Upfront: Lab Watch

Jan
2002

The Rx Report

Wholesale lab performance belies downturn



The Rx Report

Wholesale lab performance belies downturn 

by Brian P. Dunleavy

For months now, financial pundits have predicted mostly doom and gloom for the U.S. economy as we begin a new year, particularly since the September 11 tragedies. The signs are certainly there. Consumer confidence is down, stock markets are volatile and major corporations have laid off employees by the thousands.

Yet, at least until the end of last year, wholesale laboratories, businesses that arguably serve as a barometer for the entire optical industry—because they fulfill the brunt of the eyewear orders—seemed to fare quite well, at least according to data from 20/20’s latest Rx Report.

The Rx Report is based on the experiences and sales of slightly more than 30 wholesale laboratories of varying sizes and geographic locations. They have reported their information to the 20/20 Optical Research Group on a confidential basis. What follows is an overview of the businesses through the first three quarters of 2001.

GREAT PAIRS

Other businesses may have been experiencing declining sales in 2001, but not wholesale optical labs, at least not those that contribute to the Rx Report. Through the first three quarters of 2000, the Rx Report labs processed 95,195 lens pairs. Last year, the same facilities processed more than 106,000.

QUALITY AND QUANTITY

The Rx Report labs are not only doing a lot of work, but they’re also doing a lot of work with premium lens products. Among the labs surveyed, sales of most premium spectacle lens categories increased in 2001 from 2000 levels.

Progressives, for instance, which accounted for a disappointing 27.7 percent of overall lens sales among these labs in 2000, improved to 29.9 percent of lens sales among the Rx Report labs last year. To compare, sales of traditional multi-focals declined from 37.4 percent of overall lens sales in 2000 to 35.5 percent in 2001. Sales of single-vision lenses, meanwhile, dropped to 34.3 percent in 2001, down only slightly from 34.4 percent through the first three quarters of 2000.

It seems the influx of new progressive designs—including new generations of progressives with improved optics and “specialty” progressives such as computer-vision lenses and short-corridor lenses—has resulted in the consistent growth in category sales lens manufacturers—and others—have been waiting for. This may even be enough to help optical stave off the symptoms of the sluggish economy.

MATERIAL MOVEMENT

In terms of lens materials, polycarbonate remains the fastest growing product at the independent lab level as its combination of cosmetic (i.e., thin and lightweight) and safety benefits continues to draw consumers. Among the Rx Report labs, polycarbonate lenses (regardless of design) accounted for 18.8 percent of all lenses sold in 2001, up significantly from the 16.3 percent in 2000. Mid- and high-index plastic—optical’s other premium material category—suffered only slightly as a result. Sales of these materials made up 10.8 percent of all lenses sold in 2001, down from 11.1 percent in 2000.

Optical’s “traditional” or “commodity” products have seen far greater declines in sales, however. Glass, which in some circles has experienced a resurgence in prestige in its high-index form, accounted for 7.1 percent of all lens sales at the Rx Report labs in 2001, down from 7.8 percent in 2000. Sales of conventional hard-resin plastic, still the industry sales leader, fell from 62.3 percent of overall lens sales in 2000 to 60.8 percent last year.

These figures provide those who favor polycarbonate as the industry’s new “standard” material with further evidence. The material has a long way to go before it catches up to conventional plastic in lens pair sales among labs, but its combination of safety, cosmetics, improved optics and relatively low price have it heading in the right direction.

ADD-ON ADDITIONS

In terms of the “add-on” category, sales results from the Rx Report labs beg the question: Has A-R finally arrived? Lenses treated with anti-reflective (A-R) coating accounted for 10.1 percent of all lenses sold in 2000. Last year, A-R coated lenses made up 11.9 percent of all lenses sold, a marked improvement. This may be the result of better coatings and coating processing systems, as well as an increase in wholesale labs bringing A-R coating services in-house, which allows them to process these orders quicker and, in some cases, cheaper than traditional coating labs.

However, despite the influx of new products to the category (particularly in the plastic arena), sales of photochromic/variable tint lenses haven’t experienced the same market jolt. All photochromics—both plastic and glass—accounted for 15.5 percent of lenses sold in the Rx Report labs in 2001, down from 16.4 percent the previous year.

Sales of plastic photochromic/variable tint lenses have increased in the past year, however, accounting for 72.9 percent of all the lenses sold in the category in the Rx Report labs last year, up from 65.4 percent in 2000. As a result, of course, glass’ contributions to sales in the category have dropped.

Processing lenses remains the bailiwick of wholesale labs. And, in an era when new, complicated lens designs and materials are being introduced to the market by the dozens, this expertise and efficiency is particularly important. Labs, and their customers, will be relying on these premium products to carry them through the tumultuous economic conditions the entire industry will face in the coming year.








 

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