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Last year, French manufacturer ESSILOR launched a host of out of the box promotional offers designed to drive consumers to the store in India. However, in the process they unintentionally ruffled quite a few feathers in the ECP community. Bernhard Nuesser, President of the AMERA region (Asia, Middle East, Russia, Africa) and Head of Digital at ESSILOR International, who is also a member of ESSILOR’s Management Committee, and Maarten Geraets, the Chief Executive Officer for Essilor South Asia (India, Sri Lanka, Bangladesh, Nepal and Bhutan), who is responsible for leading all operations across ESSILOR Group in India and South Asia Markets, were in New Delhi recently along with Anish Kumar (Commercial Director ESSILOR Brands) and The Indian Optician took the opportunity to meet them to hear their side of the story – we are happy to share that it is simply a case of mis-communication and the head honchos of the globally known company have reiterated their commitment to grow the industry and support iECPs by investing in innovation, digitalisation, training and brand building in the coming years.
The discussion was not only informative but interesting as well. Here are a few excerpts from the conversation that ensued.…
The Indian Optician (TIO): What will be the impact of EssilorLuxottica & Grandvision acquisition on the Indian Optical Industry?
Bernhard Nuesser (BN): According to our research stats, there are 7.7 billion people in the world who need to protect their eyes and out of these, at least 2.7 billion people do not have the vision correction they need. Also, there are many people who are not satisfied with their eyewear performance – all these factors led to the creation of EssilorLuxottica in October 2018. EssilorLuxottica’s strategy is to operate through an open, non-exclusive business model and the group is fully committed to growing the eye care and eyewear industry for the benefit of all of its stakeholders by giving access to innovative, high quality products that gratify the consumers’ vision and style needs.
The contemplated acquisition of Grandvision is part of this overall strategy. It would allow EssilorLuxottica to accelerate its initiatives to increase both the awareness and the demand for high-quality eyewear and lenses, raise standards for service and consumer engagement across channels, and promote the importance of comprehensive eye exams. These initiatives are a catalyst for growing the entire sector, including our valued eye care professionals.
This latter transaction is still pending regulatory approvals. While announcing this deal in July 2019, EssilorLuxottica informed that the approval process would likely take 12-24 months to be completed. Until then the companies will operate independently. Once the transaction is complete, all Vision Express stores will become part of EssilorLuxottica in India. This will enable us to invest in additional resources so as to promote awareness and access in the industry and thus, serve the growing appetite for brands and quality in eyewear at different price points.
TIO: Given the landscape changes, how will Essilor promote the independent eye care practitioners in the society?
BN: In line with its core mission of Improving Lives by Improving Sight, ESSILOR has been committed, since its origins 170 years ago, to provide vision solutions and access to good vision while adding incremental value to the existing ecosystem. We are truly proud of our “Customer & Consumer Proximity” philosophy as it has helped us to strengthen and build highly valued relationships with our customers over the last 21 years of operations in India. ESSILOR India is committed to continue working closely with the independent-eye-care-practitioners (iECPs) and will support their practice in a way that will allow us to navigate together through the changing landscape and drive mutual growth.
The present day consumer’s needs are changing due to increased screen time spent on mobiles, laptops and other digital devices – therefore, it has become doubly important to increase their awareness by educating them on how to protect the eyes from harmful blue light and UV rays, how to deal with the early onset of presbyopia and how to manage the rising level of myopia. Essilor has a pipeline of innovations addressing the consumers’ evolving needs supported with brand building efforts. We are also willing to continue helping the iECPs to distinguish the new distribution formats by providing them with differentiating categories like advanced single vision, light intelligent lenses and personalised progressive lenses.
Maarten Geraets (MG): As we have been doing since the past 20 years, ESSILOR will continue to focus on growing and developing the ECPs through strategic initiatives. Our newly launched Partner Program “ESSILOR Experts” is one such initiative designed to help vision oriented iECPs, differentiate themselves with the help of ESSILOR brand credibility. With this program we aim to support our ECPs on footfalls, upgrades, conversion and customised special offers. We will continue to enhance the offerings in this program to support the iECPS in raising the standard for service and consumer engagement.
TIO: According to ESSILOR there are ample opportunities to improve the penetration of optical solutions in India. What kind of prospects are you talking about?
MG: India hosts the world’s second largest population with vision correction needs with only 15% corrected so far. Even amongst the corrected ones – there are opportunities to upgrade what people are wearing, by converting mineral to plastic, bifocal to progressive and increasing the penetration of HMC, photochromic etc. We are convinced that opportunities in the optical market are huge and that there is potential for multiple models to succeed – different consumer segments have different needs and purchase behaviours, and one can address these needs with a little planning, insight, and commitment.
The penetration of progressive addition lenses (PALs) in India is 5% as against other fast growing countries like Indonesia which is at 17% and Brazil at 33%. Besides, the older population is growing faster in India which means that around 80 million new presbyopics will enter the category in the next five years. Also, lifestyle changes have lowered the category entry age thus providing an opportunity of early introduction to new wearers.
TIO: ESSILOR has been successfully building relationships with customers for over 21 years in India. But with the launch of Cool Winks, Indian retailers now feel threatened – how do you intend to allay their fears?
MG: Omni-channel is the fastest growing channel and Lenskart has plans to open 300 new stores in 2020. With the recent funding they are capable of driving disruption harder in coming years impacting the price-perception of the category and raising the bar of in-store experience.
Being one of the leaders in ophthalmic optics, we have to play our part without compromising on support for our core business i.e iECPs. Keeping this in mind, Essilor launched an experimental omni-channel initiative ‘Coolwinks’ in Gurgaon. Our chief reason for doing so was to adapt to the changing landscape, to connect with the new age consumers and mostly to understand about the Omni-Channel approach and expand basis the learnings.
The technology-oriented Coolwinks store aims at providing a completely different consumer experience versus a conventional store and will cater primarily to fast fashion oriented consumers. This store is an extension of the online store and will focus only on Coolwinks brand. ESSILOR’s strong consumer brands (Crizal, Varilux, etc.) will enable the iECPs to differentiate while demonstrating the value of their expertise. These brands will remain exclusive to iECPs and will remain a common tool to win in today’s competitive environment.
At the same time we are developing a partnership model for the iECP community through shop-in-shop / franchise model so that they can also cater to this generation of consumers leveraging the Coolwinks brand and grow faster. We strongly believe in driving the success of this partnership for growth of the category and making sure we win against common competition. We will continue promoting the importance of good vision and eye exams which we expect will drive more people to care for their vision and connect with eye care professionals ultimately. I reiterate – iECP’s will remain at the core of our business, consequently, the independent teams who have supported the growth of iECP practices will remain 100% committed to them.
TIO: The ECP community who have been your supporters in the past are now protesting against ESSILOR in many pockets. What will Essilor do to diffuse this situation and win their trust back?
BN: Yes, we are aware that a part of the community is not happy with us at the moment. Unfortunately, this situation has resulted due to mis-communication and we believe our story has not been completely understood. It is my and my team’s collective responsibility to explain to iECPs ESSILOR’s real intent and also learn from their feedback. I want to reassure everyone that ESSILOR is always striving towards win-win solutions. We will do this via 1 on 1 communication, smaller meetings as well as larger roadshows. Essilor believes in being in-touch with market realities, is open to feedback and willing to adapt to arrive at solutions that drives mutual growth.
MG: I am confident that with the wide range of solutions we provide to iECPs such as our “Essilor Experts” program that strengthens their proposition, introduction of innovative new products that delight consumers, streamlined operations and distribution channels that benefit both brands and trade and promotional activities that drive footfalls and multi-pair behaviour, plus in-store marketing, instrument solutions and opportunity to cater to new age consumers through Coolwinks Shop-in-shop or franchise opportunity will build their trust in our support. Given that we all are together in our fight against poor vision and are driven by the common objective of growing the category we are sure we will further strengthen the relationship we have nurtured over 21 years and come out stronger.
TIO: How does ESSILOR plan to unlock the market’s growth potential to benefit all stakeholders in the optical industry, especially the opticians?
MG: ESSILOR’s strategy is driven by its mission of “Improving Lives by Improving Sight” and as a company we are dedicated to correcting and protecting the vision of the 7.7 Billion people worldwide. Besides bringing in innovative products and services, ESSILOR is also totally committed to continuously raise consumer’s awareness on the existing solutions, on the importance of having their vision checked regularly and of seeing an eye care professional. As an example, the recent renewal of the SEE NOW campaign with Mr. Amitabh Bachchan and Fred Hollows Foundation in UP. Together with our key stake-holders, we want to explore how we can drive awareness and make the category even stronger. After all, we know there are still ~500mio Indian consumers in need of a solution but are either not aware of it or do not have access to it.
We also want to increase the demand of quality eyewear and eye care products, drive consumer engagement more effectively, raise the standard of in-store experience, resulting in more regular eye exams, up-to-date prescriptions and an increased purchase of tailored vision care products and services to meet all of their vision and style needs.
TIO: Earlier your advertising campaigns used to end with “visit your optician” – this line has now been omitted. Why?
MG: Our recent advertising campaigns were focused on driving multi-pair offering and the entire communication was around that. Initially we used to say “Visit your Optician” but that’s a very passive call to action. Now when we say “Buy a pair of CRIZAL lenses today and get second at X %” it has a very active call to action to buy CRIZAL lenses due to promotion but as we all know, CRIZAL can be bought only at your optician thus it directs all traffic to the optician and thus, has much stronger impact than simply “Visit your optician.”
TIO: ESSILOR launched big consumer promotions in 2019. Did these promotions help you to increase your business?
MG: These promotions definitely created a buzz in the optical category and also helped our business. In 2019, we explored new ways to get the ECP business back to growth. Hence, in our endeavor, we customised few successful global promotional programs and rolled them out in the Indian market in 2019. The “CRIZAL Happiness Promotions” were launched to give consumers an irresistible offer to go back to their trusted ECP and thus help on footfalls. Happiness Offers promoted the concept of Multiple Pairs, which is not a common consumer behaviour, which helps overall increase of ticket size for short term growth and build new consumer habits for long term growth. These programs also help the ECPs to upgrade the consumer and hence improve the product mix for ECP.
TIO: What kind of feedback did you receive from the ECPs regarding these initiatives?
MG: We saw very positive response overall to the program but we also got lukewarm feedback from a few quarters, who were not successful in upgrading consumers – they told us the program did not meet their profit expectations. We addressed their feedback in the next “CRIZAL Bundle of Happiness” promotion which also focused on growing the category by driving multiple pairs. I also want to highlight that given the fixed cost of servicing a consumer irrespective of number of pairs he purchases, any sale of additional pair to same consumer even at a discount will result in higher margin per consumer. We also tried explaining to the ECP about the concept of COST OF SERVICING. Typically, the cost of servicing the consumer remains the same irrespective of the consumer buying one pair or 2 pairs. Since the cost of the servicing is completely borne by the first pair, the profitability in the second pair is very attractive even at discounted price. This is really the game changer our ECPs need to be aware of. At the same time, ESSILOR always follows a simple principle of not discounting the primary product. To avoid any de-valuation of the category we ensured that consumers pay full price for the 1st pair and that only the 2nd pair can be purchased at a promotional price. Both the offers were aimed at getting growth back to the category, which we still believe is of prime importance if together we want to WIN in this competitive landscape.
TIO: Leveraging your global perspective, what are the key trends that you foresee shaping the Indian optical market in the long term?
BN: Indian consumers are evolving rapidly. Affluence is increasing with Avg HH (house hold) income projected to grow 2X from 2008-2028 (BCG analysis). Urbanisation is growing rapidly and consumers today are more independent with ~70% nuclear HH. India has also embarked on a rapid digitalization journey with 560 million internet subscriptions. Thanks to the low cost of data, India is one of the leading country’s in terms of data consumption per subscriber (8.3 GB/month as per Mckinsey Report). Easy availability of information online has made today’s consumer much more aware, informed and brought transparency. Along with socio-demographic shifts, new attitudes are also emerging which includes increased brand-consciousness, health-consciousness, convenience-orientation, social media sharing, relying on ratings, reviews and recommendations and of course, shopping online. The new generation of consumer valuing choice, convenience and independence has driven fast fashion omni-channel and online models in optical category too.
Another big trend that we are seeing is “Digitalization” which is reshaping shopper experience and consumer journey. As per Google 55% of consumers started their purchase decision online in 2018 and this is expected to go to over 90% in next three years. Online is not only about purchase but also getting relevant information to make an informed purchase. As per Essilor internal consumer research, in the spectacle/eyewear category too, 49% of shoppers who purchased in conventional stores, first went online to look for information and about ~16% shoppers shopped spectacles online in Metro/Tier 1 cities. Not just online shopping we believe future technologies like smart eyewear, remote-refraction can completely change the industry landscape. Virtual try-on is already available in the category. In the new era of artificial intelligence, machine learning traditional practices alone may not be sufficient to sustain, every player in the optical industry should constantly evolve and adapt as per changing consumer and market trends.
THE INDIAN OPTICIAN
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