The arrival of British optometry chain Specsavers has changed the Australian optometry market indelibly.
For many years, the market has been dominated by giant OPSM, with smaller chain Paris Miki a long way behind.
OPSM still dominates the market, with a staggering 33% share, but Specsavers has made huge inroads. It plans to open 50 new stores in 2009 (taking its total network to well over 150 stores) and is aiming for revenue $200 million.
The key to Specsavers’ growth has been its deep discount offers, which have helped it quickly grab second spot in the downturn-hit market. But the discounts have also forced competitors to slash their own prices and as a result growth rates are down sharply.
IBISWorld estimates that this industry will grow at an average annualised rate of 0.6% over the five year period to 2008-09. Growth in industry revenue will be held down by negative real growth in unit selling prices.
A fall in import prices for spectacles, frames and lenses over most of this period will be passed on to consumers, due to competitive industry conditions.
But new optical lens technologies, such as anti-reflective and variable-tint lenses, will positively affect industry growth by driving new purchases and optometry consultation.
Out-of-pocket household expenditures account for over half of total expenditure on purchases of optical goods and a negligible amount of total expenditure on optometry services.
Household expenditure on purchases of optical goods is not expected to grow in real terms over the five years to 2008-09, which means that households will spend a declining proportion of their budget on purchases of optical goods. A real reduction in average unit selling prices is expected to act to dampen growth in household expenditure on purchases of optical goods.
IBISWorld forecasts that this industry will grow at an average annualised rate of 1.4% over the five year period to 2013-14. Growth in total industry revenue is expected to be held down by a real decline in unit selling prices and a real decrease in the Medicare rebate per service.
The “budget” optical dispensing store concept will gain market share, which will increase competition and reduce margins. Further consolidation may occur through growth in franchised networks, buying groups and co-operative networks. Large optical dispensers will continue to seek to obtain exclusive provider agreements with private health insurers.
During the outlook period, the number of optometry services is forecast to grow at a moderate rate with most of this growth resulting from the population growth and ageing of the population.
But the state of the economy could hamper the sector’s growth. Growing spending commitments among some age groups in areas such as housing, education and energy, could have an adverse effect on spending on eyewear among these groups.
IBISWorld supplies business information databases, including industry reports, company reports and business indicator reports. www.ibisworld.com.au
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