Have you seen the obesity in this country, mayo is white gold! :DOriginally Posted by drk
Have you seen the obesity in this country, mayo is white gold! :D
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Glasses ARE NOT a volume product...They are a customized item. Done "onsey-twosey".
The cost of production may go down, but the delivery and distribution of Rx eyewear DOES NOT!
The only reason that Costco gets these Essilor prices is because (as the fly-on-the-wall heard during an Essilor sales meeting):
"If we (Essilor) doesn't sell Costco (et al) a product at an attractive price...someone else (our competition., Sola, Zeiss, Hoya, Kodak, etc.) will."
But because it IS Essilor who does the bulk of this practice, it's the reason I've found to put their name into slang:
"HASSEL-*****"! (because they're both a hassel, and a *****)
My two cents, what's yours?
Barry
I bet the average eyeglass wearer spends more on groceries in one month than on glasses in two years...That's a lot o' mayo
Darryl J. Meister, ABOM
I'm not a big fan of Costco Optical, but I did work there for one year. You have to give them the credit of creating/adapting the business model. They are as follows:
margin - single digit (don't know exact)
frames - brand names at close out price
outside frames - $15 (?) extra charge. won't take drill mount, safety, sunglasses, high wrap, "worn" or high $$ frames
sunglasses - brand names (include Maui Jim) at close out price
frame selection assistance - limited, only when opticians are not busy closing sales
lens - limit brand selection but adequate for a good % of consumer
C/L - most major brands with good pricing
return policy - fairly good (not different from other merchandise sold)
sample lost leader - $1 for plano polarized lens with new frame purchase
coupon promotion - on color and non-color C/L, 2nd pr, transition...
insurance - only take Spectera
receipt - itemlized, given without asking
lab - regional lab, no farm out
OD - independent
optician - ABO required for all new hire. Others need to pass ABO very soon.
optician turn around rate - vary. most depend on how good/nice the optical manager is (it could be from 100+% turn around rate less than 12 months, to 0% with warehouses few miles apart)
optician experience - vary, some are really good
optician knowledge - most limited (unless learnt from previous jobs)
optician salary/benefit- could be good if you stay there long enough (multiple years)
optician's future - limited promotion channel
Hope this give optical shop owners some idea on how to compete with Costco Optical (if you choose to).
(ps. All of above are public information or my personal opiinion. no trade secret)
Last edited by a1vo; 01-23-2007 at 04:31 PM.
Paul @ Silicon Valley California
Very well said......................................
Costco might be buying in bulk..............but for sure they are not selling in bulk, as I have never seen line ups in any of many costco opticals I have seen. They just capture the market with lower prices which the independent retailer does not want to adopt.
Nobody on this board so far has reacted when economy was mentioned, but I am reading every day in the news that some company is reducing staff by the thousands. If you are an employed individual working for a large company you must be thinking from time to time if it could be your turn in the near future.
Eyeglasses have been known forever to be expensive, so we can't blame people for looking at lower prices. Therefore the independent retailer has to adjust his way of thinking, like OptiRook said.
Darryl, I knew that you would come out of the closet, the knight in full armour, on the attack............I guess it is your job to defend the imperialistic way of the major corporations, even if it is not the one that puts the bread on your table. :hammer:Chris, I realize that this is the start of another one of your tirades against lens manufacturers,
That's only because people do not WANT eyewear, they perceive it as a medically-based need.Eyeglasses have been known forever to be expensive
If we don't change this...we're all doomed.
For my money...Movie concession prices are way over priced!
barry
AMEN to that! I won't even go to the theatre! When a good movie comes out on DVD, I'd rather buy it than go pay those high theatre prices.
Costco has a great selection by the way!
It's the economy and it's smart shopping that is driving folks to the mass merchandisers.
My suggestion . . . if you are not a boutique or in a trendy upscale neighborhood, don't buy into, "don't worry about the mass merchandisers, just do what you've been doing," especially if you have poor customer retention (after the exam) and depend upon astronomical prices to make up for your volume. That's exactly what the mass merchandisers want you to do.
Remember the Mom & Pop corner grocery store example above? Here's another one that will hit closer to home - Camera stores. Oh yeah, they used to dot the landscape of middle america and everybody took their film in for processing and bought their cameras there. Not for a long time. And what did camera stores rely upon to keep their prices high? "Individualized attention/service" and "expertise." Instead, what they got was consumers who became better educated, shopped for value, and purchased at the mass merchandiser, now the major outlet for film processing and cameras.
[quote=Audiyoda;173744]
Here's a good comparison - I picked up a Vizio 43" plasma HDTV from Costco for $1100. The best retail I found locally was $1400.
quote]
I don't know what you guys are selling the above mentioned lenses for but the TV or any of the other items mentioned are not the same level of savings.
I doubt they have any loss leaders they just sell on volume and low margins.
Chris, if by this you mean that I will respond to your posts when you inevitably decide to make disparaging and often unfounded remarks against lens manufacturers, with whom I work, then Yes, I will take offense to those remarks. That said, I think your understanding of the word "attack" is a little skewed. Since you use it often in these contexts, after hijacking threads with wild accusations concerning how lens manufacturers (I'm not exactly sure why it's always lens manufacturers, either) are taking advantage of the world, here's the definition of the word:Darryl, I knew that you would come out of the closet, the knight in full armour, on the attack.
to set upon in a forceful, violent, hostile, or aggressive way, with or without a weapon or begin fighting with; to begin hostilities against or start an offensive against; to blame or abuse violently or bitterly; to direct unfavorable criticism against
Darryl J. Meister, ABOM
I disagree with the TV comparison. A 21% difference in the price of TV's is not the same as a 66% difference between eyeglasses.
Here's a poll (and a truth test!)
How much does the average independent ECP charge for the average pair of eyeglasses with polycarbonate progressive lenses?
.... great prices and even a better return policy. Best thing to do is you run your show and they will run theirs. They do hire only qualified opticians and pay them well while providing them with great benefits. I would reccomend them to any young optician over any doctor or any other chain. I really do know what I'm talking about. As someone has already suggested ask William Walker, he knows first hand. Costco offers a great future for young people looking for retirement benefits and insurance.
I now a person who works part time for them 3 days a week and has benefits and 401k. Last year he made over 40k part time. Eat your heart out all you low paying MD's and OD"s.:cheers:
Our opticals enjoy very nice margins. Obviously better than the tv dealers.
Correct me if my understanding is wrong.
1,000 Costco locations sell 5 pair of glasses in each location, that equals 5,000 pair of glasses sold that day.
1 Independent sells 5 pair of glasses in his/her location, that equals 5 pair of glasses sold that day.
So Costco needs to order 10,000 lenses a day. The independent needs to order 10 lenses a day.
Sounds like bulk to me.
I want to defend Darryl and the lens manufacturers here. The product we sell (even progressives) to laboratories is most often only 10% of the price that the consumer ultimately pays. Our contribution to the margin is miniscule compared to what is gleaned by wholesale and retail concerns.
And that folks...is how Costco is able to do it!
They are the distributor, wholesale lab, and retail discounter.
....haven't sold one in 2 years. Best seller prog/transitions/titanium frames and yet we offer frames for $19.95 never sold one last year. The thing someone said about making money when you buy,how true, been saying that for 30 years, even more true today. I think todays market is the best I've ever seen and I been doing it almost 47 years.:cheers:
But that is still, using your example, 5 pairs of glasses at ONE Location. Store-to store, ECP's are sellin as many....
so why don't our labs (and manufacturers) give us the same break?
A: "cause there's no consequence if they don't!
But if a manufacturer doesn't sell a chain that way...
A: SOMEONE ELSE WILL (read: CONSEQUENCE!)
Barry
Those numbers were just as an example. I think when William Walker comes upon this thread he may have some insight. It's more like 5 pair per optician per day per store.
Buying groups have tried to pool all the ecp together and get bulk discounts.
But your analogy would go either way if independents were truly a singular purchasing presence (that is, there would be just as much of a consequence to not selling to independents). Unfortunately, independent eye care professionals are not a "single company" and, just as in any other industry, will not be entitled to the benefits associated with volume purchasing. But, as CME4SPECS noted, there are "buying groups" and such available for independent eye care professionals that will allow you to benefit somewhat from volume pricing.so why don't our labs (and manufacturers) give us the same break?..so why don't our labs (and manufacturers) give us the same break? A: "cause there's no consequence if they don't! But if a manufacturer doesn't sell a chain that way... A: SOMEONE ELSE WILL (read: CONSEQUENCE!)
That said, if you managed to convince every other eye care professional in the US to buy only "Brand X" lenses, I suspect Brand X would be willing to cut you a collective pricing break. Keep in mind that volume pricing is based on the expectation (if not contractual obligation) of the buyer to purchase a large quantity of the seller's product, not just to give a "big company" a "big discount." And there will always be considerably more logistical issues associated with selling to thousands of small, competing companies rather than to one, large company, even if the total quantities are the same.
Last edited by Darryl Meister; 01-23-2007 at 05:10 PM.
Darryl J. Meister, ABOM
Look at the hornets nest he went and kicked! Darn guy barely posts anymore and he jumps in, kicks around a bit and gets us all rowled up!
Scoundrel!
;^)
;) :cheers: ;)
I disagree with you on this Darryl. Even if all the ECPs banded to together, they would'nt get a price break..
because their egos and preferences would prevent them on agreeing one what "one" lens type they would negogiate. Thererfore...NO CONSEQUENCE!
The chains don't care what they sell...as long as they can look like a bargain.
If Essilor or ZEISS or KODAK or SOLA or HOYA lends their name to this type of distribution..then shame on them...they're doin'it for the business...
at OUR expense!
If business is the be all end all, then why does CHANEL (try to) control their distribution so tightly?
A: FOR LONGTERM BRAND BENEFIT!
barry
But that's kind of my point, Barry. That, and the fact that it would still "cost" a lot more to sell to thousands of businesses buying one product at a time than it would to sell to one business buying thousands of products at a time.I disagree with you on this Darryl. Even if all the ECPs banded to together, they would'nt get a price break..because their egos and preferences would prevent them on agreeing one what "one" lens type they would negogiate.
Darryl J. Meister, ABOM
Then where oh where is all that profit goin?
When clients say my glasses are too expensive. I tell 'em:
"Last time I looked...it's your doctor that drivin the Mercedes...not me!"
Barry
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