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VISION FOR THE FUTURE

by Simon Lord,
last updated 24/11/2009

Specsavers has demonstrated how to revolutionise an industry

Back in 1990, my new wife and I were backpacking in India at the start of a 12-month odyssey that would end in our emigrating from the UK to New Zealand. We had been in Delhi for precisely six days when I managed to break a lens in my glasses. Yes, I had a spare pair but they were so heavily tinted that when we were indoors I was unable to see much at all. If I took them off, I could see perfectly – as long as what I was looking at was no more than seven inches away.

I had bought the now-broken glasses in London especially for the trip and they had been very expensive – reactive glass, anti-glare coating, special frames and so on. They had also taken six weeks to deliver. It was therefore with some trepidation that I set about finding an optician to try and replace the broken lens.

We were recommended to an optician on the other side of the city and endured the usual states of fear and euphoria that accompanied any journey in India – sitting in the front of a rickshaw going the wrong way round a busy roundabout has that effect, even when you can’t see what is about to hit you. But when we got to the opticians, we were in for a surprise. Yes, they could replace the lens. Yes, it could be reactive and have the same coating. But no, it wouldn’t take six weeks – it would take just seven days. And no, it wouldn’t be expensive – in fact, it would cost just a quarter of what I had paid in London a month before.

My wife and I went off to Goa for a week to escape the crush of Delhi and when we got back, the replacement lens was ready – along with the spare pair I had ordered for safety’s sake for the equivalent of NZ$50, including frames. It occurred to me that, somewhere back in England, an optician had made an awful lot of money out of me, even allowing for London property rents.

Someone else had also had the same revelation and was already doing something about it. Doug and Mary Perkins founded Specsavers in Guernsey in 1984. Having built and sold a successful optical chain, the couple then seized the opportunity presented by deregulation in the UK to create a new value-for-money brand. Within four years, there were 100 Specsavers stores and the real growth was just beginning. Another 600 stores followed in the UK alone; in 1997 the franchise went into Europe and in 2008 it came down under. Today – and this figure is certain to be out of date by the time you read this – there are around 1400 stores across the Channel Islands, UK, Ireland, the Netherlands, Scandinavia, Spain, Australia and New Zealand.

The first New Zealand stores opened in November 2008. Within 10 months Specsavers had established 28 stores from Kaitaia to Timaru, and the company expects to be market leader in this country by mid-2010. How has it grown so fast?

The first reason is that Specsavers employs what is called ‘conversion franchising’. When it targets a new town, it identifies existing independent optometrists and approaches them, rather than the other way round. This ensures a pool of qualified local people without the need to recruit externally. Given the way that Specsavers has shaken up the market, anyone approached is wise to consider the opportunity.

Second, Specsavers makes it affordable to convert. It uses an unusual financial model that is partly franchise, partly joint venture to enable new franchisees to come on board quickly and painlessly.

Third, it invests heavily in the brand and positions Specsavers customers not as cheapskates who want to spend less but as stylish consumers who want value for money – the company brought style guru Gok Wan to New Zealand. It backs this up with quirky television advertising (‘Should’ve gone to Specsavers’) that is often genuinely funny. Franchisees regularly report sales increases of over 50% compared with pre-conversion figures.

Fourth, it brings real financial muscle to the market. With almost 40% market share in the UK, it has its own lens manufacturing laboratories and offers a huge range of designer frames.

Fifth, rather than just reducing costs, they heavily promote ‘two-for-one’ deals that actually increase sales value. Their customers now buy different glasses to match different occasions; a real change in consumer expectations.

But finally – and perhaps most importantly – Specsavers has demonstrated how the intelligent application of franchising can revolutionise an entire industry. As I discovered 20 years ago in India, corrected vision may be a necessity but it doesn’t have to be expensive. In fact, the less expensive it is, the more people are able to benefit. That’s the approach that Specsavers has taken and it is proving to be a dynamic one.

There are other franchised chains in the New Zealand optical market, but none of them has done what Specsavers is doing, despite having had many years to study the new entrant. It remains to be seen what the impact will be on prices – and the optical state of the nation – over the next few years.

This article first appeared in NZ Business, October 2009

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