Executive summary
The world of business is exposed to many factors that require the management to fully comprehend in order to develop and make use of the best polices and strategies that will add the competitive advantage of the company. Specsavers as eye care ear care service provider and retailer is no exemption. Management analysis tools such PESTEL, SWOT and Five forces analysis have been used in this report to help us identify the company’s’ position in the industry and her strategic options.
Introduction
Industry overview
Spurred by economic and fashion trends, the eye health care industry is widely receiving attention from otherwise unexpected quotas. Increased exposure to harmful elements in our environment and change in eating habits have been identified by researchers as to having great significance in affecting eyesight problems ad there by increasing consumptions of eye care products. Leading in this quest for better eye care are opticians who are developing prescription and designers glasses to their clients. Economic empowerment of the people is largely attributed to be the main cause of the shift to designer glassware.
Company analysis
The company was started in 1984 by husband and wife team Doug Perkins and Mary Perkins and by 1988, the company had over 100 outlets. Throughout this period Specsavers made significant advances with its strategy of expanding its successful business model into new countries and healthcare sectors. All Specsaver enterprises spreading from the UK to Scandinavia are based on joint venture and franchising partnerships.
Adding value
Having started as eye care specialists, the enterprise has diversified business to include their hearing care centre through the ear care brand name. The company offers consistent and clear pricing to provide affordable eye care and hearing care for all and sundry, with quality products and services. Their products are strategically priced to accommodate the high spenders and the budget customers with prices ranging from £25 through to £169. The company consolidates its position as a market leader and has a common phrase ‘Number One Choice For Eye Tests and Number One Choice For Contact Lenses”.
Through aggressive marketing the company has ensured that brand awareness in the market is maintained at very high levels. According to TNS, the company brand has 96% recognition in the UK market.
Returning customers are the major customers of the company. Again a strategic CRM programme has ensured that the customers are handled well to motivate them to return in future.
The outlets stocks designer and ordinary glasses obtained from their suppliers such as Tommy Hilfiger, Red or Dead, fcuk, Bench, Quiksilver, Roxy, Jasper Conran and Missoni and their very own market leading Osiris designer brand. Therefore we can see that the stores have their background businesses in the name of the factories and labs to help in testing their own products. This ensures that quality is maintained throughout in line with the teachings of Total Quality Management (TQM). Specsavers has also explored the contact lenses market with its own brand of “easyvision” monthly and daily disposable lenses. The brand name seem to have obtained a enormous fan base in the UK where sales of Specsavers own-brand designer range Osiris rose by 267% in 2006, making it the best-selling designer glasses brand in the UK today. Such phenomenal growth rates are being experienced across all branches with the best performing ones being in Australia.
Specsavers recruits the best professionals in each region to provide high quality management in a retail environment where the provisions of professional optical and hearing healthcare in the local market are competently addressed. Change in business trends around the world have meant that this company has to keep on evolving its business management principles in order to fit in changing. It has therefore developed a “dynamic and innovative modified leadership development programme with an award-winning consultancy”
Specsavers has over the years through its expansion programme transformed in to the largest employer of optometry students in their internship, with over 200 placements in 2006 Focus has again been directed towards development of student dispensing opticians. It promises young graduates in this field a unique career pathway that revolves around optometry, dispensing optics, retail, management and leadership training for optical and retail staff.
The company has again been very successful in carrying out their direct marketing initiates and development of deep distribution channels through their wide network of franchises. As such, the placing aspect on the 4P’s is comprehensively taken care of. Operations in over ten countries ensure that Specsavers customers and the potential market have easy access to the company’s products in their respective locations.
Consumer retailing businesses from hotel and restaurants to electronic outlets are at the moment experiencing a decreased business phase as the world economy is on a slide. This has been prompted by the slowdown of the US economy which has affected the whole world with the UK as the second largest economy not spared either. Decreased consumer spending as the financial markets take a nose dive combined with very high inflation rates have seen the number of sales in retail outlets go down or at least slow down the pace of growth. Nevertheless, this does not mean that the slowdown must be felt in the company. Continued product improvement and a rapid expansion programme mostly being carried in Australia keeps the company going. Again optometrists are facing high competition from much unexpected quotas in the name of health foods where some players claim they have the right foods that will heal eye and visual problems permanently. Other traditional rivals are other eyecare operators namely Dollond & Aitchison (D&A), Glasses Direct, Boots Opticians and Vision Express. To thrive in the midst of such competition from other operators and health eating merchants, the company must have some factors working for them. In order to identify these factors we carry out a SWOT analysis test that allows us to identify the key strengths, weaknesses, opportunities, and threats facing the company.
Product development
The company takes pride in pioneering of new technologies in eye care. It has ensured that the philosophy of customer is king in product development is upheld always. (Heather 2004). For instance in 2005, the company introduced Pentax lenses as standard in all their glasses. This is in line with its objective of attaining and upholding global standards in eyecare. In addition to this, the company has taken another direction of segmenting their markets and developing new products to specifically serve those markets. On of the major inventions in this category was the unveiling of lenses that are specifically designed for drivers. This was in support of their on going Drive safe campaign. Apart fro their brand name Osiris, the unveiling of these new lenses also saw the inauguration of the UtraDrive and Polaroid lenses as their brand names. These lenses are aimed at helping drivers do so more safely.
The company has also taken another direction in targeting their market by introducing corporate eye care. This allows employers to offer their workers subsidized eye care.
Pestle analysis
This is an acronym for political, economic, social, technological and legal environment (Boddy, 2008).
Political environment
The company has been a beneficiary of the political relation between it and the UK government. In fact one of the founders of Specsavers, Mary Perkins, was appointed a Dame Commander of the Order of the British Empire in the Queen’s Birthday Honours List in 2007 in recognition of her services to business and the community in Guernsey Island. The company is also the largest private employer in the island which is considered a tax haven by the government.
Economic
In the high street market, Specsavers ensures consistent and clear pricing to provide affordable eyecare and hearing care for the widest market through a hierarchical price model with quality products and services, high professional standards and strong customer satisfaction in every outlet. Since the business was acquired in October 2002, Specsavers Hearcare has experienced more than tenfold growth and its market share is now 18%. There are over 200 Specsavers hearing centers throughout the UK, with a growth forecast of 100 new centers in 2007.
As the individual store businesses continue to expand, Specsavers partners have invested £1 million in a dynamic and innovative bespoke leadership development programme with an award-winning consultancy, in order to meet the changing requirements of their businesses.
Social
The company is taking advantage of the growth in demand of designer glasses and more so frames. It has therefore consistently sought partnership with the main designers in the name of Timmy Hilfiger among others in a move to create a niche market that will go for the high street products. On the other hand, its good customer relations as a trusted consumer brand and efficient employer, the company has won the support of the local and international population. Again the company is involved in financing the research in diabetes as a known cause of eyesight problems.
Technologic
The company has invested a lot to ensure there is efficiency in operations by installing an modern layout to facilitate development. As the individual store businesses continue to expand, Specsavers partners have invested £1 million in a dynamic and innovative modified leadership development programme with an award-winning consultancy, in order to meet the changing requirements of their businesses The idea has been to bring into harmony the basic core function of the IT support system and integrate them efficiently to power business growth. In 2007 company chose PRIMEPOWER Solaris-based servers from Fujitsu Siemens Computers as the underpinning for its broader IT infrastructure to help in the overall performance of the entire outlets focusing management under one central point for increased harmony in operations.
Legal issues
Operating and running franchises requires some very intricate legal technicalities that have to be observed by the franchiser and the franchisee. In addition to that, the case for Specsavers is complicated by the fact that the company operates in many countries thereby exposing the country into varying legal requirements. For example in the case of Spain, the company operates its outlets as normal franchises where Specsaver has no shareholding capacity in the various outlets.
Opportunities
With its experience in operations, there are more opportunities in spreading operations over different regions like it did in Asia by opening a hotel in Dubai.
Specsavers has established a strong brand name in eyecare products retailing operations so that merger and acquisitions are not hard to negotiate not only with potential franchisees but related industries in a bid to implement vertical integration.
Specsavers have reported increased sales and market presence as shown by the 2007/08 financial year report which showed revenues of over £1 billion.
With such a performance the company has the financial capacity to carry on with expansion. The latest expansion programme going in is targeting the Australian market where the company has opened 66 outlets and plans on adding another 80 stores by the end of this year.
With increased global fashion awareness, designer glasses are among other designer items are shaping consumption patterns for consumer goods and in this case eye glasses and other eye care accessories.
Threats
Demand for consumer products will shrink further if the global and regional economic downturn persists.
There is a possibility of poor training in international outlets and shortage of skilled labor that increases with international expansion.
The current emphasis and shift to healthy eating and organic treatment for eye ailment is quickly eating away on the share market of Spesavers and the eyecare outlets in general. (Boddy, 2008).
The rapid expansion programmes that the retail chain is undertaking is capital intensive and some analysts think it is wrong timed in that it is taking place when there is a global economic slowdown. This can deal a severe blow to the chain if sales volume were to go down drastically going by the observations in other industries.
Specsavers has failed to implement vertical integration which reduces production and operation costs but instead has concentrated on horizontal integration to reduce competition.
As a strong bran name and a strong brand equity, some of Specsavers own brands are easy targets for imitators who can spoil the company quality history. Heather (2004) says that strong brand names in the market are the most potential targets by imitators who want t make a quick buck out of the marketability of a certain popular brand.
Five forces analysis
This model seeks to seek and identify the relationship existing between a business entity and some of the stakeholders in the market and in the industry. The five forces are identified as the power of suppliers, the power of buyers, the entry of new competitors, threat of substitutes and the rivalry existing between the entity and existing competitors.
Entry of competitors
The eyecare industry can be said to be affected by created barriers to entry with no natural barriers present as of now. The strong brand name held by Specsavers works to the advantage of the company as it is easily capable of beating competitions from independent operators and any other retailers in eyecare products. Earlier we mentioned the case of the company easily convincing independent retailers to become franchisees due to the strong barn name and brand equity.
Threat of substitutes
Eyecare products are facing remote competition from herbalists who claim to treat eye disorders that are normally treated using expensive glasses with special diet.
Bargaining power of buyers
Specsavers anticipated the power that buyers had in determining prices of their products. Fortunately, Specsavers has managed to maintain its brand as a premium one thereby capping on the power of the buyers. From another front, the company provides a wide range of products that cut across the high income to the medium and low income earners but still willing to purchase products from Specsavers
Bargaining power of suppliers
Specsavers obtains its supplies from a number of firms and designers hence the suppliers have very little power. The fact that the company has also a line of its brand, Osiris, adds into capping the powers of the suppliers.
Rivalry
The company faces a lot of competition in the UK but its strong brand name and consistently highly quality products have given the company a huge number of loyal customers. The company management notes that quality and product placement have been their key in customer retention.
Research
For Specsavers planning on going multinational requires a well thought out strategy considering the size and the dissimilar environments its operations take place in. As a direct consumer products retailer, the ability to meet individual customer needs on a global basis is of mounting strategic importance. Benchmarking on customer wants and not what the market conventionally believes is one of their core marketing strategies.
As a high street vendor in glasses, Specsavers have always maintained on conserving their identity as an above budget retailer. Therefore, the idea has been to maintain fashion taste combined with class. The management thus insists on stocking their own branded glasses and those from high class designers only. This idea works very well with their pricing strategy where consumers have continuously linked the high prices with quality. The result of this have been the voting by the Readers Digest as the most trusted consumer choice brand for seven years in a row.
Core Competences
The company has proved that it is not that hard to manage a wide portfolio spanning across continents. This has seen a lot of investment in lying of a concrete communication channel to link all operations and ensure harmony in all the outlets. Again availability of funds and the ability to keep on generating profits amid a slow down in consumer spending is something remarkable at a time when many businesses are financially threatened (Boddy, 2008).
Empowerment process
Empowerment has in recent times become a buzz word in the business world. Top management executives are afraid of the term fearing that distribution of power to the lower level staff might result into disorganization resulting from multiple centers of power and thus lack of cohesion. Those in the know however have been quick to embrace the term and its application in their respective organizations. It’s a process involving unleashing of human potential hidden in talents and skills and enhancing the human ability to nurture what is perceived to be good for the organization’s growth. At Specsavers, the management trains the employees to review a situation and attend to it in their most knowledgeable manner in a bid to find a solution carried out as per the training the management organizes for their staff. The freedom to think and be creative for an employee is highly dependent on one’s ability to believe in self, to belief others and be considered believable in the eyes of others. Keller (2003) writes that, basic trust is believed to come from the type of interactions experienced within the workplace especially between the top management and other junior staff. Those who have acquired trust have a tendency to be trustworthy and create accepting atmosphere within the workplace that promotes the freedom of creativity necessary for an organization and customer satisfaction. Being a franchise entity, Specsavers allows a personal touch in the franchise while at the same time ensuring that the fundamental principles of the brand name are observed. This is, most apparent by the fact that Specsavers acts as a shareholder in the franchises but not just an observer. Franchise holders are advised on the best business ideas with employees being recommended themselves in order to ensure uniformity of services and harmonization of operations. This is very important in stressing what the company says to their customers that they can be served from any outlet the same as any other.
Future prospects
The expansion programme being carried out by the company in foreign markets will go a long way in establishing an international presence across the globe. This powered a by a dedicated management team that is keen on taking advantage of globalization trends. As it is of now, the company has its eyes trained on retaining the domestic market in the UK and dominating in other markets such as Australia and New Zealand. The fact that the company has its own brands allows fair competition with other designer brands such Fcuk and Tommy Hilfiger. On the other hand, the company might consider solely establishing outlets that sell the company’s brands only in order to allow growth in this direction.
References
Boddy. D. (2008) Management: At Introduction 4th ed, (London Pearson Education Ltd).
Campbell, D. Stonehouse, G., Houston B. (2002), Business Strategy second edition, (London, Heinemann).
Heather, W. (2004). Basics in management, (London, Edward Edgar).
Keller, H. (2003), Principles of business management, (London, Penguin).
Palmer, A. and Hartly, B. (2006) The business Enviroment 5th ed (London McGraw Hill Education).
Additional information on Specsavers. Web.
Specsavers: An innovative integrated marketing model. Web.
Specsavers family hands out a fortune. Web.
Specsavers eyes UK and Europe expansion. Web.
Specsavers analysis. Web.
www.asa.org.uk
www.business.scotsman.com
www.specsavers.co.uk
www.academic.mintel.com
www.mintel.com
www.statsaholic.com
www.alexa.com
www.business.timesonline.co.uk
www.wotnews.com.au
www.businessday.com.au
www.affiliates4u.com
www.hoovers.com