2015-07-28

Australia has proven to be particularly fertile territory for British-based Specsavers since it arrived here in 2008, famously opening 100 stores during its first 100 days down under.

When it comes to the public recognition of business geniuses who’ve resolutely marched to the beat of their own drum and disrupted major industries in the process, it’s fair to say Doug and Mary Perkins, a pair of seventy-something Welsh optometrists, have flown under the radar.

But even if Mr and Mrs Perkins aren’t a household name, you’re almost certainly familiar with their family business Specsavers and its “Should have gone to Specsavers” marketing catchcry.

A pair of glassmakers

Specsavers was born in 1984 on a table-tennis table in the home of Dame Mary and Doug Perkins, who had met at university while studying to become optometrists. The couple, both from working-class backgrounds, had previously built up and sold a small chain of optician practices in south-west England before selling out in 1980 and relocating to Guernsey in Britain’s Channel Islands.

By 1984, Margaret Thatcher‘s free-market revolution was in full swing, and the Perkinses, bored with retirement, saw the opportunity to combine their expertise as practising optometrists with their knowledge of the eyewear supply chain to shake up the recently deregulated market.

Three decades on, Specsavers Optical Group is a global retail chain offering optometry services along with eyeglasses, contact lenses, and in the UK, hearing aids. It has in excess of 1600 branches spread throughout the UK, Ireland, Norway, Sweden, Finland, Denmark, the Netherlands, Spain, New Zealand and Australia. With Mary and Doug’s son John now Managing Director, Specsavers is still a family-owned and run business with a total annual turnover in the neighbourhood of £2 billion (A$3.8 billion).

Doing things differently

Specsavers’ success is due to a number of factors, but the one that those inside and outside the company regard as the most significant is the Perkinses’ decision to adopt a unique joint venture, rather than the traditional franchise, model.

The parent company and the people who run the outlet jointly own all Specsavers’ outlets. Specsavers owns ‘Class B’ shares and is responsible for providing a range of back-office support services and marketing support in exchange for management fees, freeing up outlet managers to concentrate on day-to-day operations.

The equity and profit-owning ‘Class A’ shares are owned jointly by an optometrist and a retailer who each pay Specsavers a $30,000 to $40,000 joining fee and are given a $250,000 to $280,000 business loan to set up their store. Specsavers then collects around 12 percent of the outlet’s turnover for support services and 6.5 percent for marketing. It’s an arrangement that seems to work well for everyone involved – the Perkins family now has an estimated personal worth exceeding £1 billion (A$1.9 billion) and the Specsavers model has been lauded by many – in 2013 alone the company won the Franchise Council of Australia’s ‘Established Franchisor of the Year’ and the Australian Retail Association’s ‘Australian Retailer of the Year’ awards.

Peter Larsen is an Australian optometrist who worked with Doug Perkins in the UK and decided to get a seat on the bus when he learnt his old boss had the Australian market in his sights. He owns three Specsavers’ outlets and is the company’s Director of Professional Services for Australia and New Zealand.

“Specsavers is unusual in that it really is in partnership with the operators of the businesses,” explains Larsen. “What that means is it supports them to an extraordinary level: it does everything from negotiating and holding the lease, to overseeing the fitting out of the shop, to taking care of the accounts. It does the marketing, gives HR [human resources] and legal support, does everything that a business with a global scale can do for the small business that actually exists in a local community, to enable them to be successful in that community.”

Aside from the joint-venture model, Larsen puts much of the company’s success down to it being a family-owned business led by people with strong values and a sober, long-term perspective.

“At the head of Specsavers is a family with strong values, which percolate throughout the whole company. When you combine a strong value structure with a willingness to invest in the right decisions and not just chase quick returns, then you’ve got a very competitive business model,” he says.

The conquest of Australia

Another reason for Specsavers’ success would seem to be its judicious choice of markets.

While many companies might have fallen over with an overly ambitious push into, say, North America or China, the Perkins family has been content to enter markets where consumers are being inadequately served.

“We’re not about putting flags up around the world,” says Larsen. “We’re about creating a change within a country that really we see as deserving or needing that change in the optometry space.”

Interestingly, Specsavers first entered the Australian market in 2007 with the intention of, at least initially, just selling the glasses from the manufacturing plant it had set up (see right) to existing players.

“We started supplying independent optometrists throughout Australia with our product. The idea was to disseminate product so we could demonstrate its quality,” Larsen explains. “The original plan was to do that for a year or two and then test the appetite for launching the joint-venture model.”

Just a year later Specsavers opened its first Australian stores. “All our plans were accelerated by the positive reception we had from the Australian public,” Larsen says.

Though it can be hard to recall the pre-Specsavers days, it wasn’t that long ago that Australian consumers were paying upwards of $600 for a small amount of glass and wire that could be assembled for a tiny fraction of the price being charged.

Larsen, himself then operating an independent optometry store and heading up a buyers’ group for more than 300 optometrists, realised that his industry was ripe for disruption and didn’t have to be asked twice to join Specsavers.

“It was clear to me the market could quite easily be swallowed up by supermarkets or by other corporate-run entities. It was a much better option to be proactively involved in disrupting the market rather than wait for it to be disrupted then try and survive,” he says.

Larsen has had a number of roles at Specsavers and worked closely with Doug Perkins, who moved to Melbourne for three years following the company’s push into Australia. One of the aspects of his current role he’s enjoying the most is establishing partnerships with top local designers such as Alex Perry and Collette Dinnigan, who’ve both worked with Specsavers to create eyewear at affordable price points.

“We’ve been fortunate enough to have key Australian local designers come in and be proactive with our design teams to come up with ranges,” says Larsen. “That’s proved to be very successful. It gives the designer an opportunity to piggyback on the Specsavers brand, and obviously it allows the Specsavers brand to become more localised.”

Community initiatives

Specsavers is also involved in a charitable partnership with the Fred Hollows Foundation, one of Australia’s best-known eye-care charities. “It is obviously an admirable foundation and aligned with eye care and that’s proved to be a very successful meeting of brands and values,” Larsen reports.

Specsavers has thus far raised more than $2 million for the foundation and has also been involved in a number of other good works. Last year the company helped draw attention to and address the health care gaps between indigenous and non-indigenous Australians through the sale of limited-edition frames based on the work of Aboriginal artist Langaliki Langaliki, who has benefited from two sight-saving operations. Specsavers donated $25 from the sale of each pair of Langaliki glasses.

Through its corporate eye care package, Specsavers conducts bulk-billed eye examinations at one of its outlets, then, if required, provides corporate employees with high-quality fashionable eyewear at a variety of price points. “Obviously poor eyesight is a potential workplace efficiency issue,” says Larsen. “This program allows our corporate customers to access our facilities and facilitate their employees getting the glasses or contact lenses they require.”

What’s next?

When asked about the future of the Australian arm of Specsavers, Larsen is simultaneously upbeat and coy. He says the company’s foray into opening hearing centres in the UK has had encouraging results but doesn’t see it being replicated locally anytime soon, observing that, “it looks like an extraordinary opportunity but we’ve certainly got a lot of work to do in terms of consolidating the optical model in this country”.

He notes there is the potential to increase the disproportionately small number of Australians who wear contact lenses and still plenty of scope to expand (Specsavers, with around 300 Australian stores currently, has 35 percent of the Australian market).

“There is an opportunity for growth in the marketplace and we’re certainly in a position of strength … the task is to really strive and grow much more,” Larsen concludes.

Locally made lenses

Australian eyewear manufacturers were rushing towards the exit before Specsavers arrived on the scene. “They were basically deserting the country,” Larsen observes.

Specsavers’ Port Melbourne manufacturing and support office employs 450 people and is now one of the largest suppliers of glasses in Australia, manufacturing and distributing around 80,000 pairs of glasses every week.

“It was really about ensuring that Specsavers had full control over the quality of the product and the ability to offer its customers timely service,” says Larsen. “It reassures our partners working in their stores that the supply chain is going to deliver them a quality product, which they can have confidence delivering to their customers.”

In retrospect, opening what’s now the largest optical manufacturing facility in the southern hemisphere might seem like a logical business decision but it was a characteristically unorthodox play on Specsavers part.

“Plenty of people were shaking their heads when we did it,” notes Larsen. “That this is a company that takes a long-term view and actually invests in local manufacturing – going in the completely opposite direction to many businesses – says something.”

This article was first published in Business View magazine (Winter 2015). For more articles and interactivity, download the iPad edition of Business View for free via our app, NAB Think.

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