Retail optics has changed: there is no doubt about that, but after such a rapid reforming of the landscape is the optical profession and business set for some consolidation or is there more to come?
The rapid rise of the corporate sector has taken many commentators by surprise and not least among those leading that growth is Boots Opticians. Anecdotally it is viewed by independents as the least scary of the big three. Perhaps because of its history, perhaps because of its persona or perhaps because so many professionals have worked for optics’ big blue at some point in their career.
Being big isn’t the ambition, says Fletcher, who favours the delivery of service. But there is promise of more growth to come.
Fletcher tells Optician: ‘We continue to look and see if there are places in the country where we are not as accessible as we could be and I believe there still are some places where we are not as available to customers as we would like to be.’
Therefore, it becomes clear that Boots Opticians’ expansion has continued apace since its parent company was taken over by US group Walgreens in a multi-billion pound deal three years ago.
As a result, the growth programme has seen the group grow to 637 – of which 181 are franchises – a proportion Fletcher feels at ease with. He eschews the idea of smaller practices on a Tesco Metro-style model but getting the fit right locally.
He adds: ‘What we are finding is that there is not a particular outage from one specific footprint size. We are trying to get it right community by community with what is appropriate. There are some market towns that we have gone into where we would say this is a three test-room practice. Nottingham is an eight-room practice, there are some where we say this is a one-room practice. The gaps we have to plug range across all of those and it’s about understanding the demographics, what the footprint is and what the likely demand is. You have some reference points for that, but there are always places that take you by surprise.’
He says by taking those factors into consideration and a five-year view of a practice an owned, or franchised, practice can be established.
‘In principle, about a third of our estate is franchise-operated and two-thirds is owned. We really like having franchisees; it’s a really important part of our model and as we open more practices we want to keep the percentage broadly the same,’ says Fletcher.
The character of the business is also something Fletcher has clear views on and health is at the centre of his thinking. Being tagged onto wider health, beauty and pharmacy stores means the average Boots Opticians customer is expecting clinical excellence as a given.
Fletcher says: ‘We describe ourselves as a health-led optician. Customers have a real expectation that health is at the heart of what Boots does given our huge pharmacy heritage and what we are known for. We don’t tell our clinicians what to do but we expect them to exercise the very best of their clinical know-how for that patient.’
Accordingly, last month’s National Eye Health Week was deemed a great opportunity to demonstrate these wider health credentials and Boots used the opportunity to talk about children’s screening and, with the Rugby World Cup in mind, the role contact lenses can play in sport. National Eye Health Week also inadvertently raised the issue of free eye exams that a rival multiple offered.
[CaptionComponent="1849"]Question Time
The subject of free eye test offers was one of the issues tackled during a Question Time session at last April’s Optrafair, when Fletcher joined a number of other optical leaders for fierce debate.
He explains: ‘I appreciate this is a debate the industry has and I have a very clear view. We don’t do free eye tests. The reason for that is there is an inherent value in what the optometrist does and it’s incumbent upon us to articulate the value of that to customers. The part of what I don’t like about the debate is that we can all charge £25, for example, and that should be a national norm because it takes away the responsibility to justify the cost to customers.’
Fletcher adds: ‘I don’t agree with the idea that somehow it should be illegal to discount the eye test because that would rob the industry of a competitive dynamic that is actually quite important. I also believe it is the wrong thing from a customer point of view. It’s not right to turn to millions of people and say: “We are all going to collude to fix the price”, I don’t see how that can be justified at all.
‘I do believe it is OK to discount and we selectively discount. The reason we do that is because we recognise that there are 100s of 1,000s of people who ought to be visiting the optician, who are not, for whom price and price perception is a barrier. We need to have an offer for them.’
Fletcher says the the economic crisis over the past five years has changed people’s perception of what they pay and for the likelihood of getting a discount. If optics does not recognise that consumer behaviour is changing, it’s going to be very difficult for the profession in the long term, he says.
Notwithstanding changing consumer habits, the bigger issue of people not coming to the optician for an eye exam has to be addressed. In short, why is it that people don’t come into the industry in the way that they should?
Fletcher believes optics can drive footfall in this regard by simply educating people that healthy vision is an essential lifestyle choice.
He says: ‘I believe it is important to continue to educate the public. We all know many bright, engaged intelligent people who don’t know anything about eyesight but would want to for good reasons. The more we can do to educate parents, teachers and carers is going to be really important.’
This would build up a framework for how people can be educated throughout their lives.
Turning his attention to the wider market, Fletcher sees a potentially bright future for the independent sector. ‘I hope it remains robust because I believe we benefit as an industry from having it. What I observe is that independents who are really clear about what their specialisms are and what they are bringing to their community are doing really well. Be that kids, contact lenses, or range. This is true of any business, be clear about what you are good at and you will be successful. I hope community by community there will continue to be robust independents.’
Success of independents
The success of independents is set to determine the numbers who remain. ‘We are opening a few more [practices], as are Specsavers and VE, that will put some pressure on the independents, I understand that, but if they [independents] are clear about what need they are meeting they should have a healthy future, and I hope that they do.’
Changes to healthcare as a result of the recent change in government has added to levels of uncertainty on the high street, Fletcher adds. ‘We all know it is going to be different, but we just don’t know how. The devolutions of health and social care budgets to places like Manchester and the South West I can’t see how that is not going to continue – that’s going to become a norm. What important is that we take a positive, engaged approach to those developments. The risk I see is that we sit whingeing about it, the “wish you hadn’t done that” type of discussion,’ he says.
Returning to the issue of the eye examination fee and the politics of private patients versus NHS funding, Fletcher again comes out fighting.
He says: ‘I believe the balance between the NHS and private customers as a role model is fantastic and the government sees it as fantastic because the NHS has to pay for customers but the calibre of what we do for private patients provides a really effective cross-subsidy for NHS customers.
The competitive nature of the marketplace means that what NHS patients are getting is vastly improved over the past 15 to 20 years.
‘We should be very cautious about setting up within the industry discussion conflict that doesn’t need to be there. We would shoot ourselves in the foot if we did that.
‘Having an industry squabble about who charges what might be emotionally fulfilling, but ultimately it’s ineffective.’
Read more from the Ben Fletcher interview in this week’s Workplace Guide supplement