Australia’s optometry and optical dispensing industry is expected to grow just 0.4% in 2012-13, according to an IBISWorld report, but online eyewear retailer Sneaking Duck says it isn’t worried.
In its report, IBISWorld said while the ageing population will be a key actor promoting growth in the industry, competitive pressures are expected to soften revenue growth.
Get business news first
Sign up to SmartCompany’s daily newsletter
“Where cheap imports would translate into higher profit margins, this industry’s participants are forced to pass on cost savings to customers,” the report said.
“For this reason, industry revenue is expected to only grow 0.4% in 2012-13 to reach $2.9 billion.”
“Like the retail sector… this industry has had to adapt to increasing competition from online eyewear retailers.
“Foreign overseas retailers with sophisticated supply chains and global networks have been making their presence felt, forcing Australian retailers to build their online presence quickly.”
Over the next five years, industry revenue is projected to grow at a compound annual rate of 2.9% over the five years through 2017-18, when it is expected to reach $3.35 billion.
According to IBISWorld, the industry is dominated by four main players, which accounted for an estimated 63% of industry revenue in 2011-12.
“The optical dispensing segment of the industry displays higher concentration, with the top four players estimated to account for over 60% of segment revenue,” it said.
“One of these players, the Luxottica Group, controls about 35% of the total market. Chains and franchises are dominant in this segment.”
IBISWorld said concentration in the optical dispensing segment has increased, primarily due to acquisitions by the Luxottica Group and Specsavers – which operates through joint venture and franchise models – and through the growing presence of Big W Vision Centres.
In early 2012, Luxottica said it would shut more than 100 stores in Australia and New Zealand over the next two years in order to focus on its OPSM label, which would see more than 50 stores added to its network.
But according to IBISWorld, competition will stiffen as non-traditional eyewear retailers expand their presence.
Among the non-traditional eyewear retailers is Sneaking Duck, which launched in October 2011.
The Sydney-based start-up is a collaboration between former Google executive Mark Capps and the founders of fellow start-up Shoes of Prey – Michael Fox, Jodie Fox and Mike Knapp.
Capps told StartupSmart he isn’t concerned about the industry forecasts.
“We’ve been growing 50% quarter on quarter… You need to remember this is a huge market. Eyewear retail is [worth] $1 billion in total,” he says.
Capps says Sneaking Duck aims to offer an all-over retail experience by allowing customers to try frames at home and, if necessary, contacting optometrists on their behalf.
The beauty of the eyewear sector, he says, is that so many people need it.
“I think about 50% of the population wear glasses, young and old. We’re probably a little skewed towards the younger market but we have customers of all ages,” he says.
In light of this, Capps says Sneaking Duck focuses on fashion in addition to the health aspect of eyewear.
“The majority of our glasses are prescription glasses although we do sell non-prescription glasses. Occasionally we sell glasses to people with no lenses at all,” he says.