It is a familiar story to many specialist bricks-and-mortar retailers: a successful sector finds itself squeezed as both online sellers and supermarkets get in on the act. Opticians have been caught up in this trend, but they are defending their territory with marketing and consolidation.
While retail brands such as Specsavers, Boots and Vision Express remain a fixture on the high street, supermarkets, such as Asda and Tesco, have opened in-store opticians with aggressive price plans, while Glasses Direct has cut costs for those willing to use the online route.
Up to the middle of last year, five big optician brands dominated the market, but in May 2009, Boots and Dollond & Aitchison merged to form the second-biggest group in the UK. Over time the D&A brand will be phased out in favour of Boots.
There are several elements to the eyecare market: frame manufacturers, contact lens and accessories producers, and retailers offering both eye examinations and glasses.
Mintel research suggests that four in 10 people buy their glasses from the place where they had their eyes tested. As a result, there has been a great deal of vertical integration across the sector. Frame manufacturers have sought to ensure their in-store presence by increasing their shares in the retailers. De Rigo now holds a 50% stake in Boots/D&A, while the David Clulow chain is owned by eyewear group Luxottica. Tesco has introduced free eye tests this year to encourage consumers to visit its opticians.
The optical goods market has been growing steadily and reached £2.65bn in 2009, according to Mintel - an increase of 17% over a five-year period. However, the market has not escaped the recessionary pinch, with sales dipping 2% in 2009, compared with 2008.
While the trend for more expensive designer frames has helped boost this market, there has also been a gradual increase in the proportion of adults who wear glasses, as well as general population growth. According to TGI, 63% of adults (32m) wear glasses and one in five of these says they wear a designer-label frame.
At the same time, discounting is rife, with two-for-one offers becoming the norm. Specsavers is the biggest of the retailers and has created a strong position offering everyday low prices, with heavy investment in advertising its message.
Glasses make up the lion's share of the sector, accounting for 63% (or £1.66bn) of sales in 2009, followed by contact lenses (19%) and eye examinations (14%).
Frame manufacturing is fragmented but dominated by global suppliers. Two of these - Luxottica, which owns brands such as Ray-Ban and Oakley, and holds the licence for Versace eyewear, and Safilo, with licensed brands including Gucci and Dior - account for 36% of the UK market.
Contact lenses remain a minority option, with 8% of adults wearing them, according to TGI, although take-up is stronger among the 25- to 34-year-old age group. In addition, new product development has meant huge advances in terms of convenience and comfort. Johnson & Johnson is the UK's leading contact lens brand, with the solution market dominated by own-label products. As the popularity of daily contact lenses has increased, there has been a corresponding dip in the sales value of solutions.
There are two further challenges facing retail opticians: first, reading glasses are now widely available and present a value option for those needing basic help focusing for reading. Second, laser surgery has found more converts as its reputation improves. However, so far, of the high-street chains, only Optical Express has embraced this technology and offers it as part of its range of services.
Internet and mail-order home-shopping for spectacles remain a very small part of the market, as customers still prefer the personal service and the option of trying on the products.
As the population ages, more people will need correction as focusing on close objects becomes more difficult. More than three quarters of 45- to 54-year-olds need glasses. Over the next five years, Mintel predicts the market will continue to grow, reaching £3.2bn by 2014, an increase of 19% on 2009.