BUSINESS Updates 2011

EB follows up with ECPs who have weathered the industry's many storms over the last quarter century

By Alicia Isenberg

Twenty five years ago, Eyecare Business hit the ground running in its premier issue with an editorial on the optical industry's biggest threat to small-town dispensaries: the emergence of optical superstores. The article, “In the Shadows of the Superstores,” reported on how independent and family-owned optical businesses were scrambling to compete with the chain retailers' in-and-out service platform.

EB checked in with these independents in 1996, and again in 2006, to see how they fared against the rise of superstores and to report on other obstacles that came their way. So it was only fitting that for its silver anniversary, EB follow up once again.

In 2011, the optical industry is faced with as many challenges as ever before. But before jumping into today's obstacles, here's a quick look at the issues that have cast the longest shadows over the last quarter century.

SUPERSTORE SUPERPOWERS

The year was 1986. Like so many trades at that time, the optical industry was being overrun by corporate superstores. With the promise of low prices, convenient locations, and fast service, it was uncertain whether or not these chains would run mom-and-pop shops out of business.

Many service providers fought back by increasing advertising budgets and adding services and on-call hours. Others updated inventory and offered faster service. And while some small businesses perished in their attempts to keep up with the retail chains, others not only stayed afloat, but flourished.

MANAGED CARE MAYHEM

Ten years later, superstores, while not off of the radar, were no longer the elephant in the room. In fact, some independents even credited superstores for forcing them to become better retailers.

However, their celebration was short lived. A new challenge was taking the optical industry by force: managed care plans. With it came more paperwork, more uncertainty, and many more headaches.

“[Managed care] seems to be the worst thing that we've gone through,” said Carol Card of Card's Opticians, in Winter Park, Fla., back in 1996. “This is another phase, but this phase is probably the worst one.”

FROM ONE CAME MANY

After 20 years, most of the original respondents were retired or no longer in the business. The few that remained, however, had divided and conquered the superstores and, for better or worse, learned to live with the vision care plans that were here to stay.

Setting a new precedent, the year 2006 did not have just one overarching challenge. Instead, a laundry list of issues plagued these independent retailers. Challenges that topped the list included bringing in new clientele and changes in the way chain stores selected their store locations, among others.

MORE OF THE SAME

While a lot has changed since 2006, in today's climate, some things still remain the same. In place of a singular threat shading the landscape, today's optical stores remain shrouded in many smaller shadows.

■ Healthcare. For Card's Opticians, insurance is still an issue. “Insurance is always going to be a big concern for independent opticals,” notes Card.

On a similar note, a top concern for Mark Cohn, OD, of Bellevue, Wash., is the uncertainty of healthcare reform. Though he says there is no overcoming such a change within our entire society, he is still prepared. “The strategy for me is to remain steadfast in maintaining a quality environment for our patients, a thorough delivery of care, and the avoidance of participation in plans that are not going to reimburse fairly.”

■ Finding a niche. Bernie Winitz of Glasses Ltd. in Chicago says that in his opinion, the biggest concern facing dispensaries is carving out a niche in a homogenized industry taken over by chain stores.

In 2006, Dr. Cohn predicted a shakeout of the low end of the market. Today, Winitz agrees. “The guy up the street is selling glasses for $100, the guy down the street is selling them for $50, and then the guy farther down the street is selling them for nothing and giving you $50 just to come in. It's impossible to go low end anymore.” Independents are out-pricing the competition to the point that they can't make any money, says Winitz.

“There are so many smaller independents fighting for the same dollar,” says Winitz. “We're able to maintain our business because we are an oddity, a white elephant in an industry of mediocrity.”

■ Online optical retailers. The progress of online optical retailers is a big concern for Card. Much like superstores, these outlets promise lower prices and one-click shopping, a big enticement for busy, computer-savvy patients.

“Consumers are beginning to think that optical stores are obsolete,” says Card, who fears that the next generation's need for instant gratification will put a big strain on mom-and-pop dispensaries. “Young people believe that everything can be bought with the push of a button,” says Card.

In reaction to the growing number of online retailers, Card has cut phonebook advertising to invest more money into her dispensary's website. Though the site doesn't offer online ordering, it does help educate consumers about the products and services her store offers.

Others, like Dr. Cohn, don't view online stores as major threat. “I don't deny they will become a factor,” says Cohn, “but I don't see how they will—any more than in clothing—take the place of the face-to-face, personalized approach operations like ours deliver.”

■ Family affairs. The number of family-owned operations is continuing to dwindle. Though his son runs the business on a daily basis and plans to take over entirely once his father retires, Winitz knows that his situation is rare. “Children of family-owned businesses are no longer taking over,” he notes.

Card, who runs Card's Opticians with her husband and two children, had the same concerns back in 2006, stating that younger generations feel that opticianry is no longer lucrative. With retirement in her near future, she is unsure whether or not her children will continue the business. “I sometimes wonder if [my children] keep the store open because of me.”

Winitz believes that the shift in consumer spending habits will greatly affect the future of independent shops. “My business was successful at the pinnacle of high-end consumption. That's no longer the case,” he says. “I think [my son] will have a comfortable life, but I don't think he'll live the life that I lived.”

ON THE HORIZON

With healthcare reform up in the air and the many obstacles now facing the industry, the forecast appears uncertain. So what does this mean for ECPs? Only time will tell. But there is still hope for the motivated independents.

“When I opened up [my first store], everyone on the block said, ‘The kid's never going to make it.' I always said to myself, ‘I will make it, I will do it.' And eventually I did,” Winitz says. “So if you have the guts and you have the fortitude, you'll probably be able to make it.” EB