DEMOGRAPHICS, AMERICAN STYLE

Sneak an insider peek at just how your peers (and the country’s economic bullet points) are faring from sea to shining sea with intel from our exclusive Regional Trends in the Optical Marketplace study results

BY STEPHANIE K. DE LONG

Jimmy Choo Glint/S sunglasses from Safilo in Blue Crystal with glitter accent. Photo by Jurgen Reisch

“Slow and steady, but not exciting.” That’s how Ryan Severino, CFA, senior economist at Reis, Inc., describes retail business for the first quarter of 2016 (Q1).

Though the economy grew at its slowest rate in two years, The Associated Press reports, “that was actually slightly faster…than estimated. However, shockwaves from Britain’s decision to leave the E.U. could spread to the U.S. economy in coming months.”

The good news for Q1 is that, in optical, ECPs increased sales compared with a year earlier, according to the exclusive Eyecare Business Regional Trends in the Optical Marketplace study. Eyecare professionals in the West and Northeast fared the best, with the highest number of respondents in these regions reporting sales in Q1 2016 vs. Q1 2015 as “Up.” [See bar graphs.]

Eyecare professionals in all regions of the country—from the Northeast and Midwest to the South and West—also experienced rises in revenues from 2014 to 2015.

HEALTHY STATS ACROSS THE U.S.

✔ EMPLOYMENT. According to the Bureau of Labor Statistics, the national jobless rate in May was 4.7%, down a healthy 0.8% from May 2015.

✔ PRICES. The quarterly average Consumer Price Index (the measure of the average change over time in prices paid by consumers for goods and services, as calculated by the Bureau of Labor Statistics) rose slightly—to 237.4 in Q1 2016, compared with 237.2 in Q4 2015.

✔ REAL ESTATE. According to Reis, Inc., the average Q1 nationwide retail asking rent of $20.20 per square foot was up 0.5% from Q4 2015.

What’s ahead in retail real estate? “There’s a structural change in the market, as the focus on experiential shopping is causing transitions from simply cater[ing] to perfunctory shopping to hybrid complexes,” says Reis’ Severino.

THE NORTHEAST

Making it, from Maine to Manhattan

The Northeast is the nation’s most densely populated and culturally diverse region. So, how have its nine states fared this year?

Fully 65% of ECPs surveyed said their Q1 sales were up over a year earlier. And, the Northeast was second only to the West in increased profitability between 2014 and 2015.

Prescription sunwear, as a second-pair sale, has grown in the Northeast more than anywhere else. Practices here have also been the most proactive in expanding inventory with both higher- and lower-end frames.

While it is still fabricating fewer free-form/digitally produced lenses than other regions, free-form has nonetheless grown from 48% of lenses last year to 54% in 2016. Northeastern ECPs also sell more plastic lenses, do more in-house edging, and have experienced a stronger spike in photochromic sales than other regions.

NORTHEAST: THE BIG PICTURE

How’s the Northeast faring from a business and economic perspective?

✔ JOBS. The region has had the best employment rates in the country so far this year, with rates ranging from a low of 4.6% to 4.8% in May. That is much better than a year ago, when unemployment sat at 5.6% for several months in this region.

✔ COSTS. Regional prices were up 0.3% in May (with a CPI of 255.02), and were up 0.9% for the 12-month period ending May 31.

✔ REAL ESTATE. With the nation’s second-lowest retail vacancy rate (9.2% for Q1), the Northeast also boasted the second-highest asking rent of $21.56 per square foot for the quarter.

THE WEST

Winning, from Portland to Phoenix

In both 2015 and the first quarter of 2016, the West beat out all other regions with the strongest sales for eyecare professionals, according to the Eyecare Business Regional Trends in the Optical Marketplace study. In terms of product categories, the West also experienced the nation’s biggest growth in AR lenses and children’s eyewear.

It is, however, the only region not to report a rise in metal and plastic combination frames—and the West sold a lower percentage of PALs (41% of lenses sold) as compared with other regions.

Ironically, the region has the fewest practices selling online, while counting the highest percentage of Millennials (aka social media mavens) as patients.

In terms of sales volume, the West has the largest number of locations in the $300,000 to $500,000 annual sales volume bracket, while practices there (regardless of revenue) are also much more likely than locations in other regions to inventory in excess of 1,000 frames.

THE WEST: THE BIG PICTURE

How is the West faring from a broader business and economic perspective?

✔ JOBS. The West region rang up the country’s highest unemployment numbers this spring, coming in at 5.1% for the three-month period ending in May, according to the Bureau of Labor Statistics (BLS).

✔ COSTS. So far this year, the Consumer Price Index has increased 2.9% in the West, according to the BLS.

✔ REAL ESTATE. At $24.72 per square foot, the West region had the nation’s highest asking rents in Q1, up 6% from the previous quarter, according to Reis, Inc. It also boasted the country’s lowest vacancy rate of 8.7%.

THE SOUTH

Dixie’s Dual Directions, from Tampa to Texas

While more than half the ECPs in the South (53%) saw sales rise in the first quarter of 2016 vs. the first quarter in 2015, another 30% (more than in other regions) reported their Q1 2016 sales were flat over Q1 2015, according to the Eyecare Business Regional Trends in the Optical Marketplace study.

In terms of product, plastic frames rule the roost for 78% of ECPs here—perhaps a reflection of the region’s recent expansion in lower price points. While more likely to refill a prescription in the patient’s existing frame than in other regions, ECPs here are also the nation’s top prescribers of polycarbonate, with usage skyrocketing from 55% of all jobs in 2015 to 78% this year.

That eye protection message carries indoors, as well, with sales of digital/blue light lenses now surpassing traditional sunwear in the South. Practices here also see more kids, and edge in-house more than their counterparts in other regions.

THE SOUTH: THE BIG PICTURE

So, how does Dixie look outside the optical realm?

✔ JOBS. Though the South still has the second-highest unemployment rate in the country for the year, the good news is that its numbers have dropped—from a high of 5.1% in January to a low of 4.8% in May, according to the Bureau of Labor Statistics (BLS).

✔ COSTS. The South saw an average Consumer Price Index of 230.3 in the first quarter of 2016, a 0.71% increase over late 2015, according to the BLS.

✔ REAL ESTATE. First-quarter vacancy rates in the retail sectors of both the South Atlantic and Southwest came in near the top of the nation, at 9.7% and 10.9% respectively, according to Reis, Inc. Asking rents were $17.75 per square foot in the Southwest vs. $19.19 per square foot in the South Atlantic.

THE MIDWEST

The Heartland Highs and Lows, from Omaha to Ohio

The Midwest is a study in contrasts with its waves of grain in the plains and spiraling waves of crime in some metro markets.

It’s no surprise that the economy in this region reflects a mix, as well. The Midwest is home to both the nation’s highest and lowest unemployment numbers, as well as the highest retail real estate vacancy rate (but the lowest asking rent).

What about optical? This beleaguered region reveals the fewest eyecare businesses with quarterly sales increases—as well as the most with sales declines—since last year. In terms of product, metal frames are more popular than other regions—a reflection, in part, of the Midwest’s manufacturing and farming workforces.

While pricing has remained stable, Midwestern ECPs have surprisingly shone more than in other regions in emphasizing higher-priced product, digitally produced lenses, and sunwear. A hefty 63% of practices, however, still don’t edge lenses in house.

In short, the nation’s breadbasket remains conservative in some areas, like edging, but has become more progressive in others, like online sales.

THE MIDWEST: THE BIG PICTURE

Looking beyond optical, how is the Midwest’s economy faring compared with other regions?

✔ JOBS…OR NOT. This spring, the Midwest region’s East North Central area (Illinois, Indiana, Michigan, Ohio, and Wisconsin) rang in the country’s highest unemployment rate of 5.3%, while neighboring West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota) had the lowest, at 3.8%, according to the Bureau of Labor Statistics (BLS).

✔ COSTS. The Midwest’s Consumer Price Index was down from a 12-month average of 224.5 to 223.7 in the first quarter of 2016. Analysts see that as a positive move away from recent deflationary pressures.

✔ REAL ESTATE. At 12.4%, the Midwest had the nation’s highest retail vacancy rate in the first quarter of 2016. As a result, the average retail asking rent—$16.57 per square foot—was the lowest of any region.