While it is more common in retail to see businesses establishing a bricks-and-mortar presence and then adding an online store, the Australian optical retail scene is moving in the opposite direction. Numerous online eyewear retailers are choosing to establish a physical presence to complement their online offerings and tap into new potential, in a move expected to put pressure on traditional optical stores.
Separation of the Eye Test from Eyewear Purchase
Traditionally, an eye examination would be followed by the purchase of suitable prescription spectacles at the same optical store. However, this is changing due to the increasing sophistication and functionality of online eyewear retailers, tied in with their value and convenience propositions. Consumers are now more likely to visit an optometrist for an eye test and then enter their prescription online to find fashionable frames at attractive prices. The purchase of eyewear online has achieved continuous growth in the Australian market, with the channel accounting for 6% of retail value sales in 2014, up by four percentage points over 2009-2014.
Online retailers benefit from a low-cost model and can offer significant discounts by cutting out the middleman. However, one hurdle is the inability to try before you buy. To overcome this, online eyewear retailers have expanded their capabilities to offer features such as virtual try-on, free home trial and free returns. Furthermore, multiple online eyewear retailers are establishing a bricks-and-mortar presence, allowing customers to have an eye test in-store and then experience the look and feel of products along with the human interaction that many desire.
Contact lenses, a category predominately led by pharmaceutical giants such as Johnson & Johnson and Novartis, are witnessing a competitive shift. Many smaller players, once held back by their operational size, are now attempting to break into the contact lens space. Spectacle companies Hoya, Zeiss and Essilor for example are testing market entry strategies for contact lenses. The segment should start to see many mergers, acquisitions and new product launches in the upcoming years.
Analyst Insight by Chloe Wu - Personal Accessories and Eyewear Analyst
Private label and in-house brands in eyewear are hitting the right notes with today’s buyers. By taking on big names like Luxottica and Safilo for a share of consumers’ wallets, private label and in-house brands are opening the way to greater commoditisation in the market and a significant shift in competitive dynamics.
Traditional Focus versus a New Norm
Traditionally, eyewear of recognised brands such as Oakley and Revo has been the mainstay of optical shops. Consumers seek these established brands for quality assurance and less for their emotional appeal. Due to the oligopolistic nature of the eyewear market, prices are generally artificially inflated and lacking in transparency.
More recently, a new norm for eyewear has emerged. An impressive array of private label and in-house brands are making their debut, with creative marketing and simple pricing systems to boot.
Analyst Insight by May Ling Tham - Global Head of Personal Accessories and Eyewear
It is no secret that Google has ambitious plans for its wearable technology, Google Glass. In the first quarter of 2014, the company released a string of news stories on various collaborations, one with an eyewear manufacturer and another with a vision care provider. Google is set to popularise its wearable products from being ‘uber-geek’ items to products that the average person on the street can relate to and, more importantly, afford to purchase. Previously, we looked at the impact on consumers and society but in this opinion we look at the impact on the eyewear industry.
Getting the Right Formula
When Google first soft launched Google Glass in 2012, it generated significant excitement. While the product gained immediate fans, it also amassed a fair number of critics. One main gripe concerning explorer editions of the headset that was made available to interested buyers was that Glass looked geeky and unfashionable for daily wear. Google’s plan to collaborate with Luxottica and VSP, as announced in the first quarter of 2014, was clearly a reaction to such feedback.
Analyst Insight by May Ling Tham - Global Head of Personal Accessories and Eyewear
Google is set to popularise Google Glass, positioning it not as an ‘uber-geek’ item but rather one that the average person on the street can relate to and, more importantly, afford. Traditionally, new product innovations take years to refine before becoming mainstream. In this thriving technological era, however, it is clear that this transition period has shortened dramatically. Google and its partners are committed to making Glass available to mass consumers as early as the end of 2014.
While wearable products exude an air of novelty which attracts many, Euromonitor International looks at whether the market is really ready to embrace this new technology.
Are Consumers Ready for the Glass Invasion?
Once getting over the initial excitement surrounding Glass, one may start to wonder about the repercussions of this device becoming mainstream, such as whether eye health will start to deteriorate with prolonged usage, the safety of road users when more drivers start using Glass and privacy issues with regard to what is appropriate usage behaviour.
Contact lenses are growing faster than spectacles in Singapore as consumers view contacts as more stylish and convenient than spectacles. Consumers in Singapore are fashion conscious, and manufacturers can regain sales by marketing spectacles as a fashion accessory. The company Owndays has already started catering to this trend using a ‘fast-processing’ method allowing consumers to walk out the door with stylish frames and prescription-based lenses in hand. Euromonitor expects the fast-processing trend to expand to other countries in the Asia-Pacific region as consumers search for convenient, fashion-sensible spectacles.
At the 2014 Winter Olympics held in Sochi, Russia, there were an abundance of sponsorships seen on event telecasts and across Olympic venues, as well as adorning athletes. Euromonitor International takes a look at the eyewear and jewellery brands which have sponsored the event.
2014 Winter Olympics Logo / Photo credit: www.sochi.ru
Analyst Insight by Sulabh Madhwal - Personal Accessories and Eyewear Analyst
The last revolutionary advances in contact lenses were the use of silicone hydrogels for manufacturing in 1999 and the launch of the first progressive daily disposable lens in 2000. However, the increased willingness of external electronics and technology players to enter eyewear poses a threat which could accelerate product innovation. Here, we discuss the current state of new product development in contact lenses, which is dependent on cosmetics and technology.
Cosmetic Lenses Assuming Greater Emphasis
As discussed in the podcast ‘Circle Lenses Drive Demand for Contacts in Asia’, circle and coloured lenses are among the primary drivers of contact lens sales in Asia Pacific. New patterns, colours and collections have been making inroads in the portfolios of most global brands. In 2013, Bausch & Lomb added a new cosmetic lens collection, Naturelle, in order to compete with CIBA Vision Freshlook and Acuvue Define. In addition, consistent growth in the region has invited local manufacturers to position products which are cheaper than those offered by global leaders such as Acuvue and CIBA Vision.
However, associated concerns about consumer safety and counterfeit products are likely to pose a threat to the rise of cosmetic lenses. A case in point is South Korea’s ban on the internet retailing of contact lenses in 2012. Although the increasing involvement of national health authorities is expected to slow the ascent of local cosmetic lens brands, it presents global brands with a new growth opportunity in Asia. In addition to South Korea, other substantial Asia Pacific markets such as Japan, China and Taiwan will help shape the global competitive landscape for contact lenses over 2014-2018.
Limited Role of Technology
There are two distinct technological innovations which could have a long-term impact on contact lenses. In July 2013, researchers at the University of California, San Diego and École Polytechnique Fédérale de Lausanne (EPFL) unveiled the development of contact lenses which allow vision to be magnified by nearly three times. In order to achieve the magnification, the contact lenses have to be paired with a pair of specialised spectacles. Apart from military applications, the product could prove invaluable to middle-aged and elderly consumers who face age-related macular degeneration (AMD). Although the prototype is complete, additional research is required to improve the lenses’ gas permeability and make them suitable for everyday wear.
Source: Google official blog
In addition, Google announced its first version of ‘smart’ contact lenses on 16 January 2014. The prototype is designed exclusively for diabetes patients, and automatically takes glucose level readings once every second. This provides a quick and painless alternative to the current method of testing through blood drops. Although there are talks of Google integrating some of its Google Glass functions into the smart contact lens, this seems highly unlikely in the next few years due to the nascent stage of its contact lens development.
No Revolution Coming Just Yet
Most contact lens innovations seen in 2013 and 2014 are either riding on consumer preferences within existing categories (eg cosmetic lenses) or are a few years from being launched for retail sales (eg Google contact lenses). They are also based on providing options to specific consumers rather than disrupting the wider industry.
This trend is likely to continue over the 2014-2018 period, when soft lens materials will be the focus for manufacturers. As such, any major breakthrough which simplifies the contact lens wearing process or radically increases eye comfort will bring immediate returns for the manufacturer involved. With respect to revolutionary technologies, any new concept is expected to involve collaboration with one of the dominant players - Johnson & Johnson, Novartis, Bausch & Lomb or The Cooper Cos - in order to utilise their medical expertise and reach the global consumer.
In 2013, three acquisitions in the eyewear industry shaped the market. First, Valeant Pharmaceuticals acquired Bausch and Lomb, the third largest global contact lens company. This led to a layoff of over 400 Bausch and Lomb employees. Second, Italian based Marcolin Eyewear acquired American rival Viva International, allowing for a brand portfolio featuring both high-end and accessible luxury brands. Finally, Essilor, the world’s largest corrective lens company, acquired FGX International and Costa Inc. in a bid to expand into spectacles.
Analyst Insight by May Ling Tham - Head of Personal Accessories and Eyewear
With technology being an integral part of consumers’ lifestyles, Euromonitor International takes a look at new product developments in bags and eyewear and how tech-savvy features incorporated into these accessories might be the future for the industry.
Smart Bags Charge Mobile Devices While On the Go
While the world obsesses over smart devices, demand for accessories is increasing. No longer are bags being designed with just compartments to slot in laptops and mobiles; they are now also incorporating charging devices to allow consumers to charge their electronics when on the go, while also remaining fashionable.
Top left to right: Hustle bag from Hustle Group, Mighty Purse from Handbag Butler
Bottom left to right: Power Commute Laptop Messenger Bag and Power Q Laptop Backpack from Timbuk2