INDUSTRY OUTLOOK 2009 The year ahead

Welcome to our annual ‘industry outlook’ article. NZ Optics invited industry leaders to submit their thoughts on where the market is at and predictions on the year ahead. We have also invited two industry ‘leading lights’ to add their view to the mix. The first is Peter Nicholls who has taken a four month break from the industry after 30 years with OHL. His background and knowledge of the industry puts him in a unique position to comment on some of the changes taking place. This month sees him rejoin the industry in a new capacity. The second is Peter Gates, the convenor of a proposed new group, NARADO (National Affiliation of Retail Optometrists and Dispensing Opticians).
With so much turmoil and change happening in the industry, the views of our contributors certainly make for compelling reading.
Some would look back on 2008 and consider it to be a year of change and upheaval - others, challenges and opportunities - but we think one thing that can be agreed upon is that 2009 won’t be boring. The familiar theme through most of the commentaries is that we’re in for another year of change, challenge and opportunity - but isn’t that what makes it all worthwhile.
The market continues to re-shape itself with noticeable activity in the expansion of group operations. A big player for change in 2009 will of course be Specsavers but add into the mix the larger optical groups, such as MySight and Carlisle Mason that have grown over the last 12 months and don’t plan on slowing down; it will make for another interesting year. In 2008 we saw some of the older more established practices throughout the country review their position and become part of a group, such as Barry & Beale.
As to be expected the established large groups have either declined or not grown at all whilst the newcomers are making headway. Currently Visique has 87 full and part-time practices plus 3 Affiliates, EyePro has 42 members and OPSM, 40 stores. It’s in the second tier chain of optometry practices where the growth has been over the past year - Eyezone and Look Eyecare have 11, Specsavers has 17 plus another 3 are due to open in early March (with a further 20 before the end of the year), MySight has 14, Carlisle Mason has 10 plus one on-line business, both Paterson Burn Optometrists and Matthews Eyecare each have 6. Combined, these practices currently represent about 64 % of the market (55% in 2008) and continue to get stronger.
Specsavers have said that they plan on having around 40 practices by the end of the year and that approximately 60% of these will be Greenfield sites, not established practice conversions. As mentioned Carlisle Mason and Mysight have indicated that they would also like to grow their groups with practices that ‘fit’. With the Visique/OHL agreement not too far off this should give them a fresh start and no doubt they will pull together as a group to compete on their terms.
Whilst some businesses will struggle, others will reap the rewards brought about by the current downturn. It is very interesting to note that there are still new practices opening, for example, John O’Connor Optometrists and King Country Optometrists. There are also new frame wholesale businesses with Phoenix Eyewear and Little Peach having just setup. This is indicative that there are opportunities out there for those who have an understanding of the market and are willing to work hard.
Something the industry should be mindful of over the coming year, is that if everything does become harder, any successful business relationship needs to be a two way street. An unsupported facet of the industry cannot in turn be expected to support the industry, i.e. sponsorship for conferences and the like without a reciprocal undertaking. As they always say ‘you don’t get something for nothing’.
Have a great trading year
Maryanne and Anita

JONATHAN FOATE
Director, Visique

What will 2009 bring? I think it is likely that the global and local economy will be the issue of primary concern to both NZ consumers and businesses. I am unconvinced that the opinions we are fed via the media accurately reflect reality so it may be that the consequences for consumer spending may not be as gloomy as we are led to believe. Obviously no one knows quite what the impact of the ‘global recession’ will be but the effects are likely to continue for several years.
However, I am sure the prudent business owner will be doing everything possible to increase internal efficiencies, reduce costs and preserve cash flow. This is likely to translate into a tough period for wholesale suppliers.
With regard to the ‘optical industry’, we are in a fascinating period of change; there is no doubt that change is unsettling but at the same time it invariably offers opportunities. Independent optometrists must not only identify and take advantage of these but also take a very considered view of activities going on around them in order not to be misled by ‘smoke & mirrors’ and to ensure that their decisions are based on fact and not fear.
With respect to our current environment, Specsavers are obviously cranking up their marketing machine. They have a lot of experience in this respect and the $ to back it and I have to say they do it very well. However, I think it is important to recognise that a large part of this activity is ‘propaganda’ aimed at the industry with the intention of unsettling all those involved with ‘independent’ optometry. Specsavers very much play on the ‘fear factor’, as destabilising the industry serves their interests. I would urge my colleagues and their staff to have confidence and to continue doing what they do well. Our businesses are built on relationships which require credibility and quality outcomes driven by a service based philosophy. Optometry is all about vision, eye health and options tailored to patients’ needs; be they specs, contact lenses, orthoptics, vision training, specialist referral or simply advice. Optometry is not about driving sales and promising two pairs of specs for the price of one!
Independent optometrists must not be diverted by the activities of other players in their market; nowhere in the world have sales based, price driven corporate models caused the demise of independent optometry.
I think that over the next few years we will see closer relationships between optometric groups on the independent side of the fence and between independent wholesalers and their optometry customers. I think many of our independent wholesalers are becoming increasingly aware of the risk they face as acquisition of optometry practices by corporate players with supply chain capability erodes their customer base. In NZ we are fortunate to have ‘thinking’ practitioners who are not likely to be misled by all the ‘noise’ in our market; we also have several well organised groups of independent optometrists and good relationships with our wholesale suppliers; I believe we have a very positive future.

PETER NICHOLLS
Director, Phoenix Eyewear

In 2009 optics will continue to be dominated by the forces that prevailed in the second half of 2008, the worldwide recession and the continued expansion of the international corporate optical brands. 2009 will see growth of the large international brands now established in New Zealand as we follow the worldwide trend towards increased corporatisation of the optical industry. The establishment of these brands in New Zealand has lead to increased concern and uncertainty about the future of the ‘independent’ optical business as we know it.
The inevitable market changes brought about by the development of these brands does not spell the end of independent locally owned optical businesses. Smart professional independent businesses exist and flourish in all markets around the world where the international brands operate, both at a retail and wholesale level, however independent business owners do face a real challenge from the multinationals. Experience from other markets has shown us that the key to successfully compete is to be different - not to try and be the same, not to try and look and act like another corporate retail outlet with a similar offering of product and service. To date I believe too much emphasis has been placed on text book corporate thinking using well worn administrative solutions such as product rationalisation, inventory control and cost cutting that make independent practices look more and more the same, and more like a pale copy of a corporate brand. These strategies alone are not enough to compete in the new environment.
In 2009 successful practices will focus on their consumer, think like their consumer and offer a different experience targeted to their market as opposed to the sameness of the big brands.
The retail optical sector in New Zealand is better placed than many markets have been to face the challenge of the big international brands. For many years the local market has had a comparatively high population to optometrist ratio and finding optometrists has been an ongoing problem. One of the byproducts of this has been that, to quote a phrase I read somewhere, ‘the public have become somewhat disengaged from the profession’. This is evidenced by the huge growth in the use of ready-made spectacles over the past twenty years. The increased promotion of eyewear and hopefully eye care that will now occur will increase public awareness of the need for professional eye care. It is expected that the emphasis on price will expand the market into that section of the public now using the ready-made eyewear option.
Another result of the higher population to optometrist ratio is that unlike many other overseas markets we have a very high proportion of strong optical practices of sufficient size and with ample resources to continue to be successful in the changing environment. This will require a willingness to put in the effort to deal with the changes brought about by the competition, including some creative lateral thinking, may be even some radical thinking! The big challenge for the independent practitioner and their staff is to find an effective way to handle the focus on price. The answer to this is very much an individual issue, you need to be comfortable in how you address this with your customers, to ensure they understand the high level of professional service and quality eyewear they receive, and if required, that more affordable product options are available. Having an exciting frame selection different from the corporate brands is a good start.
2009 will see changes in the wholesale sector with changes in the local companies along with some Australian companies entering the market. Focus will move back to smaller more efficient operations concentrating on the key function of a wholesaler - to have innovative and diverse ranges of eyewear. After all, if local practices are to be different from the corporate stores they need access to an exciting range of eyewear. Wholesale suppliers will need to focus on the expectations of the end consumer and deliver product that truly meets the market in terms of quality and style at a realistic value.
The recession will have a big influence on 2009. However if past experience is a guide it will not affect the optical sector as badly as most other parts of the economy. Having been through a number of downturns before I am sure we will see an increased emphasis on practical, more affordable eyewear. More pressure may come on lens pricing, as this has now become such a large proportion of the cost of goods that make up a finished pair of spectacles. As much of the price competition is based on a specific selection of lenses, it will be important that customers understand the benefits of the lenses offered versus the cost. We are also bound to see an increase in reglazing of customers own frames.
2009 is going to be a very challenging year with continued change in our industry, however I remain positive for the future of the New Zealand optical industry, and certainly don’t think life as we know it is coming to an end.

GEOFF SARGENT
President, NZAO

The predictions for 2009 should be viewed against the success of the predictions for last year, in other words, how accurate was I in last year’s ‘crystal ball gazing’.
My initial sweeping statement of
“2008 is set to be a year of change and opportunity. There will be an election in New Zealand, the US economy is on a downward slide” ...hardly a difficult or deep prediction but for correctness I would have to give this 10/10.
Yes there was an election, whether you liked the result or not depends on your political affiliation and stand point, and one could say the US economy is still in a ‘downward slide’ or should that be a ‘downward plummet’ along with the rest of the world economies.
“The review of the HPCA Act will be completed” ... the HPCA review has been completed and fortunately for the NZ Optometry population particularly and the NZ population in general, the restricted task of prescribing has been retained. Again easily 10/10.
“In 2008 we will see more competition in the market place from chains such as OPSM, also there will be smaller group alliances or mini-chains appearing” ... well I wasn’t stretching anyone’s sense of credibility with this one and it did happen! Again 10/10 and obviously this trend will continue and intensify within the NZ industry.
 “The emergence of internet based spectacle sales will become more prevalent in the current year” ... I would have to say that now I was starting to get off my game. The emergence is true but it was not as big an impact that I suggested so the score must drop to 5/10 as only half right.
“Provision of professionally prescribed, well selected and correctly fitted product with high levels service and backup from optometrists, dispensing opticians, and wholesale suppliers will ensure the public recognise the value of using the local providers in a face to face situation” ... bit of a no-brainer really but it still holds true if you do not have a belief in your own worth then the public certainly will not. A credible 6/10 with the rider ‘works well with others but must try harder!’
“In my own view there are opportunities for optometrists in marketing professional services and these are enhanced by the commoditisation of product - we just have to change our own mindset and follow the US trend where optometrists on average earn $10 an hour more than attorneys” ... I would have to say no one (myself included) was paying attention to this one, consultation fees have not changed significantly. A poor 2/10 for this one ... ‘will need to improve’.
“The challenge for optometry is to not only ensure that prescribing remains a restricted task but also to deal with the issues arising from the Ministry of Health’s new kid on the block; the ‘Career Framework’” ... I’m guessing we will have more to say on that in 2009. Well I would have to say watch this space as at the moment there is nothing more to say about the ‘Career Framework’ but it is only February. However the restricted task does remain. A score of 3/10 as a work in progress.
 “We will also probably see more divergent styles of practise developing, as the influence of Generation X spreads through the professions” ... not a deep prediction again but reasonably accurate, thus a credible 5/10.
 “The mission of the NZAO in 2008, as a representative of the majority of optometrists in NZ, is to strive to maintain and grow the profession of optometry in NZ” ... this still holds true for 2009 as it did for 2008. An easy 10/10.
Thus overall the grade for my efforts last year would be a reasonable 66%.
Looking forward to 2009 there is not a wonderfully cheery outlook but neither should there be a ‘doom and gloom’ view. 2009 will be a difficult year which is likely to continue into 2010.
For practice owners it will have to be steady as it goes and take a lot of care in ensuring you do not become a victim of the times by over or under stocking your practice.
For all Optometrists we need to maintain our ethical and professional behaviour so the public of NZ still view us as a group of competent health professionals, not just retailers of spectacles and contact lenses.
Should we take a leaf out of Ophthalmology’s book? Where overheads are built in and covered by the consulting fees structure then the sale of ‘product’ (in their case surgery) is a separate stand alone cost. Rather than the lost-leader approach used historically?
The retail market in NZ is a picture of reduced prices and constant sales. However people still will value services and goods that are sold by value, service and backup, not just on price.
Politically with a National Government there will hopefully be some benefit to small business owners thus allowing the maintenance of both wages and staff levels in these difficult times.
I would not think that expenditure in the Health area is high on National’s shopping list of increased spending so the public health system is unlikely to see radical change and will probably remain frustrating for both the public and those health professionals that work within it and interact with it.
As a general rule of thumb in the last economic down turn in the late 80’s and early 90’s (from those of us that remember it) people still needed and accessed optometric services but were more reluctant to change their glasses unless essential, and more often than not, would reglaze an older frame.
Thus professional ethical recommendations are even more important for the patient’s confidence in you and the profession overall. Naturally careful business and stock management are even more essential in the next year or more.
So overall, the status quo will be a safe option for most in the optical industry, however there will be movements and realignments as at any other time.
Maintenance of standards are essential for the future growth of the industry and I can once again assure you that; “The mission of the NZAO in 2009, as a representative of the majority of optometrists in NZ, is to strive to maintain and grow the profession of optometry in NZ”.

CHRIS CLARK
General Manager, EYEPRO

Trust is the key for the success of independent optometry in 2009. Trust in yourself and your staff that you can continue to do a good job, trust in your customers that they will continue to buy from you and trust in your key supply partners to support your business.
Sounds easy, but how do you earn or achieve the required level of trust?
Trust in yourself - market developments in 2008 will have undoubtedly forced independent operators to stop and take stock of their business operations - essentially an analysis, whether formal or informal, of strengths, weaknesses, opportunities and threats. Were you doing a good job before the new competition arrived? What, if anything, will prevent you from continuing to do this? Is your customer base likely to be seriously affected by the recession? If so, do you need to adjust your current proposition to cope with this? If not, why wouldn’t you just keep doing what you do well? The trick is working out what that is!
Trust in your customers - it is far easier and more cost efficient to obtain repeat and additional business from your existing customers/patients than to go and find new ones. To do this, you must communicate with them effectively and frequently. It’s no longer acceptable to simply rely on a 2 or 3 yearly recall letter. There’s also no need to be shy about offering products and services that will be of value to them. You can be assured that your competitors will be doing the same. It’s important to demonstrate to your existing patients that you are up with the play and that there’s no need for them to visit your competitors.
Trust in your suppliers and support network - in tough times you need friends and mutually beneficial partnerships. If you need help, then it’s highly likely that your suppliers and partners are looking for help too. Stick together and look for ways that will benefit both parties. This will ensure that your customers will also benefit.
How does EYEPRO fit into this? Trust has always been our number one brand value. The other four values are ‘Distinctively New Zealand’, ‘Friendly’, ‘Fresh & Inspired’ and ’Real’. We’ll be progressing our 2009/10 strategy firmly based on these existing brand values. The focus is on remembering why EYEPRO was originally established, and that was to support independent optometry. We will be working with members on the three key trust areas discussed above and have several initiatives underway that will greatly enhance those trust levels.
There are so many great aspects of independent optometry that simply can’t be replicated in the chain-store models. It is however relatively easy, with a co-operative approach from members, to replicate many of the supply chain and marketing benefits of the multi-nationals whilst still retaining independence and a strong point of difference.
2009 will be a challenge. There’s no doubt about that but we’re keeping our chins up, thinking caps on and most importantly our eyes open.

GRAEME EDMOND
Managing Director, Specsavers New Zealand

There is no doubt that the optical landscape changed dramatically in 2008 and at Specsavers we expect that change to continue over the course of 2009. The New Zealand economy is in recession and so there is a greater need than ever to provide greater value to our patients and customers – because if high prices lead families to put off their eye examinations when they fall due, that cannot be a good thing for the management of eye care in New Zealand.
For our team at Specsavers the coming 12 months will be dominated by our practice roll-out programme and also by our focus on patient and customer needs. We see these as entirely connected; by year’s end we expect to have a total of around 40 Specsavers stores open across New Zealand and this means we can take our mantra of ‘affordable eye care for all’ to more and more New Zealanders. This is important because a stagnant market – either due to high prices, lack of choice, recession or practice apathy – is good for no one. It’s certainly not good for patients or suppliers because it slows investment in new technology and of course lower volume leads to higher prices.
So at Specsavers we look ahead and see the coming year as a period of growth for our franchise partners. Historically, Specsavers has seen its period of most rapid and sustained growth during times of recession. This is because our mix of owner-operated professional eye care and high quality, low price products and services resonates strongly with consumers. Already we are seeing New Zealanders connect with our whole customer service and value proposition, witnessed by all our current stores growing at an extraordinary pace. Our research is showing that customers have been very quick to identify with the genuine value that is been promoted by Specsavers in the marketplace - and it’s exactly what they are subsequently finding when they visit their local Specsavers store. It has become a virtuous circle as happy customers tell their friends and families about the value and service on offer.
As part of a growing franchise business, our marketing and advertising will grow with every new dollar of revenue that passes through the till. It’s a well known fact that Specsavers invests heavily in marketing and advertising – so another change we can all expect over the coming year is a greater market presence and public ‘recognition’ factor for Specsavers Optometrists on a national, regional and local basis; we believe this will drive us towards becoming a ‘household name’ in record time.
Finally, more and more optometrists and DOs are contacting our business development team to find out how they can qualify for a store of their own in 2009 and we know that will continue throughout 2009 as we grow to cover the whole of New Zealand.

ALEX BICHENO
President, NZOWA

The predicted economic downturn did not eventuate in 2007 but hit hard in 2008, the impact being far more widespread and far more serious than we could have imagined or forecasted. Terminology we would not normally associate with day to day business is being utilised by the media on a daily basis; recession, depression, billion and trillion dollar investments to stabilise economies. Individuals from ‘Mum and Dad’ investors to the wealthy have been equally affected as have family owned businesses to multinationals. High consumer debt, increased unemployment and falling house prices, exports and tourism make for a bleak outlook. New Zealand retail sales fell in the fourth quarter, consistent with a year long slide as the prolonged recession reduced consumer spending as households reduce debt and conserve cash. Even though the central bank slashed interest rates to revive growth, the outlook remains uncertain as consumer spending is forecasted to remain weak.
Many businesses are facing a period of hardship not experienced for decades, nonetheless, businesses should avoid being pessimistic. A great deal of the economy is associated with psychology, hence constant negative attitudes and communication will only exacerbate and/or accelerate the situation. The media adds enough negativity and hype without businesses adding fuel to the fire. However the current climate cannot be ignored, there will be both winners and losers.
Naturally practitioners are concerned with international optical chains entering the market as are wholesalers whom are also affected by cheap products being sourced from overseas, products being ordered through the internet and overseas suppliers looking at New Zealand as a new market to maintain or grow sales. However sourcing cheaper products will not guarantee success, utilising locally based wholesalers offers numerous advantages and should not be over looked.
The New Zealand industry, retail and wholesale, to date has proven its resilience to chains entering the market and the implementation of advertising and marketing of discounted eyewear. As an industry businesses have quickly adapted and will continue to differentiate themselves through their own niche markets.
As with overseas markets the industry will become more fragmented from the historical middle to high end that the New Zealand industry has been used to. Predominantly the market will fragment to either the high end of the market which will mainly consist of independent practitioners and the lower end of the market which will continue to be led by chains as well as some independents. The middle end of the market will reduce dramatically. Some businesses will compete on price, which in Australia has resulted in the advertised cost of a pair of single vision glasses plummeting to AUD$59.
However the New Zealand market still has many advantages; predominantly highly qualified, skilled and experienced practitioners and staff, as well as population to practice numbers. The current New Zealand population is 4.28 million with approximately 370 practices. This can be compared to a similar market, Victoria in Australia, which has a population of 5.2 million and approximately 730 practices. Therefore an average population per practice is 11,567 for New Zealand compared to 7,123 for Victoria.
Moving forward businesses will need to ensure there is a synergy between the retail and clinical aspects of the industry, similar markets have become very retail orientated as will the New Zealand one. Education will be paramount, creating a culture within each business that ensures a common goal amongst all staff to fulfill the expectations of each and every patient or customer. Front line practice staff must be well educated and conversant in the numerous differences between inexpensive products being advertised and the latest technology products and services from pre-examination, refraction times, ophthalmic lenses, contact lenses, frames, sunglasses and technical dispensing. Consumers will insist upon clear, quantifiable, justification for the differences in costs. Unlike other industries consumers/patients have little knowledge or understanding of choices available, compared to their understanding of other consumer products.
Practitioners will insist upon more support from their suppliers, not necessarily with pricing, but with education, training, support, knowledge, advice and information on global market trends. The industry as a whole will have to be proactive. Success will depend upon businesses providing excellence in customer service and exceeding all patients/customer’s expectations.
The majority of the industry will continue to concentrate on offering optimum eyecare and eyewear as the most successful way to compete. Practitioners whom have already invested in their businesses will be well placed for the future.
Inevitably global optical companies will continue to merge, purchase and align themselves with other companies to maintain market share and growth.
The NZOWA will concentrate its energies and synergies in continuing to establish a more professional organisation, specifically to add value and support to its members and their customers through these challenging times.
Our immediate goal is to establish a trade fair to unite all facets of the New Zealand optical industry. A trade fair that will bring together and unite the industry from ophthalmology, optometry, dispensing to practice and wholesale staff; create opportunities for every person who plays an integral part in the industry to attend education seminars, meet fellow members of the industry, share idea’s, form new friendships, alliances, ideas and network with industry leaders; and display all products associated with the industry from frames, sunglasses, ophthalmic lenses, contact lenses, consumables, tools, equipment, instruments, shop fitting, safety eyewear, fashion etc.
This will only be made possible with support throughout the whole industry. The NZOWA will be working closely with associations that it has partnered with for many years to ensure this is mutually beneficial and successfully implemented. On behalf of the NZOWA and its valued members we sincerely look forward to working with the industry and to their support with this initiative.

JIM STEWART
Chairman of the NZ Branch, RANZCO

Some of the issues we have faced over the last year include:
- inequities in the numbers of cataract operations required by the government’s cataract initiative, some regions still with plenty of people needing surgery, whilst other areas unable to find the numbers of cases they are expected to do
- the situation where patients with relatively early cataracts are funded to have surgery whilst others with much more significant different types of eye problems miss out
- under-resourcing of eye clinic outpatient services up and down the country
- concern at the current shortage of ophthalmologists, more concern about the future workforce situation, grave concern about the fact that government agencies do not recognise this as a problem, or even predict surpluses of ophthalmologists.
All the above issues have a common thread: we lack data about what is happening on the ground, so good decisions are not being made. The numbers of cataract operations allocated to each region seem to have been plucked out of the air, for instance, no account was taken of the widely differing amounts of surgery done in private in different DHB catchments. Those of us working in public eye clinics are well aware of the large numbers of referrals we cannot see, of over-booked clinics, of shortcuts taken in caring for glaucoma patients; but we lack organised robust data about these things to present to our DHBs and to government.
And what about unmet needs we are only dimly aware of? What services are available for the partially sighted around the country? What costs do these people need to meet to pay for low vision devices? Do the answers to these questions vary region by region? How many diabetics suffer undetected eye disease? Are we doing better in dealing with diabetic eye disease? Is appropriate funding being given to the new, successful treatments for macular degeneration?
The answers to these questions fall within the discipline that I understand is now known as ‘Population Health’. This includes such things as epidemiology, health economics, public health and the study of health policies. New Zealand needs a whole lot more work in population health in the vision arena!
For a number of years many of us have been talking about this issue. Our College Branch, the NZAO, the RNZFB, academics in the population medicine area and others have been working together to develop a structure to foster and support Population Medicine studies into issues affecting the vision of New Zealanders. We feel that things are really moving now and in the coming year you will hear a lot more about this. I urge all of you to consider what the unanswered questions are, the undocumented problems. There will be great opportunities to join together to get answers for them.

GREG NEL
President, Cornea & Contact Lens Society

It’s difficult to look at 2009 without global economics casting some sort of shadow over the general outlook. We are warned that unemployment may increase a little more and that things may be tough for a little longer yet. In reality there is not much that we can do about a lot of what is going on, so it will be a case of weathering the storm.
At the most basic level our industry sells care and expertise and it is important that we continue to stick to our knitting and get the basics right and this is the time of year to roll up our sleeves and get stuck in.
It will be interesting to see how 2009 plays out. 
Professional Education 2009
The CCLS has a special opportunity to harness the ophthalmology/optometry interface and this year the Society will provide its members with high quality, good value for money education in the form of our Rotorua meeting later this month. For the first time the programme does this justice with six keynotes, three from the optometry sector and three from ophthalmology. All are leaders in their fields. They will be joining us for three days brimming with great education and good fun. The programme is full of concise, evidence based, relevant quality education.
We continue to develop our society’s website as an education resource and welcome suggestions of material that our members would like to see available there.
The Keratosite eNewsletter will continue to provide members with relevant and topical updates and titbits to keep members’ appetite stimulated.
Contact Lenses 2009
2009 looks like a year of consolidation as there were several new lenses brought to market last year.  We are spoilt for choice now with both silicon hydrogel and daily disposable modalities, both in spherical and toric designs.
Semi- and Mini-scleral rigid gas permeable lenses have now changed the rigid contact lens landscape, providing near soft lens comfort but with rigid lens optics. Whilst they are mostly used in fitting irregular corneas they also provide an opportunity used to manage contact lens intolerance and provide an alternative to low Dk lathed toric contact lenses in high ametropias. The CCLS will look to provide members with workshops and education opportunities in the fitting of these lenses.
The Marketplace
I fear that it is unlikely that there will be much growth in the optics industry this year. The twin forces of consumer conservatism and chainstore optometry implies that we can see more emphasis on price points and less on professional care. This sometimes leads to sacrificing quality in maintaining the bottom line.
What this will mean to the contact lens industry we’ll have to wait and see; but I hope it won’t translate into mixed contact lens compliance messages. We have a key role to play in reinforcing the importance of appropriate lens care and wear regimens to our patients.
Internet contact lens purchasing continues to erode the traditional lens supply model and we may see more local internet suppliers join the fray, although I doubt a ‘me too’ approach will provide a meaningful solution.  Proactive fitting, specialist lenses and high professional standards offer the best buffer and the CCLS is committed to providing members with education in this regard.
As the saying goes, ‘the more things change, the more they stay the same’. Vision care is more than just refraction and the sale of appliances. Providing our patients with excellent eye care, including the diagnosis and management of pathology, are essential ‘loss leaders’. They add greatly to the reputation of  the practitioner in the eyes of the public. Competent management of atopic disease, blepharitis and both wet and dry eye can dramatically improve the quality of life for our patients, as well as increase the role optometry plays in the medical management of patients. The reason that this should be a goal for every optometrist is that it will increase both word of mouth referrals and referrals from general practice.
I think 2009 is going to be an interesting year; challenge and change coming from both inside and outside the industry and by the end of the year I suspect the landscape will be a little different, but focussing on core skills is an essential component to keeping bums on seats.

JAMES CARLISLE
Managing Director, Carlisle Mason Optometrists

2009 will be a testing year for the optometry industry (excuse the pun). The most significant challenges facing our industry this year will be the same challenges facing every other industry in New Zealand, namely the economic downturn, rising unemployment and the resulting reduced consumer spending.
Given that our industry is a unique blend of health and retail we are in an interesting position. On the one hand we can take comfort in the knowledge that people are always going to require our professional services, but on the other hand we have to accept that discretionary spending is falling and just like other retailers, we are going to have to tighten our belts and ride out the storm. It’s going to be challenging, but our industry is much better equipped to handle a recession than many others.
Apart from the economy, the big story in optometry at the moment is the rapid market consolidation of optometry practices. This process has, and will continue to, result in increased advertising and discounting by the big chains as they compete for market share.
The challenge for optometry practices in 2009 will be to clearly position themselves in consumers’ minds to ensure the best chance of success. Budget players like Specsavers are clearly positioned, targeting price sensitive consumers. Visique are less defined but tend to occupy the middle ground, along with many independent practices. We have to be clear about who we want as customers in our practices and take steps to ensure that we attract those people.
For most New Zealand practices who don’t want to compete in the ‘cheap specs’ market, the ongoing challenge is to educate the public. New Zealand has one of the largest ready-reader markets in the world, per capita. This proves that too many New Zealanders still don’t know about the importance of making regular eye care part of their routine or the wide range of skills and visual solutions that optometry has to treat their visual concerns.
The lowering of product price barriers by the large budget chains, along with their large marketing campaigns should raise public awareness of optometry. This will hopefully encourage more people away from ready-readers and into optometry practices leading to a better standard of eyecare for people who otherwise may never have been seen.
The fact remains, as an industry we have not been good at communicating. Now there is an added complication - in order to successfully capitalise on any increased advertising, or even to survive, we will need to learn how to make customers aware of the differences between choosing the cheapest eye care and premium products and services.
It is extremely important that in 2009 the New Zealand public doesn’t only hear from budget chains trying to convince them that the New Zealand optometry industry has been charging too much for eye care.
As well as maintaining their databases, successful practices in 2009 will develop their referral networks. Part of this is working closely with ophthalmology. We are very fortunate in New Zealand that we have a very cooperative approach to patient care with ophthalmology and there are many ophthalmologists who recognise the important role optometry plays in providing primary eye health care. Now more than ever we need to strengthen these bonds and also reach out to GPs and Pharmacy. Sadly many GPs and Pharmacists think of us as purely opticians, unaware of our full scope of practice. The answer, again, is education.
Most of the major challenges our industry will face in 2009; the economy; the introduction of budget optometry chains; the threat of on-line sellers; can all be addressed in the same way - education. The good news is, when we educate the public, we all benefit.

JOHN MCCONNELL
General Manager, MySight Optometrists

Truly independent optometry will always prosper in New Zealand.
After an exciting and challenging year, 2009 promises to be more of the same. Kiwi owned and operated practices will mostly continue to prosper because they are better, and Kiwis expect more. Those who fall into the price trap will falter.
As a 100% Kiwi-owned and operated independent, Vision Specialists and MySight Optometrists are expecting another year of growth. Despite the recession, Kiwis will still look for excellent eye care, and continue to want fashionable glasses. In tough times, they seem to come back to the people they trust. That is why independent optometry will always prosper in New Zealand. Looking to the year ahead.
POSITIVES:
A great place to work - for people who care for people - The best practices will continue to be great places to work, where everyone strives to care for clients who know them. Price really is the last thing that matters when you are well looked after by people you trust.
Professional Freedom - As professionals, we value the freedom to make a difference in what we do. From spending time with our patients, to selecting the right lens, contact lens or frame to suit their needs. Having the freedom to do what is best for our clients is important to us, and it means a lot to our loyal clients.
Kiwis expect quality - Kiwis who visit private practices are used to getting friendly attentive service from people who care. They are used to quality frames and quality lenses that don’t look like jam jars. They will still expect this, so they will come back to the independent optometrists who provide it.
New Zealand’s open economy - Each independent practice has the ability to source a huge range of excellent frames and lenses at very competitive prices from some great local suppliers who source directly from the rest of the world. Let’s work with our wholesalers to get the right quality product at the right price.
Greater awareness of Optometry - Unprecedented marketing and clever PR from corporate groups will increase public awareness of our industry, with a spin-off of improved ‘top of mind’ awareness amongst our clients. This will improve exam and purchase frequency.
Cheaper glasses are already here - You have been able to get complete $99 specs from selected practices in Auckland for years. And some people buy them. It’s worth having an offer for those who want a cheap pair of readers, in every practice.
NEGATIVES:
Recessionary environment - Clients are already more cautious, and in 2009 we will all have to work even harder to grow our patient numbers.
Fewer qualified staff - Global corporate expansion plans will increase demand for qualified staff even more, creating a vacuum for a period of time.
Continued commoditisation of contact lenses - Unfortunately our suppliers are interested only in a ‘volume game’. More money will be sucked out of our businesses as suppliers feed high-volume overseas internet companies with below-cost product.
Own your own business? - Some professionals will be attracted to ‘owning their own business’. You get more control (benefit), but you take a risk with your own money (gamble). If you use your money, but have no control over the outcome, you are actually buying yourself a job. And you can’t leave it. But there may be some money at the end when you sell it - like an investment property.
Summary - Kiwis will benefit from greater advertising and awareness of our industry so it will grow. And that’s good for all of us. Those practices who don’t fall into the ‘price trap’ but continue to serve their clients well, will prosper. Some smaller marginal practices who lack the resources to retain and grow their patient bases may struggle but ultimately, good strong independent practices will continue to prosper.

PETER GATES
Convenor, NARADO

The horizon is littered with changes in the New Zealand optical industry, these are some of the major topics I foresee arising during 2009.
Specsavers will steal the limelight this year - They will experience growth through acquisition and conversions of strategically important practices (I think there may be a blurred line between conversions and acquisitions). I also think there may be some big surprises as to how they build their business.
Specsavers will dominate the media - Their campaigns are very good, highly persuasive and effective. A lot can be learnt from their advertising strategies.
Consumers will be more enquiring on price as a result of Specsavers advertising - The consumer’s awareness of competitive offerings will be heightened by the presence of Specsavers and I assume OPSM advertising. The market will become polarised and it will come in at least two sub sets - (i) price vs quality and (ii) pragmatism vs design and technology. The pro-active independents will deliver the quality, design and technology but ironically, by not being a cohesive force, they will not be able to overtly stake their claim to this market niche. As a consequence the market will be led to believe that the vocal participants i.e. Specsavers and possibly OPSM are the industry’s bench mark.
Specsavers enthusiasm will not allow the truth to get in the way of a good story or outrageous claim - They are exceptionally good at self promotion to the point where they have convinced themselves about their greatness. To put it into perspective they are not as cheap as they proclaim and their best brands are second tier. However there is no one else in the market to counter their propaganda.
OPSM will change or suffer - Unless OPSM makes some radical changes to their operation and marketing position they will be savaged by Specsavers when competing in the same geographic markets.
OHL will sell off Visique - Although the market value for Visique is reported to be a fraction of the recent book value, the sale of Visique will provide some much needed cash for OHL.
Current franchisees will buy the Visique brand - The franchisees have the most at stake in relation to the brand but the original proposition which justified the establishment of Visique has past its use-by-date. If Visique is going to be a retail brand then it has to have a persona that benefits the consumer. If it exists for the benefit of the practitioners then it will be a costly exercise to compete in the retail market. I estimate it could cost as much as $2-3m over the next couple of years to resurrect the brand and establish a viable brand proposition on the back of ‘We Take Eyes Seriously’. The retail landscape has changed and so must Visique.
Visique will distance itself from OHL and seek other providers - Two scenarios exist - (i) if Visique retains a retail brand presence then its product supply line will be imperative to help create its own niche on product, price and profitability. This will require new supply lines and understandably previously excluded suppliers may suddenly become Visique’s new best mates. (ii) If Visique identifies too much risk and cost in driving their retail brand it may transform into a buying group. They are still the largest group in the country and may be pleasantly surprised as to just how much value they could provide members with real discounts.
Market segmentation will force providers to adopt new business strategies - Specsavers arrival is not the cause of market segmentation. It is a consolidation of a process that started with OPSM arriving, optometry entering into the supply chain and ultimately creating Visique. Legislative changes have allowed more commercial structures in the professional market which has resulted in both the growth and presence of more chains. Each of these factors has reduced the traditional supplier market. Unfortunately few (frame) suppliers have changed from order taking. This sector of the business is blessed with great people but they/their businesses are woefully lacking in innovative growth strategies. It is a challenging topic which is frequently defended on the basis that the practice styles and owners’ attitudes vary so much that there is no clear path through for suppliers to advance. I understand the variances but I point the finger at suppliers for not segmentising the market and creating growth programmes which stimulate advanced retailing and relationship management opportunities for practices to grow into and with. Equally the practice owners who fail to see or understand that the market needs stimulation, they too are accountable for the demise of the supply chain. I believe the viability of the supply chain will be the next major issue for the industry.
In summary, the industry will endure an unsettled period while Visique and OHL sort out their respective issues. Specsavers presence should be kept in perspective, I suspect there will be a few surprises yet to come from them. Specsavers are not category killers, they cannot service all the market and especially not the quality end. It leaves a glaringly obvious niche for independents. On the upside, Specsavers will stimulate the retail market and there will be good opportunities for those eager to develop their businesses. In these unsettled times it’s good to remember that something good always comes out of something bad.

KATHRYN OXTOBY
President, ADONZ

Recent news articles have been outlining the downturn in economic fortunes around the world. Here in New Zealand’s optical world, the market is changing. Discounts and package deals are becoming the norm, margins are tight, more players are entering the market, and a slowing economy is a concern for all.
So what is your point of difference? What makes you stand out from the crowd?
Is it - I belong to a marketing/buying group, I’ve got the latest and best optical equipment, I’m a long standing family business, I have a new modern practice?
All are good answers, each with their appeal to some customers. How many though would consider answering;
“Our point of difference is, we have a great Dispensing Optician.”
Unfortunately probably not many but let’s consider the role of the dispensing optician, and let’s consider it from the client’s point of view. After all they decide your success.
The dispensing optician is the link from check to cheque. They have the ability to enhance the optical experience for the client, a role designed for a reason.
Yes of course the optometrist can dispense spectacles, but if you want a busy thriving practice, is that the best use of your time?
Would it not be better to hand the patient over to a trained professional who;
Can explain and sell the optical features and benefits of lenses;
Can explain and sell the different frame materials and fashions;
Is trained in frame fitting and adjustments;
Can trouble shoot with prescriptions;
Can translate optical jargon to a client;
Has the time and inclination to advise each customer according to their needs; and
By virtue of their CPD requirement, keeps up to date with new technologies in lenses and frames.
Turnover in the optical business is largely due to sales and not to sight test fees. If turnover could be increased without increasing the number of tests in a day, it would have to come from either an increase in number of sales of spectacles or an increase in value of individual sales.
Any member of your staff can sell glasses but are they selling the optimum product to your deserving customer, so that they will return again and again, to you and not go to the new guy in town? Recently I had a customer looking for prescription sunglasses check out the internet after seeing our product. She told me that she could get the glasses at a considerable discount. On closer inspection it was not the same product at all and she did come back to us for her sunnies after the differences had been explained.
Does every customer through your door feel they have been the centre of your attention and important to you, or were they fitted in between tests and all the other things that needed your attention?
Of course ADONZ would like to see qualified dispensing opticians in every practice and this may not be practicable for all, nor will it happen overnight, especially as there are too few of us available at this time. However in the same way that you would expect the best advice when you buy an expensive piece of electrical equipement, shouldn’t your customer expect expert advice in your store?
If you are not in a position to employ a qualified DO, put a willing staff member through the course, and train your own. It would be the best move for a point of difference for your business.

Please Note: The opinions expressed in Industry Outlook 2009 are the personal views of the people concerned and may not necessarily be those of the organisation they represent, nor of the publisher.