Figure out the markup Lux must have on their frames. In order to make a direct offer like the one above their markup must support the 7% discount right from the start.Originally Posted by Mikef
Therfore the one who does not increase Lux business is overpaying any purchase from the company by the 7% or the $ 1000.00 per month for claims.. As I said before..........there are no freebies in business............beside opticians adjusting frames.
Why would I take your reply the wrong way? My words are not supportive of your company and I would have actually expected stronger words from you.
Which means they know which corner to choose and which corners to keep their eye on for shifting demographics. If Lux has a customer that is buying big quantities from them, and their obvious sales increase greatly year by year, are you saying that Lux will not use these indicators to target new locations for their company? Interesting busy model if they do not.
At what % market share will Lux need to reach where, for them, the independents will not be needed?
Doc
Customer traffic study for new store locations a la McDonalds Hamburger fame
I wonder about that, myself. Is Davis Vision getting big bucks to their shareholders? How about Spectera; are they turning a buck for UHC? These companies are insurers and insurers only; they live and die from it. VSP is non-profit, so I know their officers are living fat. But just how much are VISION plans making, in general?
The reason I ask? Is Luxottica expecting a profit center from being a vision insurer? I'd doubt it. It's probably a bit of an administrative and sales monster. That's why they bought a used car. Not only that, but they have their main competition with giant VSP, who, I think, due to their non-profit model, can provide better services for less.
I really do think its to sell frames, Luxotica's core competence (aside from global domination;) ). They are building the networks, now, and selling the plans, but I can't see the "no frame requirement" hanging around too long. I'd give it 3 years, and then the water will start to heat up around the proverbial frog.... It's a discount and cash-back "carrot" now, but probably a lesser-reimbursement "stick" later.
Last edited by drk; 05-26-2005 at 09:20 AM.
The insurance came along with the used car ......................and the car will be re-built and re-newed and re-painted with european ideas that do work across the atlantic.
The ultimate goal is to sell frames.......frames.........frames....frames, and when they sold enough frames they will buy one of the smaller or larger lens producers. Or may they will go the other way round.
What intrigues me is the issue of the relative margins of the Lux frame biz and its retail branch. Generally speaking a well run manufacturer is much more profitable than a well run retailer; so while sales dollars increase (addition of the retail sales and the increase in frame sales with captive distribution), are margins (%) eroding? (That question is less interesting if Lux is privately held, which I think it is????) Theoretically of course as the volume of the frames goes up due to the forward integration strategy, the per unit cost will go down. And of course there is the 3rd party question. Interesting to think what the Lux long term strategy is, simply going into retail (any retail these days) doesn't make a lot of sense minus the other considerations.
CHM, you make a good point that I was not aware of.
If retailing is less efficient than manufacturing, that lends credence to the stated reason for the chain purchases: simply to protect marketshare.
Therefore, it is more believeable that the Cole purchase is primarily to buy their third party organization; maybe they did do it to protect marketshare loss to third party plans that have poor frame allowances. I can see Lux as having gotten hurt as third party increased worldwide, pushing the quality of frames way down.
And, VSP has created it's own frame division, and has partnered in stategic relationships with other manufacturers, ostensibly in order to preserve competitiveness with other third party providers. And if Safilo and Charmant can't buy their own network, they can piggyback on the big one.
I'm beginning to see Luxottica's strategery, perhaps. What a PR nightmare, though!
That is usually or very often not correct in a vertical integrated corporation.
Very often the mother house sells their satellites the products at a higher price than they would to somebody else. The figures are twisted and turned so the satellite makes as little profit as they possiblly can arrange. Then the satellite needs financial help which becomes a tax deduction for the parent firm.
I am talking about cost in the traditional manufacturing sense.
I don't think we are at odds: I am saying greater volume drives down unit cost (i.e. cost to make) of goods, positively affecting the manufacturing margin; you are saying the transfer price may well go up, resulting in the tax scenario you describe. These are not in conflict.
I am in no way a tax expert; it would be interesting to analyze the value of profit pooling in Italy versus the US as per your scenario. There may well be a tax incentive for exports that also comes into the mix.
Publicly traded on NYSE under ticker symbol LUX , but one family (The DelVecchio family) has a controlling interest, and managerial clout.
As much as everyone is against LC as a corporation and how they affect us as independents, Leonardo DelVecchio's is a tremendous success story.
Forza Leonardo DelVecchio!!!
AA
I wonder about that, myself. Is Davis Vision getting big bucks to their shareholders? How about Spectera; are they turning a buck for UHC? These companies are insurers and insurers only; they live and die from it. VSP is non-profit, so I know their officers are living fat. But just how much are VISION plans making, in general?
The reason I ask? Is Luxottica expecting a profit center from being a vision insurer? I'd doubt it. It's probably a bit of an administrative and sales monster. That's why they bought a used car. Not only that, but they have their main competition with giant VSP, who, I think, due to their non-profit model, can provide better services for less.
I really do think its to sell frames, Luxotica's core competence (aside from global domination;) ). They are building the networks, now, and selling the plans, but I can't see the "no frame requirement" hanging around too long. I'd give it 3 years, and then the water will start to heat up around the proverbial frog...
If you prediction is true how do you explain that they lowered the requirement every two years until there was no requirement at all.
Let me assure you that VSP and Eye Med are very profitable. You are also dead wrong about non profit models providing better service. VSP has oabout 14,000 of the 17,000 optometrist on their panels. Luxottica has their retail operations and about 10,000 private practioners to boot. How can VSP serve the families that have both husband and wife working 9-5? They can't. Most of the companies with manged care contracts want a broader range of providers with a wider range of hours.
Rep
Rep,
Are you saying that--under VSP's plan--patients cannot see a provider because they are "working from 9 to 5" and ALL of VSP's providers are only open those hours?
I'd love to hear from some other opticals/optometrists/MD's offices on this board about hours. I'm not aware of any independent shop in my area that is only open from 9 to 5, M through F. Most are open evenings, and many even on Saturdays.
Hi Chris,
Just to set the record straight I got sent this way from an optician, not the company. I';m just a rep and have no desire to work corporate. I like my freedom and sales gives me the opportunity.
As far as freebies go, you are right. There are no freebies. This is nothing more than trying to entice you to come over to our way of thinking. And why not, nobody else is giving you $10 for anything. It's the same concept that VSP used to get you to file claims online. Do it online and get a couple extra bucks reimbursement, do it manually and lose that incentive.
Ah drk, I always enjoy your posts. You always have the most relative questions.I wonder about that, myself. Is Davis Vision getting big bucks to their shareholders? How about Spectera; are they turning a buck for UHC? These companies are insurers and insurers only; they live and die from it. VSP is non-profit, so I know their officers are living fat. But just how much are VISION plans making, in general?
The reason I ask? Is Luxottica expecting a profit center from being a vision insurer? I'd doubt it. It's probably a bit of an administrative and sales monster. That's why they bought a used car. Not only that, but they have their main competition with giant VSP, who, I think, due to their non-profit model, can provide better services for less.
I really do think its to sell frames, Luxotica's core competence (aside from global domination;) ). They are building the networks, now, and selling the plans, but I can't see the "no frame requirement" hanging around too long. I'd give it 3 years, and then the water will start to heat up around the proverbial frog...
Let me start with Spectera and Davis. Why does anybody even carry those plans. They are the two worst two plans in the business. You waste more time trying to crumble Lux and just accept the crap that those two plans throw at you. You carry those plans you deserve what you get.:hammer:
Secondly, you better believe its our plan to sell more frames. We are after all in the frame business. We have never made it a secret that if we could not sell more frames than there is no sense in being in the managed care business. EyeMed is not our profit center. It is more of a convenience and yes a tool to sell more frames.
Will the no frame requirement be scrapped after three years like you suggested. Who knows, but I hope so. Afterall why should we send you patients just so you could send them a Safilo frame.
We have appointments as late as 6pm and we are open on saturdays as well..
Gimmicks do have a goal.......................
I just love it. And I am just about ready to make a bet that you will get quite a few customers with that sceem.
Every gimmick has a goal of some sort. I am fascinated how the company proceeds to re-gain part of the market they might have lost through the recent move of aquisitions.
As I said for a long time..............domination of a market is a very political game.
You heard it here first folks. Reminds me of an expression: WHEN THE TAIL END WAGS THE DOG.
Just to set the record straight; Lux's business strategy is perfect. I am sure it is working better than they even had hoped since so many ECP embrace every facet of Lux's business.
Doc
I've been watching this thread since the beginning, and it's about time to say something. The only way to hurt Lux is to help other smaller companies sell more than Lux does. Take all of thier market share possible and keep it. This is going to take some inventive marketing on everyones part. Lux does not have a perfect marketing plan, no one does. Just find the small parts of the market that Lux and company aren't serving properly and expand, expand, expand. I think of it this way; the coyote doesn't go after all the available food just a part, but they keep spreading and growing and now have a big chunk of the food and territory. All big companies eventually fail, Lux will too, we just need to be persistant and keep nibbleing at them.
Jaqui, You brought up a good point. The question is............when?
Imperial Optical in Canada controlled the optical market retail and wholesale at 30% for about 50 years.
B&L is gone of the ophthalmic market, American Optical is only a name, Sola has become a subsidiary of Zeiss, Rodenstock lived as a family business forever and is now functioning mostly in their home land under new owners.
Some of the old name German frame manufacturers (Metzler, Nigura) are names only and the products are made by Moulin (another giant)
Retail chains have been passed on to new owners over the last many years but still somehow survived, at least by name.
The larger a corporation the more red tape is being used. They become non-flexible and decisions are made by people that might not even have notion of the trade they are working in.
However they should not be under estimated in the way of handling their business.
Actually, I think it could happen sooner then later. We all need to work together to do it. There have been several good ideas, our own insurance, our own central labs, etc. We don't need to follow Lux's way, we need to show them that as independents we can create our own way and show the world that we can do things more profitably, with a better product and better service. What I'm trying to say is, we need to pull together. I know this is hard for independents, but extinction is forever.
Well said.
I don't follow you. Since Eyemed has been started it has actually gotten easier to be on the panel and there is no gimmick involved. It started out that you had to have 200 frames to join in four different price categories. We found two problems with this: 1. The very small shops that carried only 200 or so frames were certainly not capable of filling their entire stock with Lux, something that we do not advocateanyway, believe it or not. 2. In the beginning there were lots of areas that did very little Eyemed so people did not want to stock frames when they were not seeing patients.
So we evolved a little bit. Eyemed said fine, if you are seeing less than 26 patients per year than there is no frame requirement. Anything over that you had to do $100 worth of business with Lux. Everybody should be a winner, you get patients and we sell you good quality frames, unlike the Davis tower or Spectera box of not so good frames that you are required to have.
But guess what. Even though the Drs. signed a contract agreeing to these conditions there were some that blatantly broke their word. I have an acct. that literally saw 600 Eyemed patients and did not do any business with us. It was not in anybodys best interest to start kicking people off the panel so we evolved again.
Same rules as before but now if you meet the requirements its a reward system and not a punative system. If the same guy that saw 600 patients does not want to do business with us, so what. Thats his business but he could be getting back $6,000 in reimbursements. I don't know about you but I'll take a $6,000 raise anyday. Maybe his three opticians could have a $2000 a year raise. I bet they wouldn't mind selling Lux frames for that.
Bottom line is you have to buy frames from somebody. You can either buy ours that are good quality and fairly priced and earn a little extra from Eyemed or you can buy the other guys who give you........a frame.:idea:
.....or you can buy the other guys who give you........a frame and do not look to compete with you for the retail market share and buy off your compliance to their aspirations with a short term carrot.
Doc
Yes you are right. You can continue to buy frames for 15 to 20% more and pass that on to your patients. You can continue to buy frames from companies that do nothing but sell you frames at a lesser discount than they sell to the chains. Gee I wonder how I know that. You don't have to buy frames from a company that actually drives patients thru your doors unlike any other frame company out there.
Face it. Lenscrafters was your competition before Lux and they are still your competition, just like the OD down the street is your competition. The difference is that the goal for US Shoe, when they owned LC, was to put you out of business. It's been 10 years since the acquistion and you still seem to be in business. Lots of my customers are doing better than ever and despite what you think Lux is not trying to put the independent out of business.
Why is Luxottica always th only Evil company.
Highmark(Owner of Viva and Davis) has almost 3 times the revenue of Luxottica. They are buying up small retail chains across the country.
Luxottica's frame prices are about 10 to 20% less than other big frame venders. The reason: because those venders give bigger discounts their big customers and let the little independents pay for it.
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