UK Opticians (retailers)
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In the United Kingdom businesses that sell prescription spectacles and/or contact lenses are referred as 'opticians', after the profession of that name (see UK Opticians). Total revenue for opticians in the UK was £2.4 billion in 2006 from the two thirds of British citizens requiring glasses or contact lenses - although the market was considered in a state of depression from inflated prices at that time. [1]
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[edit] The eye test
UK law requires that spectacles and contact lenses be made to according to an eye test, which must have been administered by a qualified optometrist or ophthalmologist. [2] [3] 17.5 million such tests are carried out every year in the UK. [4] However, although an eye test is required no standard test is defined, and test duration, quality and cost may vary considerably. [5]
Once a customer has paid for an eye test, the optician is obliged to hand over the resulting optical prescription to him or her, allowing the customer to purchase spectacles at the optician of his choice. Such opticians include dispensing opticians - i.e. healthcare professionals who are not able to conduct eye tests, but specialise in lenses and wave optics and manufacture and sell spectacles [6] - as well as retailers employing optometrists.
Note that although opticians charge for eye tests certain groups can receive free eye tests - see [7] for a guide. Individuals who qualify for free eye tests often also qualify for subsidized spectacles or other treatment. Eye tests are free for ALL residents in Scotland. [8]
[edit] Deregulation in the 1980s and current domination by large retail chains
The key event in the structure of the modern opticians retail sector was de-regulation of the industry by the Conservative government led by Margaret Thatcher in the 1980s. De-regulation was enacted through two key measures:
- Ending the monopoly of optometrists over the supply of spectacles, allowing spectacles to be sold by dispensing opticians, supermarkets, etc.
- Allowing advertising, including prices.
Opening the door to advertising led to a change from an industry dominated by independents and small chains to one dominated by a few large chains.[11] Today 70% of the market is concentrated in just four retailers, Specsavers, Boots The Chemist, Dollond and Aitchison, and Vision Express, with Specsavers alone having a 30% share. [12]
[edit] The questionable success of de-regulation
De-regulation was motivated by the belief that increased competition would lead to improved value for consumers. However, concentration of the market under four major chains (see above) has failed to meet this goal:
- There was a 40% increase in the average cost of a pair of spectacles between 1999 and 2006
- In 2006 the average price for a pair of spectacles was £148
- 62% of the retail price was calculated to be profit (before promotional and related costs) by a Financial Times columnist
See [13].
High fixed costs, economies of scale, and most of all the need for national TV advertising - Specsavers was the UK's 46th largest purchaser of UK TV ads in 2006, spending £27 million [14] - make the establishing of an effective new competitor on the high street problematic, restricting competition.
[edit] Impact on the UK economy
This sector is dominated by non-UK companies, with consequent loss of profits and taxation to the UK economy. Of the four major retailers:
- Specsavers is based in the tax haven of Guernsey
- Vision Express is owned by a French based parent company (Grand Vision)
- Dollond and Aitchison is owned by Italy's De Rigo SpA group.
Boots The Chemists is, however, a UK publicly traded company.
Except for a very small number of prestige items, spectacle frames are not manufactured from the UK but are imported from abroad [16] along with spectacle lenses from companies such as Nikon, Pentax and Zeiss.
[edit] The Internet
The high profit margins (and high staff and retail space rental costs) of high street opticians have attracted competition from price-cutting Internet based retailers.
Legal and regulatory problems have often affected attempts at competition via the Internet. The situation has been complicated by possibility of self-interest by the main regulator, the General Optical Council, whose membership is dominated by the high street opticians who are most threatened by such a change. The UK's first online spectacles company, Glasses Direct was threatened by an indefinite delay in a regulatory decision by the GOC until it threatened legal action. [17] against the regulator. Troubled relations between the regulator and Glasses Direct continued in 2006 when a leaked letter by CEO of Specsavers revealed that he had attempted to influence opticians working for the company to vote against a candidate associated with Glasses Direct and for "..candidates with the interests of hands-on, professional practitioners at heart". [18]
In 2006, the General Optical Council failed to present evidence in its case against eBay for "aiding and abetting" illegal contact lens sales when the GOC admitted overlooking the EEC ruling that companies cannot be responsible for monitoring public websites belong to them. A libel case by ebay against the GOC continues and the GOC has sought to avoid responsibility for ebay's costs in its action against the auction company. [19][20]
In 2007, Glasses Direct received backing from several major venture capital companies, with new funds aimed at major - possibly international - expansion. The requirement for legal due diligence before such an investment is made strongly suggests that the investors have received legal advice saying that threats of future legal action by the GOC may be discounted. [21]
[edit] Corrective laser eye surgery
Laser eye surgery in the UK is provided by specialist clinics and NOT by high street opticians. Laser eye surgery has had a troubled history in the UK, with allegations of a poor safety record in the press in 2003 leading to a reduction in patient numbers, and National Institute For Health And Clinical Excellence (NICE) raising concerns about the longterm safety of the widely used Lasik method in 2004. [22]
However, the industry has staged a recovery and resumed growth, going from 95 clinics in the UK in 2006 [23] to 105 clinics in 2007 [24]. In 2006 NICE stated that laser eye surgery was safe and effective when carried out on suitably selected patients: this was the first official endorsement of this form of treatment in the UK. [25]
