The Future of Optical

I don't have a crystal ball, and even if I did, optical is more of a yarn ball. Rather than looking mysteriously into the future, let us consider what is currently unravelling.

Consolidation: This is nothing new to our industry and is not a reason to panic. There are fewer and fewer colors of yarn these days in optical, but we are also facing disruptions that cannot be ignored. In any oligopoly (and optical is a long way from being an oligopoly), there are risks of unprecedented disruption which create new opportunities. Cable television was one of the prime examples of an oligopoly for many years. And what anti-trust laws struggled to accomplish in decades, Netflix seemed to accomplish overnight, a total transformation of television. In optical, we are seeing a boom of online retail which is expected to be over 21% of the market by 2023 (Statista 2020 Report). When you couple that with the stagnation of optical retail revenue as reported by the Vision Council's latest report, I have to wonder how long Equity firms will continue to see Optical as a financial safe haven. Previous financial reports seemed to claim almost guaranteed 2-4% YOY total revenue increases for the foreseeable future, but this has all changed. Currently we are seeing equity firms sweep in and buy distressed offices burdened by the current market, but soon they will be under pressure to show returns on these investments. This could result in a slowing of consolidation or even some divesting.

Innovation: Nearly everyone has heard that "necessity is the mother of invention". These trying times in our history have produced strides in technology for both retail and telehealth. But even more importantly, consumer attitudes have dramatically shifted towards online sales and telehealth. Providers have also realized the increased time savings of these alternate service models. According to a recent AMA survey (ama.com May 17, 2021), 64% of chronic disease management physicians wanted to continue with the service after the pandemic and more than 50% of the other service areas also wished to continue using telehealth as a part of their model. Online grocery sales now account for almost 53% of grocery revenue. These numbers represent a dramatic shift in attitudes towards virtual sales and virtual treatment. Since optical sales are comprised of both retail and health environments, these numbers cannot be ignored.

Conclusion: I see all of this disruption as a huge win for those who embrace change. Consumer driven change cannot be ignored. Many types of change are driven by an early entrant with a new exciting product such as the smart phone. These new ventures are often risky because the investor does not know what the market is asking for, but they are reaching into the future and creating a new market demand. However, what we are seeing today is consumer driven market change. I believe that the sales model for the future of any organization is a hybrid of e-commerce and local retail. Very soon, e-commerce and virtual services will be an expected part of any website for any type of retailer.