MARKET TRENDS REPORT

TOP 10 MEGA MARKET TRENDS

We divulge the results from our exclusive Market Trends Study to give you the top business trends you need to know in the new year

BY STEPHANIE DE LONG

It’s a new year, complete with fresh opportunities—as well as new (and not-so-new) challenges. You told us about both in the just-completed Eyecare Business Annual Market Trends Study. To help you plan for and prosper in 2016, we share the results of that research here by presenting the year’s top 10 market trends.

1. Business Is Up

As our annual Market Trends Study reports, ECPs face plenty of challenges. That being said, there’s a lot of good news, too. In fact, 55% of those surveyed by Eyecare Business report that their sales for the first half of 2015 surpassed those from a year earlier.

Despite concerns about healthcare reform and managed care costs, more than half say they expect sales for the year just ended to show an increase in eyewear sales and related services. Six out of 10 expect their year-end numbers to reflect an increase over 2014 in eyecare and eye exam revenues, as well.

ECPs’ Overall Sales

2. Hiring Is Tough

Since 2013, healthcare reform has topped the list of business challenges. While that hasn’t changed, the number-two challenge definitely has. In fact, for the first time in six years, hiring good people surpassed managed care on the list of business challenges you’re facing. That is fueled in no small degree by the fact that unemployment in the U.S. is at its lowest level since April 2008.

ECPs’ Key Concerns

3. Eyewear Revenues Rise

In terms of revenue, ECPs report that approximately a third of their revenues came from patient exams in 2015, and nearly 70% from product-related transactions. Spectacle lenses account for the lion’s share of those dollars, followed by frames and contact lenses. Though contact lens sales represent a smaller piece of the pie, CL patients are great customers. For one thing, millennials—the demographic everyone is pursuing—represent the largest category of CL wearers by age group.

4. Customer Service Is Key

Customer service is what it’s all about. It’s how three-quarters of the ECPs surveyed (73%) say they compete with online-only sellers and how 67% of them report they counter the challenges of today’s competitive business environment.

Just as ECPs know customer service is the deciding factor with consumers, service is important to practices, as well, when it comes to picking both wholesale labs and vendors. In the lab arena, for example, along with quality of work, customer service is why ECPs report they decide to remain loyal to a lab. Service, followed by return on investment, is also the top reason cited for selecting an edging or surfacing equipment vendor.

Simply put, customer service tops every list, whether it’s about buying or selling, in today’s marketplace.

ECPs’ Top 5 Strategies

5. Mix Overcomes Objections

Beyond providing great customer service, ECPs also report several other successful strategies for growing business in the face of increased competition, price sensitivity, and decreased profit margins resulting from healthcare reform. These include reassessing inventory mix (27%), providing lower-cost options (46%), and discounting (29%).

In both frames and lenses, ECPs also report adding more house brands to the mix. In the spectacle lens arena, nearly half of those surveyed (49%) report that they offered house-brand lenses in 2015. That’s a big jump from the 37% who said they did so a year earlier.

How ECPs Are Overcoming Cost Objections

6. Talking Product Specifics

While house brands often provide a lower-priced option, ECPs are positioning themselves in the higher end, as well, with 61% reporting that they now emphasize premium-priced PALs over lower-priced ones. That’s up from 55% a year ago.

Though time constrained, ECPs are also making it a point to discuss important options with consumers. Almost nine out of 10 (88%) say they always discuss the benefits of AR with patients, and half report that they also discuss digital eye strain with all their patients.

They are also discussing brand names when it comes to frames. While O.D.s are most likely to discuss contact lens brands, opticians report that they discuss frame and spectacle lens brands with their customers. All told, 13% of O.D.s surveyed say they always address frame brands in the chair, while 62% of opticians report that they always discuss them with customers.

Discussing Brand Choices—Opticians

7. Connecting Online

More than eight out of 10 (84%) ECPs surveyed now have a website for their business. While the percentage of those with Facebook or Twitter accounts has risen to 68%, only 12% report they update those accounts daily.

Communication technologies are also important internally, say the ECPs we surveyed. For example, 73% of them consider it to be “extremely important” to have all their exam lanes linked together. That’s up from 58% a year ago.

Though the use of apps internally is still fairly new to many practices, fully 28% of those surveyed say they now use them to take additional measurements for personalized lenses.

ECPs’ Use of Social Media

8. Lenses Rule

ECPs report that well over half their customers and patients (66% in all) now request specific lens brands. When asked about near-term potential, ECPs put three lens technologies—computer vision/blue light, wavefront, and sunwear—onto their Top 10 List. In terms of materials, polycarbonate is cited by nearly 73% of ECPs as their top-selling lens material, with CR-39 and high index almost tied for the number-two spot.

Looking ahead, ECPs predict the biggest growth categories in spectacle lenses over the next two years will be sun lenses (82%) and progressives (80%). When it comes to big purchases, edgers beat digital refractors to the top spot on equipment wish lists in 2015. The motivation for buying new equipment continues to be increased efficiency and cost savings.

ECPs’ Top-Selling Lens Types

9. Focus on Frames

The majority of ECPs surveyed (58%) now have between 500 and 1,000 frames on display, a higher percentage than in the past two years. When it comes to frame selection, style is more important than ever before, while price has dropped in importance over the last three years.

While the majority of inventory remains in the mid-range price tier (52%), nearly half of those surveyed report increased multiple-pair sales. Most second-pair sales come from Rx sunwear and photochromics.

That may explain why Rx sunwear accounts for most of the “specialty” space on frame boards and why it’s considered the fastest-growing specialty category.

ECPs’ Frame Sales

10. What’s In Store For the Future?

When it comes to future challenges, ECPs report that managed care remains the biggest perceived threat. Still at number two, but rising to 24% in 2015, is online eyeglass sales competition. To counter, 22% of ECP websites is now used for e-commerce. Another 12% of those surveyed say they plan to get into e-commerce within the next year. When it comes to new opportunities, wearable technology is definitely gaining traction. In 2015, 48% of ECPs view wearables as a key consideration, up from 11% in 2014. In broad-brush terms, ECPs place eyeglasses and primary care ahead of regular eye exams as perceived opportunities for future growth. And when it comes to equipment, especially edgers, 40% of ECPs report plans to make a purchase within the next three years.

Well over half of the survey respondents (61%) report annual sales of more than $500,000 in 2015, and 25% top the $1 million mark. Those numbers have increased in both segments since 2014, and that represents a great jumping-off point for 2016.