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Doug and Mary's model

Business
Specsavers has reached the 700th practice milestone with the opening of three practices in Norway. Chris Bennett interviews its founders about the business model, competitors and its long-term strategy

Specsavers has reached the 700th practice milestone with the opening of three practices in Norway. Chris Bennett interviews its founders about the business model, competitors and its long-term strategy

There are few names in optics that polarise opinion as starkly as Specsavers. Its founders, husband and wife team Doug and Mary Perkins could not be further from the traditional image of hyper-successful business leaders. For Doug Perkins the 'numbers' hold no interest, while Mary talks of bringing affordable eye care to everyone. Yet today the couple sit at the head of a hugely successful optical business empire boasting 700 practices in five countries.

Specsavers was set up in 1984 and since then not a single practice has been closed, but its success and innovative approach has brought some controversy.

Doug Perkins takes a measured approach to those who accuse Specsavers of damaging the profession: 'I believe that Specsavers has championed value for money and has maintained its mission to offer affordability to everyone. Specsavers has uniquely championed the UK-owned value for money concept which has helped to increase sight tests for the whole market by about 50 per cent in the last 20 years.'

He points to the group's many awards and accolades: 'This success is good for UK optics and it's British. Our partners are very focused on their teams, the customer and the regulatory bodies and the hard work that at least a dozen of them put into those regulatory bodies are the important things as far as we are concerned.'

DOUGAN~1.gifHe is also philosophical about the sniping about Specsavers on websites such as Monoptica's Nettalk. 'Constructive criticism we are interested in, but anything that is in the area of taking pot shots I think just flows over them [the partners].'

He says the average partner has been with Specsavers for 10 years and they have seen it all before.

Perkins makes no apology for the  position the business enjoys but he is clearly not obsessed with its size. When asked how many practices the group has he responds: 'Amazingly I am extremely poor at those kinds of headlines, the numbers don't drive me, it's the concept side that does.

'I am interested in opportunities and business models that are based on optometry rather than optical boutiques. They don't excite me so much.'

Hearing opportunity
Despite that, Specsavers will continue to grow in the UK, through expansion overseas and through controlled diversification. At this point Perkins mentions Specsavers' latest foray into the hearing aid business. 'Hearcare is very much a controlled situation where we have looked at the market and the alignment of hearing with optics worldwide. We looked at the demand curves in mild to moderate hearing loss that are, demographically, likely to go through the roof. That means there are challenges for Specsavers and the NHS.

'A business always has to grow,' he says. 'It is only the challenge of raising the bar that produces ever-better people so there has to be expansion.

'We passionately believe in what we call the optical model. The optical model is getting back to this concept of healthcare for everyone - rich, poor, young and old. Optics is a classic example and dentistry is the classic non-example,' he adds.

At this point Perkins refers to professor John Spiers' book Patients, Power and Responsibility,1 specifically Chapter 19 for the theory behind the optical model.

The optical model, he says, is one the healthcare profession should look at because it is massively efficient. It conducts 15 million eye care treatments a year and generates a negligible amount of customer complaints.

This is because it is in everybody's interest to engage in customer satisfaction, says Perkins. Adherence to this model is crucial for Specsavers, he says, citing the experience of dentistry and Specsavers' decision whether to enter that market.

'When Lord Hunt was championing change in dentistry I think there was a vision for a return to the joined up dentistry that we all remember from when we were young. You could go into any dentist and get service. We thought there would be a return to that.'

Unfortunately there wasn't, he says and that is why Specsavers didn't go into it. Other areas such as laser eye surgery also fail to fit the model because of the competency and regulatory issues.

'It is a case of, can the brand add value, can we as individuals add value? Obviously these things have to be kept under review, but based on competency, volumes and overhead costs it [Laser surgery] didn't actually fit.'

So can that optical model be extended to cataract, glaucoma and AMD working with the NHS and the PCTs?
'I think we are massively interested in the pathways and we are 100 per cent involved in CET, the governance and the review of all our OOs and DOs.'

This review is done on a monthly basis and is a tough job, he says. 'I believe that we are a model that could be of use to both the College and the GOC in the way that we have gone about it. But, without a good framework of standards and dedicated career professionals who want to aspire to higher levels, this is not going to happen.

'What concerns me is the lack of clarity with the NHS. Because of the decentralisation you have got ophthalmologists not wishing to change their style of working. If optometry is going to become the path to cost-effective competence to tackle these issues there has to be clarity. That is the centralised role of the health authority in my opinion.'

Perkins clearly believes that local control is too fragmented, resulting in frustration among those trying to move forward. He says independent opticians are putting a massive effort and investment into advanced optometry. Maybe the Scottish model or the Welsh model may show the way forward, but people have to be able to see a career path and who is going to pay for the technology.

'How can you decide what technology to invest in if you haven't got total clarity of the model?'

Doug-&-Mary-June-2004-2.gifContact lens supply
More pressing is the current round of market liberalisation across the internet and the decision of supermarkets such as Tesco to sell contact lenses.

'The global manufacturers almost without exception have thrown themselves into the pharmacy supply which is extremely unfortunate. It puts them in a unique position through the Tesco publicity machine to do comparative advertising with all of the traditional optical people. The suppliers, for example CIBA, have supplied details of our products so that Tesco can undercut them and do comparative advertising. That is not a good situation. The independents are even more exposed.'

He says the only way of combating this is putting research into the value definition of price, quality and service and he says Specsavers have got that right.

'We believe that the customer fundamentally wants a joined up aftercare, fitting and product service.'

Perkins rejects the idea that Specsavers' recent price reduction in contact lenses was a reaction to Tesco's entry into the market or that it has been done against the will of Specsavers partners. 'I think that some independents and Monoptica [Nettalk] do take comfort from our discomfort but I can assure you it is zero.'

He says meetings took place months ago to decide on the pricing strategy and Specsavers' partners were at the heart of the decisions made to combat the threats posed by Section 60 changes to contact lens retailing. 'I would say the current framework of pricing has actually come from the partners after that debate.

'Our debate and repositioning was based on the threat of deregulation. You may have an optician sat at a desk in Tesco but its still deregulation. He is controlling the system but not the eye care and the problems of that customer.'

There needs to be a constant redefining of that proposition, he says. 'You have got to be proactive in, and give publicity to, the advantages of joined-up care. This may be an area that the profession needs to combine together on. This doesn't just apply to contact lenses, but applies to the web and spectacles because the same issues apply.'

He says there is an important role for publicity to play: 'I think the danger with any deregulation is if you don't upgrade the marketing messages to tell people what the advantages are you are giving the high ground to these deregulated entry participants.'

He does not consider the threat posed by the internet to be great: 'I don't believe that the web is that low-a-cost method of marketing eyewear.'
This scepticism also stretches to the entry of pharmacies into contact lens retailing. He says contact lens aftercare is not within the domain of the pharmacist but it is core to the role of optometrists and contact lens opticians.

'The distribution system confuses and gives false comfort to the customer,' he says.

Doug-2.gifEyeing the competition
Perkins is constantly looking at competitors especially among the chains undergoing change, but he remains confident of the Specsavers credo: 'Specsavers has the best joined up strategy, despite the monthly changes in the competitors' initiatives being more robust than ever.'

He spares no modesty when asked who he admires: 'They seem to be all copying us. One has to be honest, one only has to look at Tesco and Asda and Boots.'

They have all replicated, perfectly legally, the Specsavers' model, he says.  'This means that we can't stand still, we have to innovate, we have to change and develop differentiation. The last thing we want in optics in the UK is undifferentiated chains.'

Exactly who will lead that innovation in the future is a question Perkins says he is often asked and he rejects the idea that Specsavers can only function with Doug and Mary at the helm. Although he has no intention of retiring: 'I did so when I was 38 and my answer would be "never again," there is a clear succession plan. 

'That is a question that comes up every five years and the answer is always the same. Specsavers is a family business. It is interested in family values and we treat our people for the long term and it's the way we like to be treated. I would say a big proportion of our stores are truly family businesses, which is great to see.'

He says the succession plan for Specsavers is the same as any family company, there's no secret formula. 'When I am not doing the job as well as I have done there are people, my children for example, who will play an increasingly active part. Our secret of success is about involvement and participation and we encourage that. It is no secret that my children are in the entrepreneurial part of the business, eg overseas. That produces the same entrepreneurial benefit of skill development that I had.'

So are there things he would have done differently? 'We came in 20 years ago when value for money was on the decline. We came in on a wave with Boots, it was a whole wave of change based on value and, in our case, on opticianry ownership.' That gave birth to the joint venture idea. 'Specsavers started back in 1984 with one store and to this day we have never closed a store. We wouldn't alter the business model one bit.'
'I am an entrepreneur, although unlike Mr Moulsdale [ Optical Express] I am only in one outlet, but I'm still an entrepreneur. And with entrepreneurs you never have any lows, there are only learning experiences.' The highs he says were when the Specsavers won its two optician Awards, 'a real team effort'.

The future for Specsavers is inevitably tied up with the provision of health services and this is an area that clearly troubles Perkins. Specsavers, he says, is interested in best practice and how it can achieve some beneficial outcome from optometry advancement. 'We are trying to make commercial sense of what is available. We need the IPF [Intra-professional forum] to point out the need for clarity and proper career progression.'

Back in the 1950s he says it was clear what was on offer. But that is no longer the case. 'Independents who are making the investment need to get the clarity. What we want to do is to keep the business exciting for the staff in terms of career development, excitement and best practice because we haven't optimised that by any means.'

This historical perspective is crucial  to understanding the UK customer. 'We are pretty well the only optometry-owned major and we are passionate believers in the UK business model of complete eye care.'

This concept is what the customer wants in the UK. 'They love it because over the last 50 years it has evolved from the NHS and hopefully now it's going to go into advanced optical care. With the voucher system it is available to everybody and that is the exciting part of it.'

That is what the Specsavers joint venture has allowed to flourish. He says that is something European holding companies have no concept of and their ideas should not be allowed to dilute that model which has worked so well.

'If optics went private, that would be such a disappointment. The products and services on offer are wider now than ever, and so long as they can be accessed with a voucher, people have got the maximum choice.'

Privatisation is something he clearly sees as a threat and something to be avoided at all costs. That can only come if practitioners stop seeing the NHS as a fair deal, something he thinks we have been quite close to.

'The Scottish and the Welsh are demonstrating in smaller communities, in pilots, the true value of optometrists.'

This passion among OOs to provide care and the optical model combine to create a powerful force which has provided eye care in an efficient and accessible manner.

The future clearly holds many challenges with the expansion of the role of the optometrist and the lack of clarity in how the profession and the
NHS work together on the Eyecare Pathways.

When history is written Perkins says he would like the profession to think of Specsavers as the people who helped preserve independent optics.

References
1 Patients, Power and Responsibility. John Spiers, Visiting Professor, School of Humanities and Social Science University of Glamorgan. Radcliffe Medical Press

group history.jpg.


 

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