Mass Merchants, Clubs Show Gains Despite Economy

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NEW YORK—In spite of—or perhaps because of—the economic problems that hit the U.S. hard toward the end of last year, the mass merchandising chains and warehouse clubs with a presence in the eyewear/eyecare market increased their optical location counts and in many cases their optical sales during 2008.

As the nation’s growing financial woes kept consumers tightening their discretionary spending throughout 2008, those Americans increasingly turned to the everyday-low-price mass merchants and warehouse clubs for the purchases they did make. That shift toward more cautious, “value” shopping gave chains such as Wal-Mart and Costco growth in both net revenues and comparable-store sales for 2008, at a time when other retailers were struggling to stay even with the previous year in terms of sales.

In addition to boosting their overall revenues (though not always their comp-store sales) during calendar 2008, these national and regional retail players increased their U.S. optical revenues by an estimated combined total of just under $71 million—a considerably smaller increase than the estimated $135 million increase in optical revenues these chains achieved during 2007. Their combined number of in-store vision centers grew last year as well, with an aggregate increase of 84 optical locations in 2008.

Overall, this group of mass merchants and warehouse clubs together generated optical revenues totaling an estimated $2,187.3 million for calendar 2008, just 3.3 percent more than their estimated $2,116.5 million in optical sales and services in 2007 (and less than half the growth rate these same players generated in optical products and services in 2007 versus 2006).

That aggregate 2008 volume took these giant retailers’ share of the total VM Top 50 U.S. Optical Retailers’ combined sales volume to 30 percent in 2008, about even with their share of the Top 50’s aggregate optical revenues the prior year.

As usual, Wal-Mart continued to dominate the mass merchant’s sector of the optical business in 2008. Between the nearly 2,500 company-owned vision centers in its Wal-Mart discount stores, the 227 leased departments operated by National Vision and its more than 500 Sam’s Club optical departments, the discount giant finished the year with just over 3,200 optical locations under its two retail brands, making it the nation’s largest optical retailer in terms of store count and giving it a total optical volume of $1,484 million in the U.S.

Wal-Mart/Sam’s Club and many of the other mass merchants and clubs in this group are continuing to expand this year in the U.S, despite the economy. Sam’s Club will add 15 to 20 new locations during fiscal 2009, for example, while Target is also growing, already adding 27 new discount stores and Super Centers on March 8 alone. Costco executives have said they plan to add 13 to 15 new warehouse clubs by late August.

While not all of these stores’ new locations may contain vision centers, this continued expansion is likely to provide an additional bump for the segment’s presence in optical by the end of this year.
—Cathy Ciccolella

Leading Mass Merchants, Clubs With Optical Departments