Time to think ahead ........................

[Chris Ryser]

Over the last 3 days gasoline prices in Canada have gone up by nearly 30% to a price that approach $ 5.00 a gallon. By the end of today prices should reach $ 1.35 per liter which translates into $ 5.40 per Gallon. In the USA, I also hear of drastic price increases in the news, and more to come.

What will that do to the economy in general and how will it affect the optical trade in the retail, wholesale and manufacturing?

Will opticians be making more sales and money? Or will opticians start to feel the economic pinch in the very near future or worse, already now.

Large cars won't sell any more..............resulting in major reduction in car sales that has already started. This is leading to more massive layoffs in the automobile asembling industry and even more so among the automotive parts industry.

People being laid off will not spend money for big ticket items unless in an emergency. Therefore more layoffs can be expected in other industries from manufacturing to retail. It will be a chain reaction.

The dental and optical sectors are usually the first to feel the downturn results. People will visit the dentist in an emergency and as well the optician in a similar case. They will make the old reading glasses make last until the arms are getting to short. They will want to repair the frame when it breaks or want to purchase a replacement that will take the old lenses.

How are Optiboard members going to react in a situation we are in already, or very soon going to be. Are opticians going on talking about the most expensive lenses, pricy high index lenses and coatings, or are they gearing up for tough times with solutions that will let them bridge over the coming tough times.

It wouild be interesting to get some comments on what everybody thinks.......if the present market situation is only a hype or should we do some smart preparing for what is coming.

[For-Life]

I notice in the case of an economic downturn the first thing to go is new frames. A lot of people do not believe in selling stuff that lasts long, but it is either you sell them new lenses for their old frame or they go to wallyworld and buy a new set. So selling good frames, keeping up with in house edging ect.


Then there is another thing. People will spend less overall, and some people will hold off, so you have to do something that will make people want to buy from you. Being differentiated is one.

During the 2001 economic downturn the drill mounts were at their height and people were willing to spend the extra buck. Since I was the first in town to have a nice selection of them they bought from us.

[Optical_1]

Well, I think you have a point. I think the thing to do is what I always try to do, which is buy low sell high. The point that I am trying to make is that in my opinion, the key to doing well in this business in good time or bad is directly related in how we buy products. One of the most important aspects of owning a small business is buying wholesale quality products at a low price. So, I think small business owners and their employee's should start thinking about lower priced frames, as well as lenses. I think that this could have a positive effect on the business in the long run, because people will become more conscience of what stuff costs and how much profit is being made from a paticular product, because in the end it's not the gross that counts.....it's the net.

[Jacqui]

Chris, isn't CR39 and other plastic lens materials at least partly made from petroleum products?? If it is we could see higher and higher lens prices too.

[Jim]

People have to buy something.
Humans are basically hunter/gatherers. It is in the genes. People have to hunt, we can't help ourselves.
In the modern world we shop. That is how we hunt today.
We have basic psychological needs that fall just below our animal needs for food, shelter, procreation, safety, survival etc.. Some psychological needs that follow close behind the basics are sense of community, love, self worth, discovery, enjoyment, and of course, hunting and gathering.
Shopping is how we satisfy our basic need to hunt and gather.
No matter how bad the economy gets, people have to buy something.
A lot of items will become taboo, like big screen digital TV's, gas hog autos, new furniture, and such. But we have to buy something.
We can't help ourselves.
We will satisfy our need to hunt via trinkets found at the Wal-Mart or Dollar Store. Or we'll buy important, justifiable, non frill items that will satisfy our basic need.
We will buy stuff that psychologically aides our basic needs for shelter, safety, and survival. We all got needs.
To survive we must be healthy. We will still go to the Doctor.
We must have shelter. We will pay our mortgages or rent.
We must eat. We will still buy food.
We must see well. We will take care of our eyes.
Therefore eye glass sales sold by health care folks will improve, chain stores maybe not so much. Glasses must look like, smell like and taste like a medical device, not just a product or "good deal"
We got to buy something. We will justify eye glasses as a necessity of life.
Industry wide, units sold may drop because of the chain store decline, but stand alone and Doctors should do well in a poor economy.

Optimistically speaking

Disclaimer: Past performance may not predict future trends.

[SkiBunny]

During the 2001 economic downturn

Fact: there has been NO recession in Canada this decade, unlike the U.S. If you're out west like Jedi, you're in for continuing boom times for at least another year or more due to the strength in commodities especially oil & gas.

Wait until the Greenspan-induced housing bubble deflates in the US. It is said that will affect far more households far more significantly (especially those residing in many coastal states) than has any stock market fall.

But when people need glasses, especially something like first-time progressives like me, there is no choice but to buy. You have to see, or you cannot function. I speak from personal experience, as my own economic circumstances have deteriorated substantially since a year ago (except for the value of my house), yet I'm still buying the expensive glasses I need.

[coda]

Chris, isn't CR39 and other plastic lens materials at least partly made from petroleum products?? If it is we could see higher and higher lens prices too.

All plastic lenses are made from petroleum derived materials. However the major cost here is not the raw material (oil) but the processing the raw materials must undergo on the way to becomming first the monomers and finally the lenses. I'd be surprised if higher lens prices resulted from an increase in cost of the raw constituents.

Of course energy and transportation costs will (may) go up and that will increase the effective cost of the product (i.e. what you pay for them).

[For-Life]

Fact: there has been NO recession in Canada this decade, unlike the U.S. If you're out west like Jedi, you're in for continuing boom times for at least another year or more due to the strength in commodities especially oil & gas.

We there was a recession. A recession is classified as two quarter sessions without growth. We had that in Canada. Just our recession was not as severe as the US's.

[Happylady]

People will still buy glasses, but they will buy them less often, and less expensive ones. If they don't have insurance they will go to places like Wal-mart and Costco. They will reuse their frames. They will order their contacts on the internet.

[jtart2]

The way I see it, these things have been going on for the past 5 years already. People are hesitant to buy new pricy items and they already surf the internet to buy as much as possible.

It's not like this is some kind of "Great Depression"

More time/research will be spent on ways to use alternate energy sources and everything will be OK again. We knew the "gas was going to run out" someday. I don't understand why everyone is freaking out about it.

For the past 50 years gas has been exteremely cheap (if you compare it to other goods i.e. bottled water, sodas, etc)

I remember when 12 Oz sodas were $0.25 in the mid '70's. Now they are $1.29 for a 20 oz. That's a pretty big jump. However gas in the seventies, that I remember was about a dollar. I can't believe we are just now paying $3.00/gallon. It sounds about right if you asks me.

[Johns]

During the depression, my aunt was a haridresser. She was ALWAYS busy. Her clients found a way to get the money to have their hair done. The folks that are not willing to pay for quality have already found WalMart. If those willing to pay for quality are affected by the changing economy, I can relax my prices a bit and not feel it that bad.

(I believe)The best time to start a business is in a downturn. (I've done it twice.) After the recession it, your company is usually operating w/ the least amount of excess spending you'll ever have. The fat has already been trimmed. It's the businesses that take on a lot of debt in the good times that will really suffer.

[Chris Ryser]

Chris, isn't CR39 and other plastic lens materials at least partly made from petroleum products?? If it is we could see higher and higher lens prices too.

Yes Jaqui, a lot of chemicals are derived from oil......................in this case there is another factor.

I made a calucaltion once figuring out that you could make about 34,000 lenses with a 45 gallon drum of CR39

So I don't really think that even a good price increase would a ffect the price of a single lens very much.

[Chris Ryser]

The way I see it, these things have been going on for the past 5 years already. People are hesitant to buy new pricy items and they already surf the internet to buy as much as possible.

As you just said it has been going on for 5 years................now comes another very large punch to the economy...............where does that get you?

[Chris Ryser]

People will still buy glasses, but they will buy them less often, and less expensive ones. If they don't have insurance they will go to places like Wal-mart and Costco. They will reuse their frames. They will order their contacts on the internet.

That was a very good statement........................but where does it help you?
Do tou want to loose your business or your job?

What are you ready to do so that what you said above does not happen?

[DocInChina]

I think the current oil crisis will have a major impact on the US economy as well as globally. In my city, Shenzhen, we have had an oil shortage for the past month. Lines at gas stations that have oil can have 2-3 hour waits. Many stations have no oil. Since China supplies the world an enormous amount of product, this global oil crisis will have an effect on China's production capabilities. This in turn will have an effect on the US cost of living certainly.

As Chris and others have said before, it is important for companies to find alternative sources of quality product that is less expensive. These cost savings can be passed to the consumer and help preserve the bottom line for many businesses.

Doc

[DocInChina]

Continued:

I was back in the US for a couple of months and came back to this terrible oil shortage in China. Coupled with the US pressuring China to revalue the RMB, I believe the US is heading for some serious trouble. Hurricane Katrina will further worsen the situation globally. Its not a good sign for our field as well as other fields.

There are quite a few other people who post on this board that are involved internationally in our field. Chris and I have been quite vocal in the past about protecting your patient base and directing your purchasing dollars to companies that can help you with both your top and bottom line. I strongly suggest exploring your options now before the market adjusts to the global condition sooner rather than later.

Doc

[SkiBunny]

Coupled with the US pressuring China to revalue the RMB, I believe the US is heading for some serious trouble.

The US pulled the same crap with Japan when the US was uncompetitive in the 1970's/80's. Instead of the US recognizing that the problem was THEIR own doing, first they blamed unfair exchange rates, then blamed low-pricing foreign dumping, then slapped on high duties across-the-board against Japanese imports. So... same old, same old.

I am a conservative. The Bush Admin *claims* to be conservative, but in fact it is very free-spending and protectionist. Witness the punitive tariffs on steel and softwood lumber, despite having these ruled illegal by the likes of the WTO and NAFTA - agreements which the US has signed and Bush has infringed.
Both the US and the world were much better off with the Clinton admin and its enlightened policies. Hehe, flame away :cheers:

[SkiBunny]

We there was a recession. A recession is classified as two quarter sessions without growth. We had that in Canada. Just our recession was not as severe as the US's.

Actually it's two consecutive quarters of negative growth... Canada overall has not experienced that since 1992-93. Our global commodity exports and in particular our dollar devaluation softened the blows of the US recession in 2001-02

[Jacqui]

This is from MSN Canada, is the same thing happening in the US??

http://sympaticomsn.ctv.ca/servlet/A...hub=topstories

[Chris Ryser]

The US pulled the same crap with Japan when the US was uncompetitive in the 1970's/80's.

This discussion is not meant to be a Canadian bashing of the US or blaming a president, or blaming conservatives/republicans or democrats.

This is a meant to have comments on how are opticians are going to handle a coming recession or depression in order to stay commercially healthy or at least alive.

It is not a matter who is at fault, which will not be of benefit to anybody when we are going to be faced with the facts.

In Europe business has been at a snails pace for a while and the rock bottom priced optical chains are the ones that are growing fast are florishing and have become non stoppable. There are no brand name frames and no brand name lenses with the exception of a very few sold.

I dont think it being wise to brush this thought away as being crazy or useless because it will not happen in North America. The indications are getting stronger daily.

[drk]

First of all, "Ski Bunny" as a posting name is most incongruous with someone who apparently knows way more about economics than the average person. How about "Econo-babe"?

Secondly, I expect a bit of a crisis in consumer confidence with energy prices going higher. Fuel price is an "everyman's" bellweather indicator of inflation (and not a bad one at that). I expect some tightening of sphinctors.

What to do?

1.) Reassure the masses. Firstly, the customers you do have will appreciate reassurance of the value they will have received in your establishment.

2.) Make sure everyone utilizes their insurance benefits to the max. Explain that they've already paid for the benefit, so get junior in while the benefits are in place. Beat the bushes.

3.) Consider re-tuning your sales presentations to express value, like packaging, or "specials" or "sales", etc. In other words, crap that means nothing to anyone who knows better, but is magic to the unwashed.

4.) Control inventory
5.) Control human resources
6.) Streamline, simplify, succeed (to purloin Vision Web's tagline...)

[DocInChina]

I just finished speaking to a friend in NY. The gas prices in some parts of NYC are 4USD per gallon now. My friend has numerous businesses (restaurant, club, real estate) and he tells me he is getting nervous. His electric bill for his restaurant double from last year.

Close to 2 hours ago I left my house to fill up my car. (just before 5 am my time). I went to 3 different gas stations and each one had close to 100 cars waiting in line.

[SkiBunny]

This discussion is not meant to be a Canadian bashing of the US or blaming a president, or blaming conservatives/republicans or democrats.

First of all, "Ski Bunny" as a posting name is most incongruous with someone who apparently knows way more about economics than the average person. How about "Econo-babe"?

In fact i know nothing (being a clueless twit), and i'm an American citizen.
Just stated some facts and an opinion ( ); no "bashing" intended.

[Chris Ryser]

More time/research will be spent on ways to use alternate energy sources and everything will be OK again. We knew the "gas was going to run out" someday.

You are right...............but it looks that a crisis moment is just around the corner. You can not talk about some day.

All of us are being pushed into a corner by the oil industry and now other oil depending companies are profiting as wll by driving prices up.

I have a chemical supplier that has raised his minimum order from $ 500,00 to $ 1000,00 ands is charging a $ 23.00 fuel surcharge on every delivery. Yesterday the truck delivering merchandise had to go and deliver to 4 more customers all within a 4 mile range.

The extra revenue for a 10 mile delivbey tour was 5x $23.00 fuel surcharge, which equals a $ 115.00 for a 10 mile trip.

The china news papers have reported a major slow down in production all over China 2 weeks ago.

"Doc in China" should give us some more details on this subject.

[DocInChina]

The china news papers have reported a major slow down in production all over China 2 weeks ago.

"Doc in China" should give us some more details on this subject.

Hi Chris,

As of today I have decided not to even take my car out on the road. The lines for gas are terrible and many stations seem to be closed. The roads are packed with cars and trucks which makes me wonder where the heck these people are getting their gas. For now I will cab it.

I went to a few manufacturers today and they seemed to be cranking out eyewear despite the fuel problem. From what I am told the oil shortage is isolated to my province (Guangdong). Joy.

Lately more US companies have complained to me about business and their "feeling" that economic changes are coming for them. Given all that is happening globally and in the US in particular I am in agreement with their "feeling".

Tighten your belts now. Find alternatives (read that as less expensive) that offer quality, service and reliability. Just as the oil companies control our fuel, many optical industry companies are increasing their control of the optical market. He who controls the supply, controls the market.

Doc