For a company looking to simplify its portfolio, Tesco’s optical retailing arm has been low hanging fruit for some time now. Ever since the firm’s accounting scandal in 2014, which related to the admission by Tesco Stores Limited that it had overstated profits by £326m, the company has sold off business assets that were not in line with its new simplified strategy. Last year, the Giraffe restaurant chain was sold, following the sale or closure of Tesco’s operations in China, South Korea and the US. It has also sold Dobbies Garden Centres and music and streaming service Blinkbox. For Tesco Opticians, it was a question of ‘when’ rather than ‘if’.
It is Vision Express and parent firm GrandVision who have moved to capitalise on the sale of the optical division. The acquisition incorporates Tesco Optician’s network of 209 stores across the UK and Republic of Ireland, bringing the total number of Vision Express outlets to 598.
Tesco Opticians employs more than 1,500 people and had revenues of approximately £90m in 2016, which equates to nearly £440,000 per practice. The transaction, which is subject to regulatory approval by the UK Competition and Markets Authority, was expected to complete later this year.
Tesco UK and ROI CEO Matt Davies added: ‘This allows us to further simplify and strengthen our UK business and ensures our customers are still able to enjoy high quality eye care services from Vision Express in our larger stores. Our priority now is to work with our colleagues and support them through this change.’
Vision Express CEO Jonathan Lawson described the acquisition as an ‘opportunity to invest in the future of the nation’s eye health by extending our reach even further across the UK.’
He added: ‘With two million people in our country living with preventable sight loss, this expansion will help us continue to increase awareness of the importance of taking vision seriously.’
Mintel’s 2017 Optical Goods Retailing report ranked Vision Express as the third largest opticians group behind Specsavers and Boots Opticians. In 2016, the three companies controlled 66% of the sector, with Specsavers accounting for 39% of outlets on the high street, Boots Opticians 15% and Vision Express 13%. The additional practices acquired by Vision Express will not be enough to overtake Boots Opticians, which has 637 practices.
Full of beans
‘Vision taken seriously’ has been Vision Express’s slogan for several years now and its clinical business has been elevated to the same level as its eyewear offering. With social media campaigns that compared the cost of one of its eye tests to a tin of baked beans in 2014, it could be argued that the same has not always been true of Tesco Opticians.
Tesco launched its first in-store opticians in Peterborough in 1998 and since then had a turbulent time within optics. In 2008, the company rolled out free eye testing offers in conjunction with its loyalty cards to mark the opening of its 100th in-store practice. At the time, the usual price for a sight test at Tesco Opticians was £10.
Tesco beans business
In February 2010, the multiple began offering free eye examinations to anyone that did not qualify for an NHS-funded test. Tesco said at the time it was the first free universal eye test since the 1980s and the move was applauded by the Royal National Institute of the Blind. A range of £10 frames was launched at the same time.
Business as usual, was the reaction from within the profession at the time. Colin Smith, practice manager of Weston Opticians in Basildon, revealed: ‘No worries whatsoever. We’ve been busier than ever in the last two weeks [since Tesco started the offer]. Also, I think free eye tests devalue their practice and the customer service it offers.’
With the well-published free sight testing offers and affordable glasses portfolio and overarching value-led ethos of the company, Tesco Opticians found favour with patients at the lower end of the spending spectrum. At the same time, Vision Express has looked to develop an upmarket image, both in eyewear fashion and clinical care. How the multiple will now fuse the two businesses, in-store locations together will be an interesting proposition. However, Lawson remains relaxed: ‘We have worked very hard over the last few years to ensure Vision Express has a broad appeal, both in its range and its pricing and therefore, we don’t see this as being an issue.’
Whether the supermarket’s free eye testing will be continued under Vision Express stewardship, Lawson declined to comment.
Structure
Lawson said Tesco Opticians would be fully integrated into the Vision Express business and would be the same as any of the company’s other practices. Each location will have a selection of products and services tailored to suit the demographic of the Tesco location. They will be fully branded as Vision Express and operate what Lawson said was the company’s ‘commercial policy’.
Vision Express intends to retain Tesco Optician personnel, but declined to comment on any future relationship with Galaxy Optical, which provides infrastructure to Tesco Opticians locations.
However, Optician understands staff at the Altringham-based company have been told up to 300 jobs are at risk in the coming months. The company had not responded to Optician’s request for comment at the time of going to press.
Expansion
For Vision Express, the acquisition is the largest in its history. The addition and incorporation of 75 Batemans Opticians has been the largest single acquisition, but the latest deal dwarfs that.
Expansion has increased rapidly since 2013. In the deals for Crown Eyeglass, Rayner & Keeler and Conlons Opticians, Vision Express closed several practices that did not fit in with commercial strategy. The multiple did not confirm whether any Tesco Opticians locations will close.
For the time being, the parties involved have remained tight lipped as to how the incorporation of Tesco Opticians into Vision Express will play out. How Vision Express will integrate with Tesco superstores is another question that only time can answer. The multiple has cultivated a brand image more akin to Waitrose... now it finds itself in Tesco.
Vision Express acquisition timeline
1988 First Vision Express practice opens in the Metro Centre Gateshead
1993 Purchases five Lenscrafters UK superstores from Shoe Corporation in the US
1995 Opens the first practice under the joint venture model
1997 Vision Express acquired by French firm GrandVision
2008 With over 220 practices, the multiple adds 75 outlets in southern England with acquisition of Batemans Opticians. Eight are closed.
2013 May: Acquires 12 practices from Crown Eyeglass in the north-west of England. Eight closed and four rebranded as Vision Express.
July: Acquires patient data base from London optical megastore 2020 Optical. Reported to have data for 200,000 CL wearers.
2014 February: Purchases 65 Rayner & Keeler practices – 38 rebranded and 27 closed.
December: Acquires 19 Conlons Opticians practices with eight being closed.
2017 Parent firm Grand Vision acquires 206 Tesco Opticians outlets for an undisclosed fee.