Luxottica – Essilor Merger

This is my opinion, and “not necessarily the opinion of our sponsors.”

What will the merger of Luxottica and Essilor mean for the eye care industry?

1. Increased pace of consolidation for ECP’s.

There has already been a lot of activity in this sphere, with companies such as MyEyeDr and Clarkson Eyecare buying many independent ECP’s as well as smaller regional chains.

If and when “EssiLux” merge, count on this entity also to dramatically increase its’ footprint in the “retail” landscape.

Why?

Because ultimately they want to buy and control the patient’s eyewear choices. If they own the retail location then they can dictate which frames, lenses, contacts, etc. will be made available to the patient.

Needless to say, the vast majority of products offered would be their proprietary products, much like a current LensCrafters.

2. Increased pace of consolidation for vendors.

The consolidation of vendors has been taking place for years, with Essilor, Zeiss, Hoya, and VSP buying independent optical labs.

The large frame companies and especially Luxottica have been buying the rights for designer brand names, and consolidating the brands under their portfolios.

This consolidation will increase, with some vendors selling to larger companies, and some unfortunately not able to compete and closing down.

The reduction of independent ECP’s will have a dramatic effect on the abilities of independent vendors to remain viable.

3. A reduction in Managed Vision Care (MVC) providers.

As ECP’s consolidate, they large players will exert more control over MVC’s.

If EssiLux and the other large players (such as Walmart, National Vision, Costco, etc.) continue to grow and independent ECP’s shrink, they will have an increasing amount of leverage over reimbursement levels and which plans are able to empanel a significant enough number of ECP’s to support any business that may be acquired by the MVC.

4. “Offshoring” of lab work and frame production will continue.

The large labs (including Essilor) already do much of their laboratory work internationally (mainly in China and Mexico).

There has been a small rebound in frame manufacturing in the USA, but so far to an insignificant level.

As ECP consolidators get larger, they will send more of their lab work overseas to reduce their costs.

5. Decreased levels of customer service to the patients.

As offshoring grows, turnaround time will suffer. Especially for jobs that have a “spoilage”, as now it will have to travel to different countries multiple times.

These are just a few of the foreseeable trends.

What do you think?

What other effects would this merger have on the eyecare industry?

Maximize the Holiday Season

The period between Thanksgiving and New Year’s Day has been known for years as the top shopping period of the year. Thanks to insurance and flex spending accounts, it is also a great time of year to boost sales in the eye care field. Make sure you are contacting your patients with your holiday sales during this time of year! Sunglasses, nutriceuticals and accessories are great products to advertise, as well as computer glasses, blue light blocking lenses, and just eyewear in general. Help your patients get the benefits they have paid for with their vision plans! It is also a great time to go through your files and contact patients that have missed appointments or haven’t been seen in a while. Make the effort to finish the year strong!

Service

How can you thrive in today’s marketplace? A huge part of developing a successful practice is service. Service can take on many forms, but we all know when we are getting good service or bad service. Think of the last time you went to a restaurant. Was your service good or bad, and what were the criteria that influenced your answer? Think about that for a minute.

Typical answers might be attentiveness, time to be served, cheerful attitude, knowledgeable about the menu, helpful, checking your table frequently, suggesting menu items, telling you about their specials, and good answers to your questions.

Many of these same criteria are also important in an eye care practice.

For example, look at attentiveness. At the restaurant we want the wait staff to be cheerful, check on us to make sure the meal is going ok, the food is tasting good, etc. This applies to eye care practices as well. If a patient (Patient X) comes through your doors and is not greeted in a timely way, this could be the start of a service failure. The front desk is busy with phone calls so the patient sits down in the waiting room. (We would usually call this the reception area, but today it feels like a waiting room for Patient X). Then the doctor is running behind due to the previous patient’s late arrival, so the staff isn’t too worried about Patient X since they have other things going on, and besides they have had a busy day. When Patient X is finally finished with the exam, the opticians are already busy with other patients and walk-ins, and don’t take the time to talk to the new patient. Eventually Patient X has had enough and walks out the door, saying they will be back another day. Maybe they will come back another day, maybe they won’t.

According to a study by U.S. News and World Reports from 20 years ago, the top reason customers quit a business is due to an attitude of indifference by an employee of the company. The numbers from the study:

-67% leave due to an attitude of indifference on the part of an employee

-14% leave due to dissatisfaction with the product

-9% leave due to competition

Every business has “the big three” things to offer their customers: price, quality and service. (Common wisdom is you can only offer two of the three). If we look at the above three reasons, they basically ARE price, quality and service. An attitude of indifference is service, dissatisfaction with the product is quality, and competition is price. So basically the most important factor in retaining customers is service, and in third place is price. Is this what you would think, or would you think that price was more important?

The first thing on which every eye care practice should focus is customer service. Make sure your service is state of the art, proactive, and delivered to each and every patient. You will not only retain your current patient base, you will also gain new patients through the word of mouth advertising your happy patients freely provide.