Annual Report 2017

Changing market structure

Key trends in the market are also creating favorable business conditions for GrandVision. Among these trends are market deregulation, the gradual consolidation of the optical retail market, and the growth of the online market for eyewear. The main market trends in global optical retail include:

Deregulation benefits optical retail chains

Market deregulation is increasing globally, easing restrictions on eye tests and measurement services, redefining collaboration between optometrists and opticians, and facilitating market access by full-service optical retail chains like GrandVision. Price competition is also rising due changes in to social security and health insurance reimbursements, which had previously provided effective subsidies to less efficient retailers.

Under-penetration

The penetration of eyesight correction remains low across many emerging markets, providing strong opportunities for eyewear providers, particularly in highly populated countries such as China and India. Due to their large populations, the growth of the global eyewear market is expected to be strongly led by these markets in the short–to-medium term.

Consolidation of fragmented markets

The highly fragmented optical retail market continues to consolidate, favoring the growth of more larger and more efficient retail formats. Larger players like GrandVision offer better purchasing advantages with suppliers and can operate more efficient supply chains. They can also achieve significant economies of scale through centralized product finishing facilities and marketing campaigns. These translate into lower prices for consumers and support the development of best practice standards in customer service.

Emerging online eyewear market

Although consumers typically regard opticians to be highly important in the purchase of eyewear, online retailing has continuously grown, and currently represents approximately 5% of global eyewear sales, which is still below the online penetration levels of many other retail segments. Generally speaking, contact lenses, ready readers and plain sunglasses are the most suitable products for purchase through pure online channels, where the convenience offered by the internet proves more important than the in-store personal advice and expertise.

Even so, the need for personal interaction of consumers with vision experts to administer eye tests and examinations, as well as the high degree of product individualization, the requirement to fit finished prescription eyeglasses, and the long repurchase cycles of up to four years, are still a major limitation for pure online players. Nevertheless, consumers increasingly expect broader and more flexible forms of retail interaction and service. For this reason, GrandVision has established an omni-channel route to market that is integrated with its in-store services. This allow consumers to complete a number of actions online, such as preselecting their frames, booking appointments and replenishing contact lenses.