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.
This emerging strategy represents a new avenue of growth for online eyewear retailers. While the online model targets internet-savvy consumers who are confident making purchases online, a store-front strategy exposes businesses to a new audience. Store-based retailing in eyewear accounts for 94% of retail value sales, and in establishing a physical presence online eyewear retailers can tap into sales from traditional consumers with a preference for in-store purchases as well as passing traffic. The strategy is particularly suitable for consumers who require a more complex prescription, such as multifocal or progressive fittings.
Clearly Establishes a Physical Presence
One of the world’s largest online eyewear retailers, Clearly, opened its first retail store in Australia in the first half of 2014. Clearly is based in Canada and has been operating online in Australia since 2005, sourcing its frames from China and lenses from Taiwan and South Korea. The new store, located in Sydney’s business district, features a range of the company’s products, in-store optometrists and a light and sound installation. Clearly’s establishment of a bricks-and-mortar store enhances its offering by providing consumers with the attributes of a traditional optical retailer, such as a personalised service, the ability to have an eye examination in-store and try before you buy.
Source: Euromonitor International
In addition, online eyewear retailers Bailey Nelson and Oscar Wylee have transitioned from e-tail to retail. Bailey Nelson, founded in 2012, has opened seven boutiques across Sydney, Melbourne and Brisbane, as well as three boutiques in London. Similarly, Oscar Wylee opened a Sydney showroom and eye test centre in 2013. Both companies offer affordable prescription spectacles at a price of less than A$100 a pair.
The Challenge for Traditional Optical Stores
The growth of traditional optical stores is being threatened by online eyewear retailers, especially those which have established a physical presence. Traditional optical stores benefit from offering a personalised service. However, the multi-channel capabilities of online eyewear retailers present an enticing option for consumers. Specsavers and OPSM currently dominate retail value sales in optical goods stores, holding shares of 35% and 48%, respectively. Clearly is well-placed to break the dominance of these two players if it can carry over its discounts of up to 70% on its range of eyewear from its online model to its bricks-and-mortar offering.
Clicks to Bricks to Support Growth in Internet Retailing
Internet retailing is forecast to reach a 14% share of retail value sales in eyewear by 2018, with lower prices, convenience and increased online capabilities luring consumers to the online channel. The move from clicks to bricks will help fuel growth in internet retailing. Once a customer has received personalised service and made a purchase in-store, he or she will be more comfortable moving online for future purchases.
Clearly has an ambitious plan to open another six stores by the end of 2014. The company is expected to benefit from its multi-channel offering by exposing its brand to a wider range of consumers. Optical goods stores are forecast to achieve a 7% value CAGR at constant 2013 prices over 2013-2018 and Clearly will look to capitalise on this healthy growth. Traditional optical stores will need to ramp up their digital strategies to compete effectively with the online channel, and it is anticipated that they will undertake a greater deal of business online. Specsavers and OPSM are yet to sell fitted prescription spectacles online and may consider this in the future to mirror the capabilities of their online competitors.