Zeiss expanding into retail market..................
Just heard the news from India that Zeiss has opened the first 3 of 600 optical retail stores in Bombay India, and is planning to open the balance of 597 other optical stores over the next 3 month's. The target is a full 1000 stores in India within the next 12 month.
This is atom bomb size news for the optical retail industry, that one of the oldest optical manufacturers world wide, goes into a captive market situation.
If their "selling proposition" is unique and attractive, they'll do well.
If not...SOS...
But that applies to all of us, yes?
Barry
At least for the optical industry in India. ;)This is atom bomb size news for the optical retail industry.
Darryl J. Meister, ABOM
I wonder who are they going to use as their frame supplier. Anybody!?
I think Chris's money is on Luxottica. ;)
Darryl J. Meister, ABOM
Any manufacturer expanding into the retail sector is big news and will affect the optical industry globally and not just in India. The cost for entry for Zeiss into the retail sector in India is much less than the entry cost in the USA or Europe. This entry will be where Zeiss tests and refines their business model.Originally Posted by Darryl Meister
Not only will Zeiss be watching this carefully but Essilor will be watching this carefully too. As night follows day, we can expect Essilor to follow Zeiss in the future. Just as Essilor, Zeiss and Hoya were (are) buying independent surface labs, they too will look for retail locations to improve their market share and per pair profit. This makes business sense and is a smart move.
The 3 big lens makers (as well as the big eyewear makers) have substantial market share already and have already learned that the 3 O's will still support them to their own demise. The 3 O's have proven their tolerance for competition from their suppliers and have become willing accomplises to the market penetration by the big manufacturers. I am still amazed that we have discussions on this board about the economy, business competition, marketing, advertising when we (collectively) support our own loss of market share by simply giving revenue to companies that will compete against you now and in the future.
For those people who support the big companies, please explain to me how funding your competition helps your business in the long run?
Doc
The average independent practitioner does not strategize his business plan much beyond the month. The prime concern seems to be satisfying business notes due, accounts receivable and payroll. There is no tangible long term plan in place to increase business. Many small chains are no better at strategic planning and implementation of goals. As a result, the business stagnates and everyone loses interest – that is, until a crisis occurs.
Vertical integration is a fact of life in today’s business environment so it should come as no surprise. Things have changed. Some of us old farts will remember the days when an MD who sold glasses would have been run out of town, not tarred and feathered, but, pitched and rolled in cribbings. It was equally reprehensible for a lab to engage in any retail business. Cripes, the local AO or B&L lab manager would send his wife and family to an optician for glasses.
The future is pretty clear. Since the eye care market is so segmented it is going to be ruled by market share. As the large intergalactic manufacturers gain market share they will fear no retribution from any other segment of the marketplace and be damned well pleased to do whatever they wish.
Perhaps it’s time to offer CE’s in conversational German or French. The US optical industry (or any other) lacks the cohunes and cohesion to play anything but second fiddle in the upcoming concert.
Frame supplier
They will use Menrad. They already sell frames under the Zeiss label that are manufactured by Menrad. Not sure who owns Menrad but that is where my money lies.
You're certainly entitled to your opinion, though I'm afraid that I disagree with you on virtually every point. The optical industry in a developing nation like India is not representative of the US market, and therefore wouldn't serve as a particularly useful "model," any more than India's healthcare system would for our own. Besides, there are far better "models" to observe already in North America.Any manufacturer expanding into the retail sector is big news and will affect the optical industry globally and not just in India. The cost for entry for Zeiss into the retail sector in India is much less than the entry cost in the USA or Europe. This entry will be where Zeiss tests and refines their business model.
Secondly, Carl Zeiss India is a separate entity from Carl Zeiss Vision, which is the company that manufacturers and distributes spectacle lenses and coatings in North America, Europe, and much of Pacific Asia (pretty much everywhere but India / South Asia). The vague reference to "Zeiss" is misleading -- perhaps deliberately so. Like Mitsubishi, "Carl Zeiss" compromises many different companies in various optical industries. Carl Zeiss Vision is not directly affiliated with Carl Zeiss India, and I doubt that anyone in our upper management is paying a great deal of attention to the goings-on of another organization in a region like India in an attempt to plot the next big corporate takeover of "Some Small Optical Chain, Inc." here in the US.
Sorry; I know how many of us love our conspiracy theories here on OptiBoard. ;) Besides, given the current saturation of the retail market and the continued consolidation of large retail chains, entering the retail optical market in the US at this point would require a substantial investment, with little potential for a sufficient return on that investment, in my opinion.
For that matter, on the other side of the coin, most major retail optical chains have been selling their own "branded" lenses for some time. Although these optical chains are not actually designing or manufacturing their own lens blanks, at least yet, the customer's perception is that this is the case. And, of course, several "manufacturers" have already been involved in the retail side for many years; consider the success of Oakley, for instance.
I remember the ripples on OptiBoard when Essilor first began making significiant lab acquisitions. Several doomsayers were certain that the optical industry in the US would virtually collapse, apparently unaware that the optical industry actually started out with laboratories operated by lens manufacturers.Vertical integration is a fact of life in today’s business environment so it should come as no surprise. Things have changed. Some of us old farts will remember the days when an MD who sold glasses would have been run out of town, not tarred and feathered, but, pitched and rolled in cribbings. It was equally reprehensible for a lab to engage in any retail business. Cripes, the local AO or B&L lab manager would send his wife and family to an optician for glasses.
Darryl J. Meister, ABOM
Darryl: You missed a small (?) point, even though the labs were operated by lens manufacturers, neither the lab nor the manufacturer would venture into retail. Even to the point that they wouldn't even freebie thier own families. This is where the "ethics" of the industry have declined. Something about it now being O.K. to bite the hand that feeds you.
The young doctor in town was always propped up by referrals from the independent optician, the older ones being so booked up they didn't want any more referrals. They bit the hand that fed them., The retail optical started hireing doctors and bit the hand that fed them. The wholesale lab went in set up the doctors in the optical business (on consignment, no less) and bit the retail hand that was feedig them. The retailer put in his own lab and bit the hand that he was feeding back.
Now we have the manufacturer advertising direct to the public, leaving the optician as what the public precieves as an unnessisary source of information. Hell we are all shooting each other in the back and saying: "It's O.K. now ethics don't matter if they are in restraint of trade."
I didn't really miss that point Chip; I just don't think it is particularly relevant, since spectacle lens manufacturers haven't entered the retail market here. An optical company in India, entering the retail market in India, has little to do with the typical business models, traditions, and "ethics" of the US optical industry.Darryl: You missed a small (?) point, even though the labs were operated by lens manufacturers, neither the lab nor the manufacturer would venture into retail.
If a developing nation like India, with a rapidly growing population, considerable poverty, and limited access to healthcare, has found a model of eye care delivery that works for them, whether it is consistent with our model or not, I say more power to them.
Frankly, knowing that Zeiss companies, in general, have a reputation for making quality products and that many Zeiss employees are highly competent ophthalmic opticians who have graduated from of one of Germany's optics schools, I suspect that consumers in India will be in pretty good hands at a "Zeiss Outlet."
Darryl J. Meister, ABOM
Zeiss is Zeiss, I don't care if its 15 companies removed, Its still Zeiss. This is a game of symantics darryl. All large corporations have multiple entities, it hardly means that they don't control, reap profits(or loss, Ha). They still own it! Pure and simple, Zeiss is entering the retail game, I don't care if is here, or Abu-Dabbi, they are now playing.I didn't really miss that point Chip; I just don't think it is particularly relevant, since spectacle lens manufacturers haven't entered the retail market here. An optical company in India, entering the retail market in India, has little to do with the typical business models, traditions, and "ethics" of the US optical industry.
Darryl, it's not a conspiracy theory, its fact-based cynicism.
Publicly owned companies such as Zeiss, Lux, Essilor, Wal-mart,etc. MUST increase their profits every quarter. So the job of the upper management is to figure out how to do that. Zeiss has decided to move into retail. Lux has decided to buy up brands. By nature publicly owned companies don't care about ethics or back-stabbing or cutting off their customers. They only care about increasing quarterly sales, period.
What will they be doing next? Whatever it takes. These companies have 2, 3, and 5 yr plans that are top secret and I doubt Darryl has any inside information.
At some point Lux will realize diminishing returns for retail expansion and brand acquisition. What will they do next? Buy a lens manufacturer? They know, I do not. But they MUST do something.
Carl Zeiss Vision knows what Zeiss "India" is doing. The will be watching it closely. As Darryl says, it may not be a similiar business model as Europe and N America, but they will learn something. Let's see, Carl Zeiss has bought up labs, they have their name on frames now, they have partnered w/ Humphrey to get their name on diagnostic equipment ( maybe the other way around). What's next? Hmm, the Zeiss name is known by the general public - let's try retail.
If your job was to come up with ideas on how Zeiss (or Essilor or Lux) could make more money next year - what would you suggest to your boss?
...Zeiss is Zeiss, I don't care if its 15 companies removed, Its still Zeiss. This is a game of symantics darryl.
...Publicly owned companies such as Zeiss, Lux, Essilor, Wal-mart,etc. MUST increase their profits every quarter. So the job of the upper management is to figure out how to do that.
Carl-Zeiss-Stiftung / Carl Zeiss represent a variety of independently operated optical companies. Each company has its own management team, and each company is responsible for its own profits and performance. Again, this isn't entirely unlike the Mitsubishi Group; Mitsubishi Electric is independent of Mitsubishi Gas Chemicals is independent of Mitsubishi Motors, etcetera.
Unlike conglomerates such as Mitsubishi Corporation, however, Carl Zeiss companies generally specialize in optics, and arguably enjoy greater synergy between companies, as well as some centralized research and development in Oberkochen, where the parent company is based. Nevertheless, Carl Zeiss Meditech is Carl Zeiss Meditech; they produce and sell medical imaging equipment. Carl Zeiss Optronics is Carl Zeiss Optronics; they produce and sell optical surveillance equipment. Carl Zeiss Vision is Carl Zeiss Vision; we produce and sell spectacle lenses and related equipment. And so on. Carl Zeiss Vision does not directly benefit from, nor has any direct influence with, the management of these other companies.
Carl Zeiss Vision does not own any retail dispensaries in North America, and I'm not aware of any in any other region either. Nevertheless, if Carl Zeiss India has decided that it would be prudent to operate retail dispensaries in India, it will either be successful for them or it won't. I'm not even saying that I'm necessarily opposed to the idea, because, frankly, I've never really given it any thought until Chris posted this thread. Obviously, the optical industry and market have been changing rapidly, and new business models may continue to replace older models, just as we have seen significant vertical integration and consolidation. My original point was only that you're not going to see a "Zeiss" eyeglass shop around the corner here in North America (or Latin America or Europe or Asia Pacific) just because a separate subsidiary has opened up one in India, whether it's a good idea or not.
ps,
Given some of the changes in retail dispensing that we've seen over the years, I certainly don't a Zeiss shop in India as a cause to be any more "cynical" than usual, even for Chris. ;) And, actually, the more I think about it, the more the idea intrigues me. I'm sure that Lenscrafters and Wal-Mart and Pearle are all fine places to work, and the success of these operations has been due, at least in part, to effectively marketing the values often associated with the store brand, including service, value, selection, and so on. But I can just as easily imagine a "Zeiss" dispensary, which is a brand that has always emphasized high quality and performance, and I think there are many OptiBoarders out there who would be well-suited to work in such an environment. But, while this idea may seem intriguing to me, I don't plan to see a Zeiss shop in the US anytime soon, if ever.
Last edited by Darryl Meister; 08-26-2007 at 05:47 PM. Reason: PS
Darryl J. Meister, ABOM
IBM PC's are no longer IBM PCs, even though they have been sold for more than one year under the IBM name, IBM does not own any PC or laptop products any longer. IBM PC's are owned by a China PC manufacturer, not the original IBM. (Just an example)
Pay attention to Darryls answer. Carl Zeiss Vision is not the same. It was created via the merger of Carl Zeiss lens division and Sola. This venture was funded by a Scandinavian Venture Capital Fund-Not the original Carl Zeiss. If I remember correctly the original Carl Zeiss company that owned the lens business retained a minority position. They could have kept a minority position as due to many reasons, but the fact that they dropped to a minority position, the lens business did not fit into the long term strategy for the selling Carl Zeiss company. If the Original Carl Zeiss Company had wanted to keep the lens company and purchase Sola, I think you see a different structure.
Again. we play semantics. Do they or do they not have an interest in the "zeiss" company opening retail in india?? The bottom line is probably yes, how we connect the dots, like any good corporation,we don't.but the fact that they dropped to a minority position,
One reason some retains a minority position is not to dominate and control the management. It can be and often is because they could not sell the a division in total because the acquiring Venture Capital Company is protecting their new investment by requiring them to suffer any negative value going forward. The appears to me to be a spin off and creation of Carl Zeiss Vision, not by Carl Zeiss which retained a minority interest. With your logic Sola is 100% vested in Carl Zeiss Vision and is in control not Carl Zeiss. My take is the Venture Capital Firm looked at the deal and Sola did not have consumer awareness, while the name Zeiss, (by your own conclusions proves), has both industry and consumer positive recognition. The name was about branding not control by the original Carl Zeiss selling company.
After the sale many of the management team of Zeiss were repositioned and Sola management took over. I think Darryl is correct in that the venture in India is not a world wide test for the take over of optical retail.
India will not be a test for a world wide take over but it is a lower risk test market. Every market has different requirements and what works in India, US, UK, China does not always overlap but the basic frame work of running this kind of busness is the same.
If, as you say, a spin off of Zeiss is launching this then wouldn't the spin off be expanding its original agreement with Zeiss in how it is using the Zeiss name? No matter which spin off is setting up the chain, Zeiss Germany owns the Zeiss name and had to have some word in how its name is going to be used. In the end, I do not believe this India expansion could have happened without the Zeiss parent company's approval.
You are exactly right. But that wasn't your original point, which was that the company was using this as a test market before inevitably pursuing a similar model in the United States. First and foremost, it's not the same company, so this would only ever happen if Carl Zeiss Vision chose to execute such a plan. While both companies ultimately answer to a common parent company, the Zeiss "parent" company represents a large consortium of optical companies that span a variety of industries, specializing in everything from machine vision systems to corneal topographers. It's not like someone from Carl Zeiss AG is going walk into a Carl Zeiss Meditech facility to tell them how to build or sell topographers. If Carl Zeiss India feels that a Zeiss retail chain would be successful in their market, I'm sure that the decision rests mainly on their own shoulders.In the end, I do not believe this India expansion could have happened without the Zeiss parent company's approval.
Besides, many of these comments have emphasized a rather egocentric view of world eye care from the standpoint of the traditional US eye care delivery model and local trade restrictions related to eye care. But these restrictions vary considerably from country to country, as do eye care delivery models (many countries don't have optometrists, for instance). For that matter, the eye care delivery model and eye care-related trade restrictions have both changed a great in the US, anyway. Since I don't work for Carl Zeiss India, it doesn't really matter to me, but not one person has really articulated exactly how eye care professionals in India will somehow be disadvantaged by the appearance of manufacturer-owned retail "factory" outlets. And this assumes that they haven't already had them in place.
Darryl J. Meister, ABOM
Darryl works for Carl Zeiss Vision on of the biggest players in the industry. I work for ICE-TECH, one of the smallest. I am not concerned about the big company competition, (very aware but not overly concerned). They have their methods and advantages and as a business within the industry. I try to develop marketing strategies that are not the same as the big companies. As a smaller company we can offer a more hands on approach with our customers. We have more flexibility. I don't have to wait for a committee meeting to introduce a new lens material. I get a few samples, test them throughly, decide on the price, print up a price sheet and bingo a new product is born. No focus groups, and market demand studies. If there is not enough demand, it will quitely go away. The big companies use their strengths and it is up to every business manager to use their own companies strengths rather than complain about how bad it is going to be once X or Y happens.
Small companies can only be put out of business by large companies if the management of the smaller companies do not make good business decisions for themselves. In every industry there are examples of very successful vertically intergrated big players, as well as very successful niche industry players.
Sometimes I see a little too much "I've been taken advantage of by the big boys attitude". Any competitor of yours in any industry tries to maximize their business and the results for some competitors is not always good, but that is a part of the free market.
The only really bad thing about Zeiss having retail stores, would be if I had retail stores in their markets, and my stores had bad locations, bad selection and uncompetitive prices. I think this will hold true for everyone in the retail optical business. Look at it another way, if you are in the retail optical business and this India thing works out globally, maybe they will be interested in buying your store for more than you can sell it for today at a time when you are looking to retire.
I know of someone who operates a home improvement chain, primarily in the Mid-West. 10 years ago there were no Home Depots or Lowes in his market. Today there are both, but his stores still do well and he is still a Billionaire. Big companies do not mean the end of any competing business.
The defense rests.While both companies ultimately answer to a common parent company,
I think the fact that we are two independently operated companies, who have as a major "stakeholder" of sorts a common "parent" company, has already been adequately explained, but perhaps an analogy will make this clearer. My brother and I share a parent (two, in fact); but if my brother decided to open an optical shop in India, it wouldn't have anything to do with me. Now, suppose our father gave his blessing and maybe even loaned my brother some money for this venture, since he is family after all; if my brother ultimately went bankrupt doing this, it wouldn't affect me in the least. Heck, I could be making socks or widgets or something, and may not be concerned at all about my brother's industry, much less my brother's industry in South Asia.The defense rests.
Darryl J. Meister, ABOM
From what I read this is the future whether we like it or not.
To register our disfavor do we all flock to who nowAWTECH and/or Shamir as examples? Or are we shovelling sand against the tide
Maybe. Of course, another possibility on the "flip side" of this coin is the "entry" of retail chains into lens manufacturing.
Darryl J. Meister, ABOM
Daryl, I hope you understand that my comments are not an attack on you. If your family name was Hilton or Trump then the analogy would be more fitting. If a Hilton or Trump affiliated company was venturing into a business that would conflict with the parent companies interest it would not be allowed. The only way it could be allowed with the parent companies sanctioning.
My original point is that Zeiss' venture into retail optical in India will not be limited to that maket. Zeiss is a global company and the parent company will unquestionablly be looking at the market development of that venture and consider additional markets moving forward based upon the India project.
Again, this move by Zeiss is, IMHO, brilliant. From a business standpoint vertical integration makes perfect sense and protects the manufacturing base as well as insures sell through. That being said, a non-affilitated retail optical business funding this acquisition and expansion is ridiculous. This is akin to supplying unfriendly countries with weapons and then being surprised when they use these weapons against you. Who would be stupid enough to do that?
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