Video-enabled mirrors, wind tunnels and augmented reality: Will Luxottica’s innovative Melbourne store turn its fortunes around? Assia Benmedjdoub reports on its recent battles.
Arecord had been broken. One week after vertical eyewear operator Luxottica launched its flagship store in Melbourne, it had some good news for global shareholders.
For the first time in the history of the group, net sales for the second quarter of 2010 approached €1.6 billion ($A2.3b), with net income reaching a blinding €150 million ($A217m).
Ray Ban and Oakley in particular recorded double-digit percentage growth, and even its luxury portfolio, which includes recession-testing brands such as Bvlgari, Versace and Dolce & Gabbana, showed positive sales improvements.
But all the good stuff happened north of the border. Australia, for all its GFC tolerance, proved to be a more difficult market.
Following an 11.9 per cent drop in comparable sales for the first 2010 quarter – and even before that an 8.9 per cent drop in the December 2009 quarter – group sales again slid into the red for the second half of this year. Adding to its difficulties, Luxottica and UK-based competitor Specsavers had been waging a bitter battle in the Australian federal courts.
According to information firm IBISWorld, Luxottica, which owns the Australasian OPSM Group, presides over a 40 per cent share of the local eyewear market. Specsavers had been clawing at this dominance since 2008, with an 18.5 per cent stake.
As part of its value strategy, Specsavers aired a series of controversial advertisements in February and March this year, suggesting OPSM customers paid more for a pair of spectacles than they in fact did.
In one instance, an advertisement wrongly referenced a survey which supported the notion that OPSM customers had paid around $417 for their last pair of spectacles. The broadcast put this figure at $480.
A Federal Court determination in late June ruled in Luxottica’s favour and found Specsavers had engaged in misleading and deceptive conduct, with damages set to be determined at a later date.
As for its local sales woes, Luxottica is putting on an equally optimistic front. In its latest statement to shareholders, the group attributed the result to a “market where the effects of the structural adjustment of the global economy are being felt in 2010”.
“However, this has not caused Luxottica to slow investments in the area, as confirmed by the recent opening of the first OPSM Eye Hub, an innovative concept store that marks an era in the retail field,” the group said.
So what exactly has Luxottica pinned its Australian fortunes on? The Hawthorn-based Eye Hub is the largest optical retail store in the Asia Pacific, offering 2000 unique SKUs over a split level 1,500 square metre site.
While most OPSM stores have around one or two optometrists on site, seven will be on hand at the store with at least 18 employees on any given day. A concierge has also been employed to greet all customers at the door.
Extended trading hours (8am to 8pm) add to this traditional customer service bent, while professional frame stylists are on hand to assist shoppers with the perfect purchase.
But it’s not these factors that are generating local interest and, moreover, global headlines. Created in partnership with British futurist Dr Ian Pearson and international design agency e2, the store has been described as the “future of retail”.
There are a total of 64 digital screens on-site, with 41 of these acting as interactive mirrors for customers to record and play back their look. The store also incorporates sports simulation rooms for testing wind and glare, a special kids’ room with a focus on educational entertainment, seven themed optometry rooms and a living “green wall” space.
The store’s great centrepiece is The Vault, a cylindrical structure that houses designer fashion frames, including two pairs of gold, diamond-studded sunglasses from Bvlgari priced at $18,000. An Australian summer pre-release of the Burberry April Showers collection has also been secured for the next three months, with no other retailers in the world stocking them until late September.
Additional pieces to the value of $24,000 are due to arrive in store shortly, with further ranges from Tiffany, Prada, Versace, Chanel and Stella McCartney.
It is still too early to determine whether the new store, with its triple-barrelled product, service and technology assault, will lead to stronger sales growth for Luxottica in Australia.
According to IBISWorld, the local luxury market’s dismal performance last year – which saw a nine per cent fall in revenue – is set to be followed by a further 2.4 per cent contraction in 2010.
Still, prices have been introduced to accommodate a broader range of wallets – with options at the OPSM Eye Hub starting at $69 – and the group also has a total 830 stores to draw additional revenue from, including Budget Eyewear, Laubman & Pank and Sunglass Hut. With global net sales in the billions, surely Luxottica can afford to take the wager.
The OPSM Eye Hub: Fast Facts
PRODUCT
• The Adult Optical range includes: Burberry, Bvlgari, Chanel, D&G, Oroton, Tom Ford, Versace, Zegna, Police, Ralph Lauren, Ray Ban, Ferragamo, Mui Mui.
• The Adult Sun Range includes: all optical brands as well as Chloe, Dior, Gucci, Jag, Stella McCartney, Serengeti.
• The Kids Range Optical includes: Police, BMX, Converse, Fred Bare, Bill Blass, Barbie, Hannah Montana.
• The Kids Range Sun includes: Police, Fred Bare, TCC Kids.
• Four exclusive diamond-encrusted designer pieces include: Oliver People’s Harlot at $6889, Cartier Collection at $8500 and Bvlgari at $18,000.
• An on-site lab allows for fast turnaround of prescription glasses.
TECHNOLOGY
• 64 screens in total including: 41 touch screens, 14 pre-test/optometrist screen rooms, four educational LCD screens, nine LCD screens [feature wall] and one LED screen.
• Two dedicated simulation rooms: Oakley Air Simulation machine and Glare Simulation Machine for consumers to test product.
• Digital signage which can alternate weather, stock and promotional content.
• Four PCs give consumers access to educational material.
• Optometry equipment is the same as that used by ophthalmologists in hospitals.
STAFF
• Seven optometrists, eight dispensers and four frame stylists for store opening.
• 18 employees are in-store on any given day.
• Health professionals have been enlisted to the store, including opthalmologists for patient care and visual trainers to help children with learning difficulties.