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By Andrew Karp: Group Editor, Lenses + Technology

NEW YORK—The ability to be agile in response to changing market conditions is a necessity for any business, but it’s crucially important for wholesale laboratories, the vital link between optical suppliers and eyecare professionals. Fortunately, the optical industry’s biggest, most influential labs are up to the task.

According to new data from VM’s 2011 Top Labs Report, the biggest independent and supplier-owned wholesaler laboratories are adapting to meet the changing needs of the independent eyecare professionals (ECPs) and retailers that comprise their customer base. Most made at least modest gains this year, and some made significant strides forward.

Among the main reasons for growth among VM’s Top Labs was the continuing proliferation of digital lenses and lens processing technology. The emergence of more compact and affordable digital surfacing equipment has allowed even smaller labs to enter the market, which, despite the initial investment required, has proved to be profitable for most labs. Additionally, the advent of private label digital lenses is creating a new revenue stream for digital surfacing labs.

VM’s Top Labs Report, published annually since 1992, ranks the 30 Top Labs by Rx sales (pairs of prescription lenses produced) and the number of Rx jobs produced per day. It provides a detailed look at the performance of the Top 25 Independent U.S. Wholesale Labs and the Top 5 Supplier-Owned U.S. Wholesale Lab Networks.

Retail Gains Fuel Wholesale Growth
For the 12 months ended June 30, 2011, independent ECPs and retailers generated $13.9 billion in revenue, out of an industrywide total of $32.2 billion, according to the Vision Council’s VisionWatch survey. Compared to dollar revenues from two years ago, independents were up by 2.4 percent in total, spread equally over the past two years.

In particular, rising lens and frame sales among independents helped boost revenues for VM’s Top Labs. During the same 12-month period, lens sales rose 1.0 percent among independents and frames sales grew by 3.2 percent, an $88 million increase from the year-ago period, according to VisionWatch.

Combined net sales for the Top Labs, including both the supplier-owned lab networks and the independent labs are projected to reach $2,209.3 million in 2011, up 4.5 percent from 2010. Total Rx sales will reach a record $1,870.4 million, a 5.3 percent increase over 2010. The Top Labs will collectively produce a total of 131,476 Rx jobs per day, or approximately 32.9 million Rx jobs annually, a 3 percent increase over 2010.

Top 5 Supplier-Owned Networks
Gains among the Top 5 Supplier-Owned Lab Networks in 2011 is a product of both organic growth and the result of acquisitions (see related story, Top Labs in the News on page 48). Collectively, the Top 5 will generate $1,612 million in total net sales, up 5.5 percent over 2010. Total Rx sales, which is based on the labs’ core business of surfacing and finishing prescription lenses and is the basis of the primary ranking of the Top Labs, will total $1,430.7 a 5.8 percent increase over 2010. Rx lenses sales will comprise 91.7 percent of Total Net Sales for the Top 5 Labs, flat with 2010.

The number of Rx jobs per day for the Top 5 will climb to 99,600, up 3.4 percent over 2010. The average proportion of uncut lens jobs among the Top 5 is 35 percent, flat with 2010.

The Top 5 currently operate a total of 191 individual lab locations versus 193 in 2009. The Top 5 work force consists of 9,119, down 3.4 percent from last year.

On an individual basis, 2011 has been a mixed year for the Top 5 Supplier-Owned Wholesale Lab Networks. Essilor and VSP Optical Laboratories grew their Rx sales, while Carl Zeiss Vision Laboratories and Nassau Vision Group Laboratories were down slightly in Rx sales; Hoya Vision Care was even with 2010. Essilor, Hoya and VSP produced more Rx Jobs per day in 2011 than in 2010; Carl Zeiss and Nassau Vision Group fell below last year’s levels.

The Top 25 Independents
Fourteen of the Top 25 Independents will increase their net sales in 2010. Twelve of the Top 25 will increase their Rx sales versus this year, and 13 will increase their Rx jobs per day production.

The total aggregate net sales for the Top 25 Independents in 2011 will be $597.3 million, a 2 percent increase over 2010. This continues a rebound from 2009, when net sales for the Top 25 decreased 4.2 percent from the prior year.

Total aggregate Rx sales for the Top 25 will climb to $439.7 million, a 3.8 percent increase over 2010 and a 7 percent increase over 2009.

Rx sales will account for 93.7 percent of net sales for the Top 25, up 1.6 percent from 2010. Unit sales among the Top 25 will rise to 31,876 Rx jobs per day; the 2.3 percent increase reversed last year’s decline from 2009. Uncut lenses, on average, will account for 32.3 percent of Rx jobs produced by the Top 25, down 4.0 percent over 2010.

The total number of lab locations operated by the Top 25 will decrease from 79 in 2010 to 76 in 2011. The size of the work force among the Top 25 labs will decrease slightly, from 2,805 in 2010 to 2,774 employees in 2011.

The composition of the Top 25 changed significantly in 2011. Winchester Optical, which ranked 19th among the Top 25 Independents in last year’s Top Labs Report, was acquired by Essilor, a Top 5 Lab. Additionally, Harbor Optical, which ranked 22nd among the independents last year, was acquired by top ranked Walman Optical.

Three labs moved into the Top 25 Independents this year: Eye-Kraft Optical of St. Cloud, Minn., which ranked 23rd, rejoined the group for the first time since 2008. Pinnacle Optical of Birmingham, Ala., and Optic Blue of Lubbock, Texas ranked 24th and 25th, respectively. ■