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Several market trends are creating favorable conditions for GrandVision’s business. Most notable are the general decrease in market regulations, the fragmented nature of most optical retail markets, and the growing online market for eyewear. The main market trends in global optical retail include:
Deregulation benefits optical retail chains
Market regulation has decreased in various countries in recent decades and this trend is set to continue. The easing of restrictions on eye test and measurement services, and on the cooperation between optometrists and opticians is facilitating market access by full service optical retailers, including optical retail chains such as GrandVision. In addition, changes to social security and health insurance reimbursement systems are increasing price competition, as the implied subsidies for smaller optical retailers are being reduced.
Fragmented markets to further consolidate
Given the high level of fragmentation of the global eyewear market, consolidation is expected to continue and drive the growth of more effective and efficient retail formats. Large multinational players in the eyewear market have a more substantial resource base. This supports the development of retail best practices and customer service concepts that have a positive impact on customer loyalty. Competitive advantages for large optical retail players such as GrandVision include greater purchasing power with suppliers and the possibility to develop much more efficient supply chains – both leading to price reductions for the consumers, the development of best practices in customer service and assistance, the attraction and retention of talent, and significant economies of scale, such as the development of centralized product finishing facilities and larger marketing campaigns.
Emerging online eyewear market
The online eyewear market has grown to represent approximately 4% of global eyewear sales, which remains below the online penetration levels of other retail segments. Generally, contact lenses, ready readers and plain sunglasses are more suitable for purchase through pure online channels. However, the need for personal interaction of consumers with vision experts to administer eye tests and examinations, the high degree of product individualization and the requirement to fit the finished prescription eyeglasses, creates a barrier that limits penetration by pure online players.
Consumers generally prefer to select and try optical products in the store where personal contact with opticians and optometrists creates trust and loyalty. However, today’s consumers also expect broader and more flexible forms of retail interaction and service.
To address this opportunity, GrandVision is establishing an omni-channel route to market, where online services such as preselecting frames, booking appointments and the replenishment of contact lenses, are integrated in the services provided in store.
Scale benefits of optical retailers
As a result of consolidation and professionalization, some optical retailers have become larger and have developed considerable scale advantages including better procurement opportunities and a more efficient supply chain. This scale advantage results in further efficiency gains. In addition, large optical retailers increasingly create and source their own in-house branded products from alternative suppliers, contributing to increased competitive pressure in the eyewear suppliers market.