Many corporate opticals are in a mall setting or host environment. JC Penney, Macys, Sears, Target, Nordstrom, Walmart, and Costcos all have opticals. JC Penney which started in 1902, Sears in 1886, and Macys in 1858 all had iconic brands in the American economy. With the recent change in customer shopping habits these locations have struggled to be able to compete and have accumulated debt over the years.
Debt to total ratio JC Penney has the highest among host stores for opticals followed by Macy’s Inc, Nordstom and Sears being the least.
Many of these anchor stores are located in a mall setting. Anchor store closings like Sears will affect other stores inside the mall as well. Many of these anchor stores like Macys or Target will attract a customer to a mall store because of convenience or value. Many people don’t realize that the anchor store has great value to that mall and the small stores inside that typically wouldn’t attract that customer for a convenience purchase as they are walking by all the straggler traffic to the smaller stores diminishes magnifying the effect. The anchor stores are so important to the mall setting that many leases have an out clause if an anchor store closes in that mall. What does that mean for an OD who might sublease at a location inside a mall? These outside factors don’t only affect the Doctors at a JC Penney or Sears but at other retail locations.
Think about the effect that it would have in the real estate industry as these large square footage locations are vacant. The obvious reasoning would be to increase the rent of the other stores in the mall which in turn would lead to rising prices on products and services, reducing staff to make a profit, or selling the commercial real estate to another entity that might not renew the lease for certain stores. This affects the OD business as well. It’s a domino effect.
What are the reasons for the decline?
1. E-Commerces – From 2010 to 2016, Amazon’s sales went from $16 billion to $80 billion. It was the product of convenience, free shipping, and value on products. Similarly, many sites such as Warby Parker have affordable eyewear with easy return policies all at the click of the mouse. Mobile shopping is easier than ever to compare prices. Warby Parker has expanded to brick and mortar locations and has locations in Nordstrom.
2. Over-saturation – There are too many malls in the US, they grew too fast over the years and there are too many corporate opticals in each mall. The square footage is too large to sustain the rent and compete with pricing online. Mall traffic in general has declined over the years.
3. Customer Trend Shift – Customers want experience and value. The transaction does not stop at the end of the eye exam or purchase of the eye care products. Being able to engage your patients after the exam year-round is critical. Does your corporate optical have a vibrant omni channel to keep these patients loyal? The corporate optical’s marketing and social media presence affects your business as well. You will need to engage your established patients throughout the year with birthday texts, holiday email reminders, or fun social media posts. Ultimately, the corporate optical’s organic local reach in addition to your own will keep targeting those patients. When there is a disconnect on this omni channel experience with brick and mortar and online there will be failure. This experience needs to be a frictionless experience for the patient.
4. Stagnation – Some opticals just aren’t adapting or evolving with the times. There needs to be a differentiation in a company’s structure. Some corporate opticals are based solely in a mall or host setting. Being able to have free standing locations and e commerce businesses that attract different customer base is critical to competing in today’s market. If there is a breakdown on innovative views and the company is not reinvesting in itself for a defensive strategy its fate is already made of for itself.
What can Corporate ODs do?
This is the best opportunity of your career! Yes, you read that right! You can be the person that thinks “Why is this happening,” and let it happen to you or you can be the person that sees how you can benefit from it. Brick and mortar stores are not going away.
1. Find your niche – Locations like TJ-Maxx, Marshalls, and Dollar Tree have their own niches in the market and have been able to survive the “Amazon effect” so far. Corporate ODs need to develop their own brand within this setting. Evaluate the trends and how companies are trying to increase productivity, become more efficient and cut costs. See how you can incorporate it into your own practice and develop partnership with other eye care professionals.
2. Adapt – You need to take a moment to visit these e-commerce competitors yourself. Find out what it is that makes them convenient, read their reviews, and consider how your optical can compete. Begin educating your patients on what your services bring to the table. Help them understand the type of quality you offer and the experience they are getting within your office in comparison to what they may find online. It’s all in how you market yourself and the interaction you have within your office.
Consider the possibility of offering services and products that are difficult to compare to. Patients can come in for their regular eye exams and leave at their own convenience. Social media is also a great way to create an online presence for your office that keeps your office in the spotlight. Find out what your patients want and figure out how you can incorporate that into your own practice. Surveys, reviews, and mystery shopping are great ways to see into the patient’s perspective.
3. Start promoting eye health – Dentists have done a great job at getting patients into their office every six months. Optometry has been lacking in this aspect but has been making great strides over the last few years. Involve your staff in staying up to date with appointments, keeping in contact with patients and making the patient’s experience enjoyable so that they will feel more inclined to return as often as is necessary for their eye health. It’s not just a prescription for glasses that they’re getting, it’s much more. You need to help patients understand that.
4. Stay up to date – Optometry is at the same table as medicine and dental when it comes to legislation changes. It’s important to keep up on changes that may affect your practice. We have still yet to see much regulation with e-commerce or what will ultimately happen with telemedicine, but we need to be on that ship when it sails. Always stay ahead of the curve, prepare and educate yourself to be able to stay competitive into the future.
5 See the Opportunities – Being able to see unique opportunities that others don’t and take advantage of them will set you apart. Consider commercial real estate. There might be a dip in commercial real estate like there was in the housing industry. Now might be the time to invest. Turn what may seem like an “apocalypse” into something that benefits both you and your practice. “Catch the wave in Corporate Optometry” and see how you can benefit from the retail collapse that will affect how corporate opticals do business in the future.