Recession troubles Finland’s opticians, already embroiled in price war

Newcomer Specsavers estimate they now supply a fifth of all spectacles sold in Finland

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The opticians’ merciless competition over customers is ratcheting up another notch. The UK-based Specsavers Optical Group, which started its operations in Finland less than two years ago, now estimates that already it sells a fifth of all the glasses purchased in Finland.
      The chain has 91 outlets and more are to come, declares the chain’s British managing director John Perkins.
      The rest of the operators in the field do not believe that Specsavers’ volume-based market share is as high as a fifth.
      However, the most recent available statistics are also nearly two years old, from the time when Specsavers only had a couple of stores in Finland. The updated statistics should come out in a couple of weeks’ time.
     
Apart from Specsavers, the recession is another factor detaching customers from the Finnish opticians.
      Last year the branch’s net sales turned negative after a steady growth that had continued from the beginning of the 2000s.
     
The Finnish optician chain Eyen is predicted to become the first great loser of the ongoing price war. Eyen’s owner DirektOptiker has already filed the firm for debt restructuring.
      “But we will not become the first big corpse of this war”, says Mika Karra, who owns 90 per cent of DirektOptiker.
      According to Karra, the chain ended up in financial difficulties because of its oversized number of staff. Now a third of the workforce, in other words just fewer than fifty people, are gone or have been made redundant, and the chain should have regained its competitiveness, the owner says. The Helsinki District Court will decide on Eyen’s fate in a couple of weeks’ time.
      The chain consists of 44 outlets. Last year Eyen sold 26 of its stores to Specsavers.
     
The price war’s initiator, the rapidly expanded Specsavers, advertises even now on its website single focal lenses with “trendy” frames for no more than nine euros.
      Other adverts include two pairs of glasses for the price of one, as is becoming customary these days.
      “It is clear that when entering a market one has to invest heavily and tell the clients clearly what the company has to offer”, Specsavers’ Perkins says over the telephone from Britain.
      In other words, thus far the company is operating at a loss in Finland.
     
According to Perkins, Specsavers have not set a time limit by which operation in Finland should get into the black. Nor does the company have set objectives with regard to its market share, number of outlets, or net gains.
      “We plan to make investments and open new stores in Finland until all the customers have realised what we have to offer.”
      The Specsavers chain, a family business, has more than 1,200 outlets, mainly in Europe, and its net sales in the financial period 2007-2008 came to around EUR 1.3 billion.
     
The market leader Instrumentarium is not perturbed by the special offers by Specsavers or any other discount chain.
      Instru-Optiikka managing director Catarina Fagerholm says that the chain is ready to lower its prices to keep its market leader position, which it currently holds with a market share of just under a third of all pairs of spectacles sold.
      “We will defend our position and we are equipped to do that”, Fagerholm says.
      Fagerholm admits that 2008 was a tough year. Instrumentarium adjusted its prices downwards, which caused a ten per cent drop in the net sales figure.
      At the same time its Nissen subsidiary was turned into a discount chain.
      According to the managing director of the Association of Ophthalmic Opticians in Finland Ilkka Liukkonen, the field is on high alert and cost-saving opportunities are being sought at every turn.
      Even Instru has moved its lens grinding to Estonia, which cost fifteen Finns their jobs.
      According to Liukkonen, independent operators outside the large chains have survived the price war best. “Their market advantage is the strong bond with customers.”
     
Because of its population age structure, Finland has one of the highest usage rates of spectacles in Europe.
      It is estimated that by the year 2020 three-quarters of all Finns will wear glasses.
      On average the Finns renew their glasses once every three years, which is slightly less frequently than elsewhere.
      The country has just over 800 optician shops, a respectable number considering the size of the population, which is 5.3 million. The stores employ some 2,000 people.
      In 2008 the branch's net sales were in the region of EUR 283 million.


Links:
  Specsavers Finland (pages in Finnish)
  Eyen (pages in Finnish)
  Instrumentarium (pages in Finnish)

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