Strategy with Vision

SWV were interested to find out if there had been any shifts in lens purchasing behaviour during 2008 and if there had been any change in lens sales (in volume and value) compared to the previous year. The study was conducted in France, Germany and the UK, the three leading markets in Europe, during the15-20th January 2009. These markets represent 60% of ophthalmic lens sales in Europe.

FRANCE

To a certain extent, the French market has been recession proofed, due to the high level of subsidies on eyewear provided by the medical insurance organizations. It was therefore a surprise to find the market weak.

There is a trend towards paying less on top of the package supplied by the medical health provider. On average this sum is about € 300 for a frame and two lenses. Usually a consumer will pay extra money out of their own pocket to get a “better package”. There are signs that the consumer is looking for value for money in order to reduce or eliminate the need to pay money on top of the medical health insurance contribution.

What happens with the Ducroire system (whereby central organisations guarantee the payment of the independent optician) needs careful monitoring. The independent sector has been hit harder than the retail chains during the economic slowdown. Indications were received that the number of opticians who are close to having financial problems is growing.

Independent opticians who have professional competence, up to date shop fittings, and interesting designs and layout and value for money commercial propositions are still doing well.

GERMANY

This is the most difficult market to read. SWV estimates that the market for ophthalmic lenses was flat in value and +2% in volume in the last quarter 2008. (SWV measure the market at net manufacturer selling prices to the optician.) The flat figure for value is due to a shift from customers with lower discount levels to higher discount levels.

Sales of progressives were slightly weaker in December. It is noticeable that sales of mid- priced progressives were weak. Sales of promotionally priced progressives € 199 (to the consumer) and lower and premium priced progressives over € 400 were doing well. In Germany there was no reference to consumers trading down to a lower index to save money as was the case in the UK.

Sales to the optical trade for the first half of January were below those of last year. SWV believe this has been due to low temperatures as well as the fact that January 2008 was an extremely good month for the Optical trade.

UK

The market for ophthalmic lenses had declined by 5% in value and 7% in volume. There had also been a shift in both independent optician and consumer behaviours.

Independent opticians had become more willing to change the way they were supplied with lenses. This is not just a matter of obtaining cheaper lenses by switching supplier. Examples were encountered where independent opticians had rationalized their supplier base by feeding more business through one company, who could deliver similar lenses, but also moving their business to companies who could supply branded lenses.

At the consumer level, it is believed that there is a differentiation between premium lenses and branded lenses. Nikon and Kodak, not known by the consumer for ophthalmic lenses, but whose name gives reassurance, were both doing well.

Sales in January up to the time SWV carried out the interviews had been weak. As one leading supplier said...“in normal years we would have blamed the weather. Cold and icy roads tend to put people off going out to the optician”.

GENERAL IMPRESSIONS

For lens suppliers, the period October to December 2008, and January 2009 was difficult. However, during our interviews, Two lens suppliers had recorded their highest ever sales day in this period. One manufacturer was so busy that machines could only be serviced at 5 am on Sunday mornings. Sales of complete spectacles (a frame plus two lenses with add-ons) at a fixed consumer price, did well during this period.

One of the biggest problems mentioned was in the UK and Germany where there are more medium sized companies supplying opticians. There is an issue with Optician price lists which are relatively complex and costly to print. Stock lens buying prices are usually in US dollars and sometimes in Yen. Currency fluctuations seen in 2008, if continuing in 2009 may harm smaller importers of stock lenses (of which there are many), to the benefit of larger manufacturers, who are able to hedge their foreign exchange exposure.