CAPTURES NEW POSITION WITH ITS SIGHTS SET ON THE FUTURE
Smarteyes is the affordable optical chain with its own design. Since its inception 11 years ago, the company’s goal has been to make buying eyeglasses enjoyable and to lower the buying threshold by offering low fixed prices. Following a period of strong growth, MD Thomas Kusoffsky has increased the company’s focus on consolidation and profitability.
Smarteyes is present in Sweden, Denmark and Germany, with a total of 83 shops, of which 63 are located in Sweden. Since the outset, the business concept has been to build cost-efficient operations by avoiding a number of intermediaries. With eyeglass frames of its own design, Smarteyes takes control of the entire value chain, gaining clear cost advantages over its competitors. A strategy with low fixed prices also means that customers perceive a clear and attractive offering.
Many people find buying eyeglasses difficult and expensive. Smarteyes wants it to be simple, pleasurable and affordable.
There are differences between the three markets and they are at different phases of development. Denmark is the newest market and recent years have been tough there. In the preceding financial year, several measures were taken to increase profitability, including restructuring, which involved closing five shops. Over the past year, the Danish market has exceeded all expectations and is showing profitability at the shop level, a significantly improvement on both the budget and the previous year.
In recent years, Germany has shown a favourable trend and reached “break even” last year. Accordingly, management decided to open two new shops in the regions where Smarteyes is already established. The existing shops in Germany are progressing towards another record year. It therefore appears as though the positive trend in the country is continuing.
In Sweden, Smarteyes is in the process of repositioning itself in the market. This entails a transition from communicating a low price to what is referred to as “affordable design”. This involves a broadened range of high-quality products that command a somewhat higher price. The number of price groups has been increased from two to three.
“Entering the year, we had high expectations that this would generate positive effects. But it has taken longer than expected to maximize the benefit of the new model. Consequently, we did not quite meet expectations in the Swedish market. However, we are generating earnings in line with last year’s record performance and we have learned a great deal over the year, insights that will be applied to further improve our performance”, says Thomas Kusoffsky.
Following ten years of rapid expansion, he is now focusing on optimizing the existing operations and strengthening financial performance and the balance sheet to facilitate the next stage of growth.
“I am also investing considerable effort into our being perceived, both internally and among customers, as an exciting design company, rather than as a chain of opticians, which generally conveys a bit of a dull tone,” says Thomas Kusoffsky.
“In the past few years,” he continues, “we have invested heavily in our employees and developed an organization based on value, from support offices to shops. Ranking fourth among Sweden’s best workplaces in the large companies category in Great Place To Work’s annual analysis and competition provided satisfying recognition that these efforts have worked. We take pride in this being our third consecutive year on the top ten list.”
E-commerce has yet to affect opticians to any significant extent. This is mostly because there are technical limitations to selling progressive glasses and because a purchase of eyeglasses is associated with an eye exam. Clear changes can, however, be discerned in the customer journey, with purchases beginning digitally and generally by mobile phone. This applies to eye exam bookings, inspiration and comparisons of product ranges and frames alike.
Competition is fierce. In addition to Smarteyes, the leading players In Sweden are Synsam, Synpotik and Specsavers. Marketing investments generally rose over the year, with campaign and discount-driven activities from all players. In addition, new players and concepts have been established in Sweden and Stockholm in particular. The Apoteket pharmacy chain has, for example, opened optician operations as a “shop-in-shop”.
Financially, a relatively large proportion of Smarteyes’ purchasing is in EUR and USD while sales are made in local currency. The exchange rate for EUR, in particular, impacted profitability negatively. It was nonetheless possible to strengthen gross earnings and profitability.
“Despite the challenges, we expect to strengthen our performance over the coming year. In Germany, we expect the positive trend to continue. The same applies to Denmark, which recovered well after the major restructuring programme. In Sweden, we will apply our increased knowledge of the opportunities granted by our new pricing model and we will continue to develop our range and offering. I anticipate that this will generate additional income and stronger profits compared with the preceding year,” says Thomas Kusoffsky.
According to him, the fact that Smarteyes is a part of Mellby Gård brings security. This was particularly so during the expansive growth phase.
“Now that we are a more mature company, however, we have greater potential to stand on our own two feet. At that stage, Mellby Gård mainly contributes a high level of expertise through its commitment to the work of the Board of Directors.”