Optical retailers soaked up the sun's rays and steadily gained market share in the plano sunglass category from 1995 to 1997, but in 1998, there was a slight change in the weather pattern. Is it time to break out the umbrellas?

Optical retail now claims 29.8 percent of the primary market share, down from the 35 percent the channel commanded last year. The channel is still ahead of sunglass specialty, which now has 21.5 percent of the market share, up slightly from the 20.3 percent it had in 1997.*

According to numbers estimated by the Sunglass Association of America (S.A.A.), a non-profit organization dedicated to the sunglass industry, optical retailers sold 8.3 million pairs of plano sunglasses in 1998, down 7.4 percent from the 8.9 million pairs they sold in 1997.

Collectively, the entire primary plano sunglass market--including sunglass specialty, sporting goods stores, department stores, mass merchandisers, and drug stores--sold 129 million pairs in 1998, a 4.5 percent increase over the 123 million sold in 1997. This was the good news.

The not-so-good news is that the average price for a pair of plano sunglasses decreased from $20.10 to $18.70 per pair in the primary market. In other words, units are up, but retail dollars are down 2.6 percent, and average price is down as well.

SHADING OFF

Optical retailers sold $719 million worth of sunglasses--including clips--last year, down from $868 million in 1997, which translates to a 17.2 percent decrease. The optical retail channel's average price per pair also decreased from $97 in 1997 to $86.80 in 1998.

The price erosion is perhaps one of the more difficult aspects to explain, say industry veterans. They offer several reasons for this decline, including increased competition, a decline in brand awareness, and consumers' return to value shopping.

• Competition. "Prices have come down at the high end," explains Walter G. Boudreau of Polaroid Eyewear Inc. and president of the S.A.A. But, he adds, "We have a very healthy market that remains competitive. Anytime you have a market that is healthy and competitive, you might expect to get better quality at a lower price."
  Indeed, manufacturers are also grappling with competition. At presstime, reports that Bausch & Lomb was carefully scrutinizing its sunglass business--which includes Ray-Ban, Revo, and Killer Loop brands--were sweeping the industry. B&L was reportedly considering a spin-off, joint venturing, or sale of the business.
• Leveling Off. "I think the market is healthy," agrees Rick Banker, of Capo, Inc. and immediate past president of the S.A.A. "Obviously, it's not experiencing high growth, but I don't think it's depressed. We saw very high growth for several years in a row, and it seems to have leveled off a bit."
• Brand Consciousness. "Perhaps the consumer is less brand conscious," Banker says. The consumer may also be a bit more cautious with his disposable income, he adds.
• Return to Value. It may be even more complicated than just decreased brand consciousness, says Jim Pritts, vice president of membership for the S.A.A. and president of Sunglass Solutions, a consulting firm for the sunglass industry. He says the decrease could be part of a continuing trend where consumers are expecting more value in all retail markets. "People are not just buying logos anymore," he explains. "They want value and performance."

SUNGLASS SPECIALTY VS. OPTICAL

Value shopping may explain much of the decrease in average price of sunglasses in the primary market as a whole, as well as the optical retail channel, Pritts explains. "Both optical and sunglass specialty experienced average price decreases of slightly over 10 percent in 1998," he says.

Specifically, sunglass specialty saw an average price decrease from $72.50 in 1997 to $63.60 in 1998. "However, the sunglass specialty channel appears to have offset this average price decrease with an increase in units sold," Pritts says.

Many dispensers, however, reported that plano sunglass sales were better--or at least the same--as compared to last year. Most were not surprised, however, to hear that optical retail's sales--as well as average price--were slightly down last year.

"It doesn't surprise me that the average sale has gone down," says Dave Doebler, owner of Embassy Opticians, with two locations in downtown Washington, D.C. and Annapolis, Md.

Doebler notes he sees sunglasses for sale everywhere--in the wholesale price clubs, the sporting goods stores, and even upscale clothiers. In spite of this apparent saturation, Doebler says his plano sunglass sales are ahead approximately 8 percent over 1997.

Ten years ago, Stan Zyskowksi, the owner of Eyetopia Eyewear in Farmington, Conn., resisted selling plano sunglasses, but decided to go into the business anyway. He has no regrets.

"We saw that it was such a great market, so we really diversified to offer knowledge and selection of the product," he says. "Since then, we've been pretty strong at being opticians who sell non-prescription sunglasses."

Zyskowksi, who, along with his three siblings, owns three optical shops in the Greater Hartford, Conn. area, says plano sunglass sales over the past two years have been fairly balanced. He says plano sunglasses represent approximately 15 to 20 percent of their business.

"The funny thing is, although sales have been about the same, we are selling more higher-end sunglasses," he says. Indeed, Zyskowski says he has seen about a 40 percent increase in the sales of polarized sunglasses over the past two years. He attributes the rise to two factors: an educated public and more fashionable polarized sunglasses. "In the past, the polarized models were just for sport, and they had limited styles and fashion appeal. But the industry has really stepped up to bat as far as fashion goes," he says.

Zyskowski encourages sales in his stores by passing along current technical information to his customers. "It's probably easier for an optician to sell non-prescription sunglasses because of our knowledge of lenses," he says.

It's a technique that Pritts would applaud. "Now, more than ever, it's essential that the optical channel differentiate itself by service and know-how and capability when it comes to outfitting the eye," he says.

STAYING AWAKE IN THE SUN

Pritts notes there is pressure on pricing in all retail sectors--not just in eyewear. "There's been tremendous pressure on price," he says. "When you talk to people at the high end of the market, they are generally having trouble with their premium price points. It's clearly a change from a few years ago when it was easy for companies to trade up to higher price points. Few companies are able to push the envelope on pricing today."

Pritts doesn't want to come down too hard on the optical retail channel. "Optical got the wake-up call [to sell more plano eyewear]. Now, it's becoming a natural evolution to broaden price points, focus on custom products--such as clips--and promote Rx sunwear."

Market competition is one factor that Pat Shaw, the manager of Knighton Optical in Salt Lake City, Utah, can attest to. "I would agree with the trends--in terms of costs and sales," he says. "We are affected more particularly because we are in a mall. About two years ago, Sunglass Hut moved in. We were doing a brisk business in sunglass sales, but then they moved in, and we weren't."

The optical retailer, which is one of 24 Knighton locations, has about 30 percent of its inventory as plano sunglasses. Shaw says he promotes his sunglass business with mailings and advertisements to offset Sunglass Hut's visibility.

Shaw also claims managed care is another factor in his plano sunglass sales, which have decreased approximately 30 percent over the past two years. "We do a lot of managed care so we do offer discounts for non-prescription eyewear...it provides more of a customer base for us." Many of the mailers go directly to these managed care patients.

Like other optical retailers who sell a mixture of both ophthalmic and non-prescription eyewear, Shaw admits plano sunglasses are not the main crux of his business. "My focus as a manager is on selling prescription eyewear. The non-prescription business is more of an auxiliary thing. It's not a major thing," he says.

Doebler also treads the same turf as Knighton Optical does. Both of Embassy Opticians' downtown locations can claim Sunglass Hut as a neighbor, and his Annapolis store has yet another competitor--a sunglass-only boutique that sells plano sunglasses from $8 and up. Doebler, however, says he has a good relationship with this competitor, because that store will refer customers to him for more sophisticated eyewear needs such as repair work, difficult fittings, or specialized prescriptions.

Aside from staying neighborly, how does he stay afloat in the competitive wake?

"We are going in the direction of carrying things that they don't carry. I try to avoid carrying anything that the price clubs might have, because even if I did carry them, I couldn't compete on the price," he says. Specifically, Doebler sells higher-end lines such as Oliver Peoples. Embassy Opticians will also custom-make sunglass clips for nearly any ophthalmic frame, he notes. He also emphasizes high quality lens sales--from polycarbonate to polarized.

Richard Morgenthal, the president of Morgenthal-Frederics, a high end optical boutique with three locations in New York City, says his sunglass sales also increased in 1998. Morgenthal admits he is blessed with good real estate--two retail locations on Madison Avenue and one in SoHo--but he also makes it a point to prominently display his plano sunwear, which makes up approximately 35 to 40 percent of his mix.

"If we [optical retail] feel we are losing market share, we can't just walk away from the product. Let's show it in a way that's different," he says. "Spotlight it, and show it as a separate item."

OPTICAL'S SILVER LINING...SERVICE

So, does optical have something to offer consumers that other distribution channels do not? Yes, say industry experts, and that 'something' is service.

"The main message is that you have to focus on being competitive when it comes to delivering value to the customer. It's not just price," Pritts says. "I don't think that the optical retailer is capable of competing only on price. It means service, fitting, giving information, knowledge, and selection that you may not get from non-optical retailers."

"Focus" is the rallying cry of Valerie Manso. The owner of Manso Management Resources, a California-based consulting company for eyecare professionals, says she's seen varying degrees of success with her optical retail clients who sell plano sunwear. Referring specifically to large independents and medium chains, Manso says those who have focused on selling a few sunglass lines rather than many, have seen their sales increase in that category.

"For those independents who have two or three pieces of 'this or that' or no breadth in one product line, their sales are down," she says. "The key is to have just a few lines, but a broad selection within those lines," she says.

Manso advises optical retailers to heed their sunglass business as a separate segment. "Then, establish goals and track business against those goals," she says.

Morgenthal says his locations display plano sunglasses on glass shelves with spotlights so they look special. Customers, however, are free to pick them up and try them on without asking for help.

"Look at sunglasses as differently as you can from the street vendor or the department store," he advises optical retailers. "Be all that the competition can't be, and elevate the status of sunwear. If we take the recent downturn in the market as a warning, I think we can use it as a challenge to be better at what we do." EB

*Some of these estimated numbers were slightly revised from last year's reported figures, due to a sample size adjustment in 1997, reports the Sunglass Association of America.

Statistics in this report were presented by Gerry Fultz, director, optical research international for Jobson Publishing, at the Sunglass Association of America's Annual Meeting in October.