Tough times ahead for middle market outlets

A leaner market with fewer outlets and diminished profits is forecast for high street optometry in 2006.

This is the conclusion from Mintel's new report on opticians to be published later this month.

The respected retail research group's latest in-depth assessment of the retail profession predicts that the current tough trading conditions will continue unabated. Mintel's Opticians also warns that many potential patients will continue to defer spending on spectacles, and competition from discounters will intensify.

This will lead to a 'shakedown of shop numbers', especially in the middle market, and more mergers and buyouts, particularly among the smaller chains.

Nevertheless, there is some good news. Long-term growth in demand for spectacles and contact lenses is assured by the ageing population, Mintel pointed out.

For those selling expensive vision correction the outlook is even more positive, the research group said, with an increase in interest in spending more on upmarket eyewear among the more wealthy consumers.

Mintel's document praises Specsavers and its franchise system as 'motivated and enthusiastic' and Optical Express for being the most adventurous chain in the market. Both are extolled for expanding in a market where demand is flat.

And there is also good news for independents, with Mintel's consumer research finding that people are far more likely to apply the tag of expert to an independent than a multiple.

Patient loyalty enables independents to be resilient, even in the face of immense competition, Mintel stated, and even though the market is tough and outlets will shut 'there is not too much sign of a bloodbath' among the single practice firms.

However, consumer confidence is vital for any growth, and the report predicts that flat or falling demand will lead to a further squeeze on profits.
In a tight market, it will be the businesses which impress patients that will be at the forefront of any recovery.

Consumer research for the report found that although multiples are held in high regard among the public for their choice and value for money, other factors which rely more heavily on the manner of the individual staff are rated more highly by customers of independents.

'In particular independents rank higher than multiples for being efficient, welcoming, good at explaining things, attentive and caring,' the report said, emphasising that staff recruitment policies, training and development are vital parts of an optician's business.

Opticians is available from Mintel this month. Readers can buy a discounted copy of the report by calling Tom Stingemore on 0207 606 6000.