{"id":3757,"date":"2015-12-09T00:49:50","date_gmt":"2015-12-09T05:49:50","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/myeyedr-bringing-together-eye-care-and-eyewear\/"},"modified":"2015-12-09T15:54:54","modified_gmt":"2015-12-09T20:54:54","slug":"myeyedr-bringing-together-eye-care-and-eyewear","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/myeyedr-bringing-together-eye-care-and-eyewear\/","title":{"rendered":"MyEyeDr: Bringing Together Eye Care and Eyewear"},"content":{"rendered":"

The U.S. eye care market is dominated by two major channels:\u00a0independent optometrists (~44% market share) and conventional chains, such as Luxottica’s PearleVision and LensCrafters (~28% market share). \u00a0MyEyeDr. (“MED”) is a chain of optometry practices that offers the quality care of an independent optometrist with the retail experience of a conventional chain.<\/p>\n

In just under three years, MED has grown from 40 locations exclusively in the Washington D.C. market to nearly 200 locations across six states, making it one of the nation’s ten largest optical players. \u00a0And while this geographic expansion has been impressive, the more exciting story may be the growth that has been occurring within individual MED locations.<\/p>\n

 <\/p>\n

Business Model<\/strong><\/span><\/p>\n

MED’s growth has been fueled by the acquisition of independent optometrists, many of whom are nearing retirement age and have few attractive exit options. \u00a0Most independent optometrists are focused on providing quality care to their patients, and would prefer to give relatively little thought to store operations or eyeglass sales. \u00a0 MED’s value proposition to optometrists is clear: we’ll take care of billing, collections, and scheduling, and you can focus on being a great doctor. \u00a0Many of MED’s customers are also attracted by the company’s branding which clearly positions the chain as a provider of care rather than merely a retailer of eyeglasses.<\/p>\n

\"Optometry
Optometry practices which emphasize retail sales have significantly higher margins than those that focus on the provision of care.<\/figcaption><\/figure>\n

While the MED brand is focused on quality care, the reality is that retail sales are vital to how MED creates value. \u00a0Optometry practices which emphasize retail sales have significantly higher margins than those that focus on the provision of care. On average, gross margins on eyeglass sales exceed 75%, compared to approximately 25% gross margins for an eye exam. \u00a0For an independent optometrist who joins MED, retail sales may only comprise 20% of total revenue. \u00a0However, MED has developed an innovative operating model which has proven to dramatically increase retail sales as soon as the doctor has joined the MED platform. \u00a0This model produces a best-in-class conversion rate of eye exams to retail sales of over 80%. \u00a0 By maintaining eye exam revenue and layering on high-margin retail sales, MED is able to produce sales per square foot of over 3x the industry average. \u00a0Furthermore, the improved margins from the retail sales growth result in extremely low pro forma acquisition multiples for acquired independent optometrists. \u00a0MED creates additional value by acquiring multiple independent optometrists within an area and moving them into a single MED facility, significantly reducing overhead costs and maximizing asset utilization.<\/p>\n

 <\/p>\n

Operating Model<\/strong><\/span><\/p>\n

MED’s operating model has proven to dramatically increase retail sales while still providing a quality care experience. \u00a0Major elements of the operating model include the following:<\/p>\n

    \n
  • Eyewear Consultant hand-off.<\/strong>\u00a0 As soon as an eye exam is completed, the MED optometrist hands off the patient directly to an MED eyewear consultant. \u00a0This allows the optometrist to focus on care while the eyewear consultant can completely specialize in retail sales.\"\"<\/li>\n
  • Store Layout and Frame Selection. \u00a0<\/strong>MED’s store layout includes a large viewing area that would be comparable to a conventional chain like PearleVision. \u00a0Such layouts are less common for independent optometrists. \u00a0Inventory varies based on store demographics, but often skews toward the previous year’s models of designer frames which are still fashionable but can be sold at a meaningful discount.<\/li>\n
  • Insurance Program. \u00a0<\/strong>MED accepts nearly every form of insurance, providing increased accessibility.<\/li>\n
  • Incentive Structure. \u00a0<\/strong>Eyewear consultants receive commissions based on retail sales. \u00a0Although optometrists do not typically lead the sale process, they are trained to understand the importance of retail sales. \u00a0Furthermore, many doctors are eligible to receive earn-outs based on store contribution for up to two years after the sale of their practice. \u00a0 This financial upside leads most doctors to counsel patients about the importance of good glasses and prepare the patient for the hand-off to the eyewear consultant.<\/li>\n
  • Monthly Training. \u00a0<\/strong>Eyewear consultants must complete monthly training in order to be eligible for commissions and bonuses. \u00a0Training helps eyeware consultants become familiar with new inventory and learn new sales techniques.<\/li>\n<\/ul>\n

     <\/p>\n

    Alignment<\/b><\/span><\/p>\n

    MED has developed an operating model which allows it to sell eyewear as well as a conventional chain. \u00a0If MED did not have\u00a0this ability to increase retail sales, it would be significantly less equipped to improve the margins of its acquired optometrists. \u00a0If MED could not improve the margins of acquisitions, it would be unable to pay reasonable prices to selling optometrists. \u00a0And if MED stopped acquiring\u00a0independent optometrists, growth would cease.<\/p>\n

    Fortunately, MED has effectively aligned its operating and business models in such a way that wouldn’t seem obvious from the outset. \u00a0It may seem counter-intuitive, but a company called MyEyeDr. may be the best retailer in the industry.<\/p>\n

     <\/p>\n

    Sources:<\/p>\n

    http:\/\/www.visionmonday.com\/vm-reports\/top-50-retailers\/<\/p>\n

    https:\/\/www.myeyedr.com\/<\/p>\n

    MyEyeDr. internal documents<\/p>\n","protected":false},"excerpt":{"rendered":"

    How an optometry chain branded on care may be the best retailer in the category<\/p>\n","protected":false},"author":1035,"featured_media":3758,"comment_status":"open","ping_status":"closed","template":"","categories":[4,41,661,16],"class_list":["post-3757","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-effective","category-healthcare","category-optical","category-retail"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"\nMyEyeDr: Bringing Together Eye Care and Eyewear - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/myeyedr-bringing-together-eye-care-and-eyewear\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"MyEyeDr: Bringing Together Eye Care and Eyewear - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"How an optometry chain branded on care may be the best retailer in the category\" \/>\n<meta property=\"og:url\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/myeyedr-bringing-together-eye-care-and-eyewear\/\" \/>\n<meta property=\"og:site_name\" content=\"Technology and Operations Management\" \/>\n<meta property=\"article:modified_time\" content=\"2015-12-09T20:54:54+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/MED1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"500\" \/>\n\t<meta property=\"og:image:height\" content=\"125\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/myeyedr-bringing-together-eye-care-and-eyewear\\\/\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/myeyedr-bringing-together-eye-care-and-eyewear\\\/\",\"name\":\"MyEyeDr: Bringing Together Eye Care and Eyewear - Technology and Operations Management\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/myeyedr-bringing-together-eye-care-and-eyewear\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/myeyedr-bringing-together-eye-care-and-eyewear\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2015\\\/12\\\/MED1.jpg\",\"datePublished\":\"2015-12-09T05:49:50+00:00\",\"dateModified\":\"2015-12-09T20:54:54+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/myeyedr-bringing-together-eye-care-and-eyewear\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/myeyedr-bringing-together-eye-care-and-eyewear\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/myeyedr-bringing-together-eye-care-and-eyewear\\\/#primaryimage\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2015\\\/12\\\/MED1.jpg\",\"contentUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2015\\\/12\\\/MED1.jpg\",\"width\":500,\"height\":125,\"caption\":\"MyEyeDr. is a full-service vision healthcare company providing comprehensive eye exams along with dispensing prescription eyeglasses, sunglasses and contact lenses. 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