How House Brands + Custom Lenses = New R-O-I Formula

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How House Brands +Custom Lenses= New R-O-I Formula

VM
STAFF REPORT

For a “post-recession” economy that still feels rather uncertain for several customer segments in some parts of the country, optical retailers large and small are reporting an uptick in sales at the outset of 2011.

Their progress has not come without hard work and a decidedly mindful approach to the frame and lens offerings in their mix at all spectrums of the price scale. They report a major re-thinking of the role of “core” brands, either private label or supplier house brands, which reflect a new creativity (sometimes in collaboration with suppliers) and offer a price-tier alternative.

Often combined with exclusive lens treatments and coatings, these lines are striking a chord with consumers, retailers tell VM, when blended into an overall merchandise assortment that still includes a strong mix of consumer-recognized branded collections.

House brands, retailers say, appeal to a new consumer mindset which is embracing individuality and is searching for value at every price point. Many customers, they report, are responding to originality as a choice for their primary eyewear purchase—as well as a new and desirable option for the recently-elusive “add-on” eyewear sale.

“House and core brands are key to our success and profitability,” said general manager Boyce Moffitt of Spex, an optical retailer with 14 locations throughout the greater Chicago area. While Moffitt insists that core brands have always been an important part of Spex’s mix, he admits that added emphasis has been placed on the company’s selection of non-branded labels.

In recent years, Moffitt has seen a shift toward color and details in eyewear preferences—both of which draw customers to house brands. No longer afraid of going for bolder looks, clients “are focused on wardrobing their frames because they have realized that eyewear is an important accessory when completing their fashion choices,” he said. Moffitt also attributes this change in priority to widespread Internet research on frames, collections and technology.

While focus on core brands has narrowed brand selection, Spex has been able to provide deeper assortments, strengthen relationships with key vendors and increase sales. “Less crossover in styles creates greater clarity in selection for the clients, and it also helps promote the wardrobing of frames,” he said.

According to Moffitt, “the recession has definitely increased sales in our house brands,” especially for clients who want more than one pair of glasses. “While multiple pair sales took a hit over the past few years, we were able to maintain a strong multiple sale percentage because these brands allowed them to select more than one pair within their budget,” he said, adding, “This represents a key shift in consumer spending habits over the past few years, especially with our male clients.”

At the 18 Henry Ford Optimeyes locations in Michigan, customers’ key focus is the quality/value equation, according to Shirleen Steele, the chain’s director of purchasing. “That’s what consumers are looking for, whether they’re interested in designer frames or house brands,” she told VM. “Everyone wants great quality at the best value they can find—that’s our continuing challenge.”

The Optimeyes stores—including six large Super Vision Centers, with a seventh due to open July 1—carry about 60 percent of their eyewear inventory in designer brands, the rest in suppliers’ house brands. That ratio has shifted a bit more toward house brands in the past two years, Steele said, adding, “We’ve been very strategic in the placement of the brands we carry, working closely with our vendors to bring in those national brands at the best possible pricing.”

As a result, she said, the chain has seen little drop-off in consumers’ interest in opting for designer eyewear, particularly at the Super Vision locations, which highlight designer frames on island displays at the center of their dispensaries.

Optimeyes has also managed to maintain a steady percentage of add-on sales, Steele noted, particularly in the areas of photo chromic and AR lenses. “If anything, we’ve seen growth in our add-on business,” she said. “We’ve found that if we can show the patient the value these add-ons bring to their eyewear, they’ll buy them.”

While much can be attributed to the economy, at The Eyewear Gallery in Houston owner Tina Ozcelik said the surge toward originality in eyewear is a result of the recession. She believes clients struggling to stand out in a competitive market are using unique eyewear to portray self-confidence. “What has set us apart in this economy is the ability to offer hard-to-find house brands. Anybody can get a licensed brand, but the house brand offers a chance to stand apart,” Ozcelik said.

Ozcelik has found customer interest merging quality and originality. As a result, she has placed more emphasis on house brands in her single-location boutique. “The consumer has become more expressive of their own identity. They no longer purchase a frame purely on name brand,” she said.

Despite the economic woes that have kept Arizona among the highest states in the nation in foreclosures and unemployment levels, Chandler, Ariz.-based Nationwide Vision finished 2010 with its comparable-store sales 7.5 percent ahead of 2009, according to president Al Bernstein.

“Our statewide economy is still bad, and our exam bookings are down, with a lot more cancellations and no-shows,” Bernstein acknowledged. “Yet our average eyeglass tickets have held tight, at about $204—once we get patients into our offices, they are ready to buy.”

 
Nationwide has not seen any major shift in consumers’ readiness to buy designer frame brands vs. vendors’ house brands, he told VM, with sales in that category aided by promotions such as a “Fashion Week” event held in November. Designer brands currently make up less than 30 percent of the 64-unit chain’s eyewear inventory, a percentage that has remained constant in recent years, although Bernstein said the company has tightened up on depth of inventory in that category. Another 15 percent of Nationwide’s frame inventory is devoted to private-label eyewear, with house brands making up the remainder.

“We do a huge business with Arizona Medicare and Medicaid patients, including a lot of children, and much of that business is in the house brands,” Bernstein noted. “But the ‘designer’ customers still want that eyewear, even though money is tighter.”

Stephen Franklin, chief executive officer of Maryland-based Accurate Optical agreed. “We haven’t seen any lessening of interest in demand for designer brands among our customers, despite the recession. I imagine in some parts of the country consumers are shifting away from designer eyewear in favor of lower-priced ‘house’ labels, but we haven’t experienced that in our market. We see no movement to save money by buying unbranded eyewear.”

At 14-store Accurate Optical, house brands currently account for only about 20 percent of the stores’ frame inventory. Rather than seek out those lower-priced options, Franklin said, “our customers are looking for deals on the designer brands.” Despite this trend toward bargain-hunting, however, Accurate Optical achieved a 2 percent increase in dollar sales last year, he noted.

Chain executives are taking a second look at private-label eyewear, however, Franklin said. Accurate Optical has already begun a “soft” launch of digital lenses under the name Luminosity, with plans to begin advertising them soon. In addition, company executives are considering bringing back their Chesapeake Eyes private-label frame brand after a three-year hiatus. “We’re currently discussing revitalizing that brand in light of the economy,” he explained.

The economy has not dampened Accurate Optical’s expansion plans, however. The chain added a second location in Delaware in September, and opens a new store in Berlin, Md., on Feb. 15. It will also relocate a store in Cambridge, Md., by early summer.

Long Island’s Optics Plus has also seen clients gravitate toward unlicensed eyewear. According to president Richard Bauman, house brand purchases come mostly from women looking for their second or third pair of eyeglasses. “People who buy them usually need them as an additional pair. It’s a very necessity-based purchase,” he said. Today, house brands make up around 20 percent of the single-location practice’s frame offering—a number that has doubled in recent years due to increased demand.

“The recession has certainly helped the sale of house brands. We’ve had to bring in lower-priced lines as an alternative,” Bauman said, noting an increase in patients who use insurance or are increasingly price conscious. He added, “People complain about the price but they still want the Chanel. Still, it’s good to have the alternative.”