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Challenges and Opportunities in the Future of Independent Optometry

Challenges and Opportunities in the Future of Independent Optometry

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Published by Vitor Pamplona
Challenges and Opportunities in the
Future of Independent Optometry
Challenges and Opportunities in the
Future of Independent Optometry

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Categories:Types, Research
Published by: Vitor Pamplona on Jun 24, 2013
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11/24/2013

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Challenges and Opportunities in the
Future of Independent Optometr
SPONSORED BY:
 A SPECIAL REPORT BY THE EDITORS O
 APRIL/MAY 2013
 
Challenges and Opportunities in the Future of Independent Optometry
Introduction
This special report, developed by the editors o Review o Optometric Business, presents a strategic SWOT analysis o the current competitivesituation aced by independent ODs across the United States. SWOT analysis is a widely used business tool that identies the key issues abusiness must conront to remain protable and to grow.A SWOT analysis is oten a rst step in an annual business planning process. The acronym abbreviates the our SWOT components –
S
trengths
 
W
eaknesses
O
pportunities
 
T
hreats
The strengths and weaknesses o a practice are the internal actors under the direct control o the practice which infuence perormance, whileopportunities and threats identiy external actors aecting results, usually beyond the direct control o the practice.A SWOT analysis or an individual OD practice in a specic geographic locale might produce quite dierent results than one which considersthe competitive situation aced by all independent ODs, such as that presented here. Nevertheless, the broad appraisal in this report has valuebecause o the many commonalities in the competitive situation aced by independent ODs across the nation.This analysis was commissioned by Vision Source
®
, the leading alliance o independent ODs, with 2,700
+
member practices and 5,500
+
memberdoctors in the U.S. and Canada. Vision Source
®
 
wanted an objective, independent source to appraise the current market position and utureprospects o independent ODs, to provide current and prospective members a actual oundation or planning. The assessments in the analysisare grounded in quantitative market research rom reliable sources including Vision Watch, Jobson Research, the Management & BusinessAcademy (MBA) and other sources.The value o a SWOT analysis is the short list o action priorities and strategies that it produces. Such a list can ocus eorts to improve oceprocesses on a manageable set o projects with the greatest potential pay-o. This can lead to a more realistic matching o a practice’sresources and capabilities with the competitive environment. This SWOT analysis highlights the reasons so many ODs are joining alliancegroups, including Vision Source
®
, which bolster independents’ competitive position.
Mark Wright,
 
OD, FCOVD,
Professional Editor 
Carole Burns,
 
OD, FCOVD,
Professional Editor 
Al Greco,
 
Publisher 
Roger Mummert,
 
Executive Editor 
www.ReviewOB.com
Margery Weinstein,
 
Managing Editor 
Thomas Steiner,
 
Research Director 
 
Challenges and Opportunities in the Future o Independent Optometry
3
Independent ODs compete in a dynamic retail market, acing-o against some o the most sophisticated retail corporations in the world to captureprimary eyecare consumers. Primary eyecare is a huge industry. The 180 million U.S. adults who use vision correction devices spend $29 billion annually orprimary eyecare.Although proessional services are an important revenue contributor or independent ODs, device sales remain the dominant revenue producer in mostpractices, typically accounting or 55-65 percent o revenue. Independents compete to sell essentially the same range o products oered by giant retailoptical corporations – companies which enjoy greater buying power, economies o scale and have greater management sophistication. On the surace,independents’ market position would appear to be perilous and unsustainable.Nearly all independent OD practices are small businesses. They typically operate a single location with less than $1.5 million in annual revenue and with 12or ewer employees. Almost none are owned by executives highly trained in business management.During the last century, small mom-and-pop businesses disappeared in many retail categories (grocers, druggists, clothing stores, bookstores, etc.), squeezedout by multi-unit retail corporations. There was a time when the same consolidation appeared to be unolding in eyecare. During the 1970s and 1980s,retail optical chains rapidly increased their share o theprimary eyecare market. They added thousands o newlocations and introduced new dispensing concepts,such as one-hour eyewear, that attracted customers.But then the momentum slowed. Over the past 20years, the market share growth o retail optical chainshas fattened. Independent ODs as a group have notonly survived, but many have prospered.Currently it is estimated that independent ODs(not aliated with large eyecare corporations orophthalmology practices) have a 53 percent marketshare o the primary eyecare patient populationand a 42 percent share o primary eyecare revenue.Independent ODs’ share o revenue is lower thantheir share o patients because their capture rate opatients’ device purchases is much less than 100percent. Ophthalmologists hold a 15 percent shareo primary eye care consumers. Corporate providers,primarily retail chains, control 32 percent o patientsand 46 percent o primary eye care revenue.
The Independent ODs’ Position in the Primary Eyecare Market
Primary Eyecare* Provider Market Share
Independent ODsIndependent MDsCorporate
% of Patients% of Revenue
53%32%15%42%46%12%
*Primary eyecare market includes revenue from prescription eyewear, contact lenses, eye exams offered by eyecare professionals.Excludes refractive and other ocular surgery revenue, medical eye care services and plano sunglass sales. Internet sellers areincluded in the corporate provider segment.Source: Practice Advancement Associates (Jobson) estimates

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