EssilorLuxottica, Specsavers & The Eyewear Value Chain

Former Co-CEO at Specsavers, UK

Why is this interview interesting?

  • A breakdown of each stage of an eye test
  • Which parts of the eye test are hard to move online and why
  • How lenses are manufactured
  • Unit costs of lenses, frames, and eye tests
  • Operational gearing at optical retail stores
  • The power of scale for Specsavers and Luxxotica
  • Potential pressure from online on large vertically integrated eyewear companies

Executive Bio

Richard Holmes

Former Co-CEO at Specsavers, UK

Richard is the former Joint UK CEO of Specsavers, the largest UK opticians and eyewear retailer in the UK. He joined Specsavers in 2007 as Group Marketing Director where he was responsible for the brand globally and worked closely with JV partners marketing Specsavers in each country. Prior to Specsavers, Richard enjoyed 8 years at Boots where he ran Healthcare divisions, and finally the pharmacy at the company. Richard started his career at Unilever in Personal Products and is on the board of Moorfields Eye Hospital in London and Safestore.Read more

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Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Richard, can we start by walking through the eyewear value chain, right from the first stage? Let’s say that I need a new pair of glasses, I have to go and book an eye test, visit the opticians. What is the typical process?

I think, for those who aren’t involved in the industry, the eye test is often confused with something as simple as getting a pair of shoes fitted. It really isn’t that. There are, essentially, three stages to the process. There is a pre-test, an eye test and then what’s called dispense.

The pre-test is typically conducted by an optical assistant who does, essentially, three simple tests with a tonometer, which is the thing that blows a little puff of air into your eye, to test the pressure within your eyeball. That is very important in predicting the onset of things like glaucoma. Then they use an autorefractor which gives the optician a rough idea of your prescription, the degree of refraction that is going on in your eye. Then they take a digital retinal photo of the back of your eye. Those things are done upfront, pretty quickly; typically, on three different machines.

Then you go in to meet the optician. The optician does a series of tests. They do a retinoscopy, which gives you some more idea of the refractive index in your eye. That’s particularly good for people that aren’t very articulate, such as children, people with dementia or people with learning difficulties who can’t quite describe what’s going on. This gives an objective measure. Then a Snellen test, which is the thing that everyone knows about which is the letters, to see which letters you can read; that’s a pretty objective measure of your vision. Then there’s a thing called a slit lamp test which is really a microscope that looks at the front edge of your eye. That’s particularly important for contact lenses because you might have scratches on your cornea.

There is then a very important test called visual field. This is the little dots – for those who have had an eye test – that discover which bits of your vision are impaired. You might have bits that you can’t see but you don’t really notice. Your brain can compensate for areas that you can’t see. That’s a really critical diagnostic test for all sorts of things, such as macular degeneration, lesions in the pathways between your eyes and your brain. Finally – and this is probably the newest bit of kit that has been rolled out across opticians around the world – is OCT. Instead of just looking at the back of your eye, in two dimensions, an OCT scans through the slices of a cake. The optician can read what’s going on in detail, through each different layer of the back of your eye. That’s incredibly predictive and can pick up things four years earlier than was previously possible; it’s a really important bit of tech.

Linking that to AI, which is what is going on at a hospital that I’m involved with, Moorfields, can be incredibly predictive of what might be happening; not only with your eye but with things like diabetes. It’s a window into quite a lot of health issues. Sometimes, an eye test is seen as just, ‘can you see; can’t you see.’ It’s an enormously involved bit of medical investigation.

And you can’t actually replicate some of these online, I guess, which is why the penetration is so low?

Ultimately, any healthcare system, whatever form of insurance it is, whether it’s the NHS – which is essentially a form of insurance – or private insurance, will encourage people to have regular eye tests because it goes way beyond refraction and simply the ability to see or read. It goes into much deeper things. Any healthcare system, I would suggest, would be highly likely to want to encourage people to have regular eye tests, particularly after a certain age.

So you have those three in-the-store tests and then what comes next?

Basically, you are seeing the optician who will have done all these tests. You’ve done the pre-test and you’ve seen the optician. Then you will hand over to a dispensing optician. Again, that takes about three years to learn to be a dispensing optician. That’s about taking the prescription and getting you a pair of glasses that are going to work. It is about the distance of the lens from your eye, about exactly how the lenses are cut for your pupillary distance – the distance between your pupils – and crucially, how they actually fit on your head. If they don’t and they slide around, you won’t see very well.

A dispensing optician’s job is to understand what sort of glasses are going to suit you. That sounds quite trivial but if you drive a lot, you’ll need a different focal length from if you read a lot and you use a screen a lot; also for the activities you do. For example, I’m very into sailing and particular types of lenses, particular filters, are very helpful in being able to see better when you are at sea or for driving or for using screens. The way you are going to use your glasses is very important in the choice of lenses and frames that you are going to be using.

How important is an actual person being with you to do that versus choosing a type of lens that may fit an activity online, for example?

Some of it you can absolutely do online. Obviously, you can ask a series of questions such as, how do you use your glasses? That’s absolutely the case. Ultimately, most of those things can be done online. What’s hard to do online is actually fit the glasses. When you come back, you will see the dispensing optician to actually fit them and bend them. In a store, they will actually warm them up and bend the arms around so they fit on your ears better. Again, it sounds trivial but if you have a pair of glasses that slide up and down and move around, it’s really quite tricky. Of course, to some extent, you can do that yourself, with a kettle and boiling water and try and make it work, but it is actually quite a skill. I think that is difficult to do online.

On the point of online, what specific part of that process, in the opticians, between the pre-test, eye test and the dispensing, do you really think is the sticking point for physical retail?

You clearly can’t the little puff of air to measure the pressure within your eyeball, online. You can ask someone to look at a screen and see what they can see but that’s very different from a real experience, in a room, where things are a certain distance away. You clearly can’t do an OCT scan. Other than very basic refraction, understanding how you can see things, in a simple way, you can’t do any of that online, at the moment.

At the moment. So we’ve had the eye test, got the prescription; where does the optician send that prescription?

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EssilorLuxottica, Specsavers & The Eyewear Value Chain(February 9, 2021)

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