Zeiss expanding into retail market..................

[Chris Ryser]

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.

[Barry Santini]

If their "selling proposition" is unique and attractive, they'll do well.

If not...SOS...

But that applies to all of us, yes?

Barry

[Darryl Meister]

This is atom bomb size news for the optical retail industry.

At least for the optical industry in India. ;)

[LENNY]

I wonder who are they going to use as their frame supplier. Anybody!?

[Darryl Meister]

I think Chris's money is on Luxottica. ;)

[DocInChina]

At least for the optical industry in India. ;)

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.

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

[rbaker]

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.

[samsoptman4940]

Frame supplier

I wonder who are they going to use as their frame supplier. Anybody!?

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.

[Darryl Meister]

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.

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.

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.

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.

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.

[chip anderson]

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."

[Darryl Meister]

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.

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.

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."

[obxeyeguy]

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.

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.

[MarcE]

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?

[Darryl Meister]

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.

[AWTECH]

Zeiss is not Zeiss

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.

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.