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The year finished much as it started, with extreme weather conditions once again bringing the country to a standstill and affecting sales in the optical retail sector in the run-up to Christmas.
Figures reported by the British Retail Consortium have shown that the snow, concerns over job security and the general state of the economy have resulted in a sales decline of 0.3 per cent on a like-for-like basis, compared with December 2009. As the UK's largest retailers begin to report their Christmas trading figures there have been mixed results, but the UK retail optical market has seen a more significant fall in sales of almost 9 per cent from December 2009.
During our data collection this month we were able to discuss this dramatic result with some of our contributors. Many were unable to open their businesses for several days, patients and key staff could not make it into practice and therefore eye examination and dispensing appointments were cancelled and re-appointed for the New Year. However, there is some good news and positive movements with key performance measures demonstrating improved annual growth through 2010.
Percentage changes from December 2009 and over 2010 (Figure 1) show the annual growth for key performance indicators and the percentage change over the period. As already mentioned, total practice turnover fell by almost 9 per cent from last December and, though this impacted the annual growth figure, it remains positive at a little over 9 per cent. Annual growth for this measure in 2009 was negative at -12 per cent. The other encouraging news in terms of annual growth is that the total number of eye tests increased by 2.6 per cent and the sales of bi/trifocals and progressive lenses showed positive figures of 2.3 per cent and 6.1 per cent respectively. All other key performance measures fell between December 2009 and 2010, apart from the percentage of eye examinations which were NHS with an increase of 10 per cent. Total dispensing volume for our sample indicates annual growth is down by 15 per cent over the year, which has been caused by the reduction of sales in single-vision lenses, now showing a negative annual growth of -21 per cent. The annual growth of new contact lens fits continues to be negative at -12 per cent.
Turnover
Practice turnover (Figure 2) has reduced from November by 12 per cent to 153 Index points, which is the lowest Index value we have seen since January 2009. The first half year showed really positive signs, with the Index following the same growth pattern as 2008 and 2009, but this all changed in the third quarter and has worsened since.
Turnover per eye examination (Figure 3) performed well until July when the values started to reduce, following the same trends as both 2008 and 2009. Although August fell below the level of 2008, the remainder of the year has stayed above the previous two years, with December producing a record figure of £171, almost £27 higher than last month and close to £33 higher than December last year. This is primarily due to the small number of eye examinations performed in December.
The total number of eye examinations (Figure 4) reduced considerably by 23 per cent from last month to 82 Index points, which is the lowest value seen in the Index for 18 years, since December 1992. Our historic data shows that in January 1993 the performance increased by 11 per cent and a further 16 per cent the following month. The series lines for the three years are similar and show 2010 producing higher results than both 2008 and 2009 for the first half year and 2010 still outperforming 2009 until December.
The percentage of eye examinations that are NHS (Figure 5) is maintaining the same trends as the previous two years, showing a slightly higher rise in November and the same decrease in December as in 2009, however there has been an increase in the percentage number of NHS tests over the whole period.
The average dispensing rate increased by 3 per cent on November 2010 to 59 per cent, which is 2 per cent higher than December 2009.
Lenses
Single-vision lenses (Figure 6), have seen their lowest Index result in December at 36 Index points, a significant fall of 21 per cent over last month and 31 per cent over last December.
Bi/trifocal lenses (Figure 7) over the three years show a decrease in October and the increase in November 2010 follows the 2008 trend. The decline shown in December 2010 of 36 per cent is more severe than during 2008 and 2009.
Progressive lenses (Figure 8) normally increase at the expense of bi/trifocals and we see the trend-line for 2010 following a very similar pattern to 2008 until the last quarter of this year where both the increases and decreases are less dramatic and the trend more closely follows that of 2009. The Index value of progressive lenses this month is 174, 18 per cent lower than last month, 31 per cent lower than last December.
The Index value of new contact lens fits (Figure 9) has dropped away over the last quarter and traditionally we see a pre-Christmas rise, which has not happened this year. The Index of 125 points for December is 1 per cent lower than November 2010 and 28 per cent lower than last December.
Contact lens solution sales (Figure 10) have unusually declined during December. Historically this figure increases over the Christmas period, perhaps due to the purchase of Christmas stocking fillers. We saw good growth in the first half-year, which has been sustained over the second half at a higher level than the previous two years. The figures are 2 per cent lower than last month at 82 Index points and 2 per cent lower than December 2009.
Photochromics (Figure 11) are used with 13 per cent of all spectacles dispensed. The rate of sales seems to increase between November and June and slow down during the summer and autumn months.
Sales of anti-reflective coatings (Figure 12) tend to increase in the first half-year and reduce in the second half. The trend for 2010 is slightly increasing, with the 39 per cent recorded for December 2010 being 1 per cent higher than December 2009.
Re-glazes have stabilised at 12 per cent of dispensing, the same as December last year.
In December we ask our panel members how their business has fared compared to the previous December (Figure 13) and their thoughts regarding optimism for trading in the forthcoming year (Figure 14). The results of the survey this year were clearly affected by the weather conditions, with 81 per cent of our sample reporting worse results for December, compared to only 35 per cent last year. Our sample are much more decisive this year about the future, with 26 per cent saying they are very optimistic for 2011, compared to 6 per cent last year and 20 per cent not at all, compared to 12 per cent last year.
Please note all figures shown are adjusted to a 25-working day month.
In December 2010 there were 25 working days.
This data has been brought to you with the support of Transitions. ?