The UK is the number one market for sales of contact lenses and delivers over 37 per cent of the total annual value of the top five European countries.
Despite being the European contact lens capital, over the past year the UK has witnessed a different performance to other European countries. The growth in consumers choosing frequent replacement lenses has and continues to be beneficial to the market growth in terms of volume. In 2005 the volume of the contact lens market grew by 5 per cent to record sales of over 361 million lenses. However, due to a number of factors which will be explored later, the market witnessed a decline in overall value.
The UK has a strong economy, with retail markets continuing to grow and a consumer who is continually looking for a better offering. Clearly the contact lens market is moving forward at a rapid rate in terms of technology and innovation. Manufacturers recognise this and are targeting consumers with effective and emotive advertising. So what are the key elements influencing the changing contact lens market in the UK and how are they affecting its performance and future potential?
On June 30 2005 changes to Section 60 of the Opticians Act opened the market to increased competition including large multi-national grocery chains and internet retailers. Consumers now have a greater choice as to where they purchase their contact lenses. Invariably, however, an increase in the number of different distribution outlets can lead to a competitive situation for retailers, mainly led through price. As mentioned earlier, the value of the contact lens market declined in 2005 to £411m, despite the market achieving growth in volume. This kind of performance can only be recorded if one or more variable has declined; in this case we look at price.
The average price of a daily lens declined more than 8 per cent in 2005, which had a direct impact on the value of the UK market. It's not only a time when retailers are reducing prices to compete, throughout 2005 GfK also recorded a large increase in the sale of private label lenses. At the end of the year they represented 30 per cent of the value of the UK market, up from 25 per cent in 2004. Clearly there are additional benefits for retailers in selling private label products but due to their general lower price than branded products this has also had a direct impact on the price deflation of the market.
Linked in with the changes to Section 60 we are now entering a time of changing patterns in retail development, where small independent retailers need to use and understand their unique selling points to hold onto their customers and to compete against strong national retailers. The UK is well recognised for its dominant retail chains, whether looking at consumer electronic markets or optical markets. This pattern is more than likely set to continue, and it is up to retailers now to recognise this and adapt to the market. Throughout 2005, independent opticians saw their value share of the market cut by nearly 10 per cent due to the growth of multiple retailers.
The market is rapidly changing, with technological innovation increasing the presence of daily, weekly and monthly lenses. Silicone hydrogel lenses now account for over 17 per cent of the market by value (February 2006) and this trend looks set to continue with leading manufacturers introducing lenses with heightened health benefits to the consumer. Retailers need to recognise this and ensure they are offering the consumer the optimum products, starting with the premium offering first.
The UK also has an ageing population; according to GfK ConsumerScope data, 40 per cent of the UK population are aged over 55. However, when you contrast this against actual contact lens wearers, only 6 per cent of wearers fall into this bracket. Clearly as a market this does offer opportunities, especially with many retailers and manufacturers marketing on the fact that contact lenses should be for everyone.
For many retailers the challenge now is to target the three main consumer groups, which are the new wearers, existing wearers through refits and lapsed wearers. Recent data has shown that the number of new wearers entering the market has declined, so it's imperative that the market reacts to this. It is also crucial to remember that the UK contact lens market is one of opportunity, and one that GfK believes will return to positive growth in terms of volume and value by the end of 2006.
Anthony Norman is account director for GfK Marketing Services