The end of the calendar year presents an opportunity to review the key performance indicators over the past 12 months and see how they compare with the previous year’s, along with our monthly analysis. This is our third year of the change in the Index sample to only include independent practices and regional chains. In the year-on-year comparison we carried out last year there was very little change in the key performance indicators but this year we have seen positive annual growth in the number of eye tests, volume of spectacles dispensed and revenue.
As we have seen in the past, December is the most challenging month with falls in all performance measures from November apart from turnover per eye examination. More encouragingly, all of our benchmarks, with the exception of new contact lens fits, are higher than December 2014.
Figure 1 shows the relative perfromance for the month of December in 2015 over December 2014 and the annual changes for key performance indicators during the whole of 2015.
The annual growth for total eye tests is positive at just over 2% and December 2015 showed a significant improvement of 11% on December 2014 to 90 Index points. Sample average total dispensing annual growth is also positive at just over 1% and December this year is 8% higher than last December. The annual growth for single vision lenses is negative at -2% but the December figure is 5% higher than December 2014. Bi and tri-focal lenses fell by -1% year on year but recorded an 11% increase this December from last. Annual growth for progressive lenses is positive at 2% and again December’s figure was 6% higher than December 2014.
New contact lens fits annual growth declined 2.7% and December’s figure was 6% lower than last December. Contact lens solution sales show a year-on-year decrease of almost 4% but December sales were 2% higher than last year. Total practice turnover annual growth is positive at 1.5% and December sales were 7% higher than last year at 161 Index points.
Practice Turnover
Practice turnover (Figure 2) fell from November by 7% to 161 Index points but this fall has not been as severe as previous years. The December figure has contributed to a good performance in the second half of 2015 compared with 2014 and positive annual growth. These flat, or now slightly improving revenue figures, support the evidence provided in the Mintel Optical Goods Retailing UK Report (Feb 2015) showing how independents’ share of the UK optical retail market is now being maintained at around 30% after 20 years of diminishing market share.
Turnover per eye examination (Figure 3) increased by £2 over November but this results from the smaller number of eye examinations performed during December. This figure is an average value rather than an Indexed value and the average figure reported by our sample has decreased by less than £1 from 2014 to £176.43 in 2015.
The total number of eye examinations (Figure 4) historically drop during December and they fell this month by 11% to 90 Index points. We saw a falling trend in the numbers of sight tests from the start of 2013 up to the middle of 2014 but over the past 18 months the trend has been reversed resulting in positive annual growth. The percentage of eye tests which are NHS (Figure 5) has seen a very small, fractional decrease year-on-year and fell by 2 percentage points from November to 73%.
The Health and Social Care Information Centre reported that the increase in the number of NHS sight tests carried out in the UK stalled in 2014 but, in its most recent report, published on January 13, 2015, there were more NHS sight tests carried out in England between April and September 2015 (6.55 million) than in the same period of 2014 (6.41 million), a 2% increase.
Lenses
Sales of single vision lenses (Figure 6) fell by 12% to 55 Index points from last month. The volume of sales in the first quarter fell below those in the same quarter of 2013 and 2014 but matched them for the remainder of the year
Bi/tri-focal lenses (Figure 7) fell by 22% to 38 Index points from November and this is the lowest value we have seen since December last year. The volume of sales this year matched the Index values reported in the first half of 2014 but fell below in the second half of the year.
Progressive lenses (Figure 8) fell by 8% from November to 201 Index points. The volumes during the first half of 2015 were positive compared with the same period in 2014 and went on to match or exceed the monthly figures reported for the rest of the year.
New contact lens fits (Figure 9) were almost 2% lower than November at 108 Index points and were unable to sustain the positive start to the year.
Contact lens solution sales (Figure 10) decreased by 3% from November to 82 Index points, with no evidence of the “Christmas effect” we saw in 2013. Apart from the peak in May, solution sales have consistently been below those of 2014 and though the longer term trend is down, sales were higher than in 2013.
The sample average percentage of photo-chromic lens sales (Figure 11) is 2 percentage points lower than last month at 12% of all spectacles dispensed.
The series line is flatter this year than 2014 and the percentage is higher in every month apart from May.
Anti-reflective coatings (Figure 12) are two percentage points lower than last month at 48%. This measure of added value is higher than the two previous years and peaked in November at 50%. Reglazes (Figure 13) are also two percentage points lower than last month at 15% but after the first quarter of 2015 are higher than 2014.
Improvements to the index on the way
In line with the new-look Optician we are considering how we can provide a more relevant benchmarking service covering local trends and prices and this will be our last Index feature with monthly analysis. Coming articles will review the Index, or percentage changes in our key performance indicators, over the last 20 exciting years in the optical retail market. What does the evidence say has really been happening? Please note all figures shown are adjusted to a 25-working-day month. In December 2015 there were 25 working days.
Key points
- With the exception of turnover per eye examination, the key performance indicators fall below those reported in November
- All of our benchmarks are higher than last December apart from new contact lens fits
- Year-on-year growth for total turnover, number of eye examinations and number of spectacles dispensed is positive
- Progressive lenses annual growth is also positive at 2%
- New contact lens fits and value of solutions sold are both negative year-on-year
- Percentage of lenses dispensed with anti-reflective and photo-chromic treatments at record levels for the year
- Panel members show increased optimism for future trading compared with last year
In our annual business confidence survey in December, we ask our panel members:
- How do you think your business has performed in December compared with December last year? (Figure 14), 54% said their business had performed better, 24% said results were the same and 22% thought worse
- How optimistic are you for your business over the next 12 months?
(Figure 15), 40% are very optimistic, 54% are somewhat optimistic and 6% are less confident about the future. This compares with last year when 30% were very optimistic, 65% somewhat and 5% not at all confident – so an improvement in levels of optimism
