The late months of 2017 were gloomy for UK consumer sentiment with major news coming in November as the Bank of England (BoE) announced that the inflation rate hit a five-year high of 3.1%, leaving consumers feeling the pinch of higher prices and bracing for further increases.
While the inflation rate has risen wage growth has been stagnant, falling behind the growth of inflation and squeezing household spending. Delving into GfK’s Consumer Confidence Barometer, which measures consumers’ perception of the cost of living now compared to 12 months ago results highlight that in December 2017 54% of people thought the cost of living was a lot higher compared to the previous year’s 34%. This perception has continued to increase since August 2016 after the EU referendum but has increased significantly over the last two months of 2017.
GfK Optics tracks four product groups, spectacle frames, sunglasses, contact lenses and contact lens care products. Looking at the total GB optical sales tracked the four product groups have a combined value sales growth rate of +1.4% for December 2017 moving annual total (MAT). Contact lenses, which is GfK Optics’ second largest segment, has seen an increase of +2.1% MAT December 2017 by value. Contact lens care products, including dry eye drops, also displayed comfortable growth of +4.3% MAT December 17.
GfK’s GB Eyewear Panels, which track spectacle frames and sunglasses have seen combined value sales growth of +0.8% December 2017 MAT. Spectacle frames, the largest optical product group tracked by value sales, has seen positive performance as the product group experienced growth of +1.5% December 17 MAT with the independent optician’s channel achieving a higher rate of value growth than the multiple opticians over the last 12 months.
However, in sunglasses we are seeing a contrast of performance compared to spectacle frames with value sales showing negative movement of -3.5% MAT December 17. This decline in total value sales for sunglasses has been driven by a fall in volume sales which are down by -8.4%. Digging into channel performance both multiple and independent opticians are performing ahead of department stores/sunglass specialists in terms of value growth compared to 2016, though despite this the department stores/sunglass specialists channel remains the largest by value sales.
Reviewing sunglasses performance over the last year, Q1 2017 gave the year a strong start, growing by +6.2% in value sales compared to Q1 2016, with January heavily contributing to this impressive performance displaying +21.6% value sales vs January 2016.
However, investigating deeper into the Q1 performance, volume declined by -2.6% with increasing average prices the main driver of the strong performance growing by +8.9% vs Q1 2016. However, the following quarters saw a decline in value sales, especially the late summer period July, August and September, as all three months showed double digit year-on-year value declines contributing to Q3’s poor value sales performance of -12.8% vs Q3 2016. Delving deeper, volume sales again heavily drove the decline in Q3 with a significant drop of -17.0% vs Q3 2016.
Q4 saw a similar, if less extreme, trend with smaller falls in both value sales (-2.4%) and volume sales (-5.8%) with average price again increasing year-on-year by +3.6%.
Although the sunglasses market has had a difficult year with declining sales compared to 2016 there has been a shift to higher price bands with an increase in average price in all four quarters of 2017 compared to 2016.
Finally, it should be noted that 2016 was a particularly strong year for sunglasses and so the period we are comparing against would naturally be a challenge to match. Indeed the product group achieved its highest annual value sales ever captured by GfK over 2016.
It is likely that 2017’s sales decline compared to 2016 was influenced by the combination of less favourable weather conditions than in 2016, particularly over the peak spring/summer season for sunglasses sales and the growing economic uncertainty witnessed in the UK discouraging consumers from making purchases. Over 2018 it is again likely both factors will again have an impact on this market.
Note Data quoted covers England, Wales and Scotland
Prepared by Paul York, senior account manager, Optics, paul.york@gfk.com, 020 7890 9513, gfk.