving only the capital work done by rental or lease. Receipts from “real” growth or decline in industry metrics. The inflation interest royalties, dividends and the sale of fixed adjustments in IBISWorld’s reports are made using the tangible assets are excluded. US Bureau of Economic Analysis’ implicit GDP price INDUSTRY VALUE ADDED (IVA) The market value of deflator. goods and services produced by the industry minus the DOMESTIC DEMAND Spending on industry goods and cost of goods and services used in production. IVA is services within the United States, regardless of their also described as the industry’s contribution to GDP, or country of origin. It is derived by adding imports to profit plus wages and depreciation. industry revenue, and then subtracting exports. INTERNATIONAL TRADE The level of international EMPLOYMENT The number of permanent, part-time, trade is determined by ratios of exports to revenue and temporary and seasonal employees, working proprietors, imports to domestic demand. For exports/revenue: low is partners, managers and executives within the industry. less than 5%, medium is 5% to 20%, and high is more ENTERPRISE A division that is separately managed and than 20%. Imports/domestic demand: low is less than keeps management accounts. Each enterprise consists 5%, medium is 5% to 35%, and high is more than 35%. of one or more establishments that are under common LIFE CYCLE All industries go through periods of growth, ownership or control. maturity and decline. IBISWorld determines an ESTABLISHMENT The smallest type of accounting unit industry’s life cycle by considering its growth rate within an enterprise, an establishment is a single (measured by IVA) compared with GDP; the growth rate physical location where business is conducted or where of the number of establishments; the amount of change services or industrial operations are performed. Multiple the industry’s products are undergoing; the rate of establishments under common control make up an technological change; and the level of customer enterprise. acceptance of industry products and services. WWW.IBISWORLD.COM Eye Glasses & Contact Lens Stores in the US June 2014 38
Jargon & Glossary
IBISWorld Glossary NONEMPLOYING ESTABLISHMENT Businesses with WAGES The gross total wages and salaries of all no paid employment or payroll, also known as employees in the industry. The cost of benefits is also continued nonemployers. These are mostly set up by self-employed included in this figure. individuals. PROFIT IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as revenue minus expenses, excluding interest and tax. VOLATILITY The level of volatility is determined by averaging the absolute change in revenue in each of the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%. www.ibisworld.com | 1-800-330-3772 | [email protected]
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