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Optical Markets Continue to Grow Second Quarter 2016

During the 12 month period ending in June 2016, the vision care industry in the United States generated $40.08 billion in revenue at the retail level. When compared to sales revenue from the previous year, the market improved by 3.1% and up by 21.6% over 12 month period ending in June 2008 retail sales totals—before the recession set in.

During the June 2014 to June 2016 time period the strongest optical markets were contact lens sales (+9.6% to $4.75 billion) and Rx lenses (+13.0% to $12.81 billion). Plano sunglass sales have also seen moderate sales growth with 8.9% dollar revenue growth, equally over the past two years. This is due to a balanced mix of increasing unit sales and rising prices. All other markets are currently growing at a moderate rate over the past couple years, with the exception of LASIK surgery. Eyeglasses accounted for the largest share of the vision correction market (56.2%) representing $22.51 billion, growing by 11.0% over the past 2 years with most of that growth occurring during the 12 month ending period June 2015. During the most recent year, eyeglass frame and lens revenue were up by 2.6% and 4.2%, respectively, from year-ago levels thanks to rising unit sales and rising prices.

The independent side of the optical industry is by far the largest component of the U.S. vision care industry—generating $18.27 billion in revenues during the 12 month ending period June 2016. During the past year, the independent outlets have seen a moderate increase in aggregate revenue (approximately $768 million—4.4% growth in sales) with Rx lens, contact lens and over-the-counter reading glasses revenue increasing the most over the past year. Examinations are a large contributing factor to the success of independents, grossing nearly $4.15 billion in revenue. In addition to increasing the number of exams performed in aggregate as a group, there are other reasons why independent EPCs are succeeding in the face of a challenging optical retail environment.  The increase of managed vision care benefits by consumers at independent locations and the increased utilization and reliance on IPAs and buying groups are just a few. ECP membership in optical buying groups (or independent practice alliances) have grown to an all-time high and grant independent ECPs access to resources, training and pricing that was not previously available to them on their own.

While independents enjoyed their fifth straight year of dollar revenue growth during the 12 month ending period June 2016, other optical distribution channels also experienced growth recently. For conventional retail chains, sales revenue grew by 3.0% to $8.35 billion during the 12 month ending period June 2016. Additionally, optical sales revenues for mass merchants and wholesale clubs grew by 2.9% to $4.87 billion during the 12 month ending period June 2016.

During the 12 month ending period June 2016, sales of optical “products” (eyeglasses, readers, sunglasses and contact lenses) generated $32.27 billion in sales at the retail level through all outlets and channels. $1.50 billion of those sales originated from the Internet through direct online purchase activity. We estimate that 2015 was the fourth calendar year for which more than $1 billion worth of optical products were bought over the Internet. The dollar totals from online optical sales for the 12 month ending period June 2016 were up 7.8% over 12 month ending June 16 online sales revenues and up by 68% over 12 month ending June 2011 online sales revenues. While prices for online products have increased slightly over the past two years (~1%-2%), most of that increase in revenue was driven by an increase in volume unit sales and an increase in the number of online purchase transactions.

Most of the revenue from online optical sales (46.3%) comes from the sales of contact lenses. We estimate that about 4% of all eyeglass lenses and frames purchased in the US during the 12 month ending period June 2016, were purchased online over the Internet—about 3 million pairs. For the 12 month ending period June 2016, online eyeglass sales are up 10.4% in units and up 12.3% in dollars. Sales of online plano sunglasses have also grown steadily over the past few years. Currently, about 6.8 million pairs of plano sunglasses were sold directly online over the Internet during the 12 month ending period June 2016—about 6.5% of all plano sunglasses sales during the period. The smallest online optical market was over the counter readers. During the 12 month ending period June 2016 there were about 1.9 million pairs of OTC readers worth over $26 million sold online.

Data in this article was compiled from VisionWatch, the large scale continuous research study conducted by The Vision Council. VisionWatch contains useful industry data on lenses, frames, sunglasses, reading glasses, LASIK, contact lenses and eye exams. For additional information, please contact Alexis White at 703-740-2251.

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