DAVID HOLMBERG

SAN ANTONIO, Texas—At a time when optical retailers and eyewear vendors alike are feeling the recession’s pinch, HVHC is making strategic investments in all three segments of its eyecare/eyewear business, while re-evaluating the product mix of both its retail and wholesale operations, according to David Holmberg, president and chief executive officer. “HVHC is exceeding plans this year,” Holmberg told VM in an exclusive interview, “and going forward we want to strengthen each of our entities further.”

HVHC, a Highmark company, owns the Eye Care Centers of America (ECCA) and Empire Vision retail operations as well as eyewear supplier Viva International and the Davis Vision managed-vision network. And although the optical business as a whole may continue to suffer from the current economic woes into at least the first half of 2010, HVHC keeps making strategic investments in its products, people and infrastructure with an eye toward better times, Holmberg said.

As HVHC scrutinizes its overall business to improve operations—and synergies—for all three elements, “everything we’re doing is very proactive and very focused,” Holmberg declared. “We’re open to new opportunities and new ideas.”

ECCA’s EyeMasters store in Pearland, Texas.

On the retail side, HVHC’s expansion is ongoing, reflecting 2009 sales that continue to show improvement despite what Holmberg called “soft” results in September and October. Next year, ECCA will open more than 20 additional retail locations, including its first move into Highmark’s home town, Pittsburgh—about eight stores are planned to open there early in 2010.

One key focus of attention for the retail business has been HVHC’s optical laboratories, which also serve outside retailers as well as eyecare practitioners who are providers for Davis Vision. A new lab here that became fully operational in June has “dramatically” reduced turnaround times on eyewear orders while lowering costs, Holmberg told VM.

The Visionworks location at Stratford Square Mall in Bloomingdale, Ill.

“We’re shifting our mentality from just operating a group of labs to offering a manufacturing platform,” he explained. “Our goal is to have a world-class manufacturing organization; we‘re making big capital investments to support our retail business as well as the Davis Vision ODs.”

The company also plans to expand its year-old lab near Philadelphia.

Other elements of HVHC’s retail business under scrutiny include price points, merchandise mix and marketing message. ECCA currently operates close to 440 stores in 36 states under more than 10 retail brands, but Holmberg said plans call for consolidating some of those store names under ECCA’s two largest brands, EyeMasters and Visionworks, beginning in a few markets in the second half of next year. EyeMasters will be the predominant brand west of the Mississippi River, while Visionworks will dominate in the East.

The overall target customer—the consumer seeking the “good” and “better” segments of the familiar “good, better, best” product mix—will remain the same, but merchandise assortments will be more customized within given markets. “In some areas, our retail customers may be more brand-conscious, in others more price-sensitive,” Holmberg noted. “Our core marketing message won’t change, but we’ll do more testing and be more creative about which price points and brands people respond to, for more flexibility.”

And while private-label merchandise will remain a key element of the stores’ assortments, “we also see opportunities to fill in gaps with some brands we don’t currently carry, both from Viva and from outside suppliers.”

Although sister division Viva obviously has been a key vendor supplying the HVHC stores—the retail segment bought eyewear valued at $6 million from Viva in the first half of this year alone—“we want Viva to be a healthy industry player on its own,” Holmberg said. “Viva has to win a place in our stores like any competitor—that makes Viva healthier and better able to serve everyone.”

The HVHC president/CEO said the focus of Viva’s product offering is “eyewear brands that are strong competitors in North America, and have the ability to compete internationally as well.” With that in mind, Holmberg noted, “we’re looking at all of Viva’s brands to see which [ones] make sense to go forward with, and which don’t. Our North American and international wholesale businesses need to be in the ‘sweet spot’ where the consumer is today, so we’ll likely make some adjustments.”

While executives watch closely to see what impact the ongoing Congressional discussions on health care reform might have on Davis Vision’s managed-vision business, HVHC continues to invest in that segment as well, most recently by upgrading the Davis Web site, www.davisvision.com.

The Davis Vision management team is currently “looking at that division’s capabilities, and working to understand what our managed-vision customers want,” Holmberg said. “We make it a point to sit down with our customers and say, ‘Tell us what you’re trying to accomplish, and we’ll figure out a way to help you accomplish it.’”

In addition to the revamped Davis Web site, HVHC is exploring various online technologies to improve both internal and external communications across its businesses.

At Viva, for example, “we’re looking at using the Internet to stay more relevant with our catalogs and other materials,” Holmberg said. On the retail side, an Intranet system in about 100 stores will be leveraged further; ECCA is also evaluating electronic medical records. And expansion of current online training programs for both Viva and ECCA “has real potential,” Holmberg noted, adding, “We’re looking for partners within the industry who have specialized Internet knowledge.”

Looking ahead to next year, “while everyone is optimistic that 2010 will be better than 2009, I think the eyewear/eyecare industry will still see a period of time where business will be flat,” Holmberg predicted. “So we all need to sharpen our pencils and be smart about our businesses as this challenging economy continues. At HVHC, we see lots of room for expansion, but we’re also very patient. We’re looking to do high-quality, sustainable things, not quick hits.” ■
  - cciccolella@jobson.com