I just saw an article about Walgreens piloting an optical shop at one of their stores in Chicago in Drug Store News. Walgreens already sells reading glasses and contact lenses already so why are they adding more services now?
The vision care market is all about the materials. According to the Vision Council of America, three out of four Americans need glasses or contact lenses. The cost of glasses ranges widely depending on a consumer’s preferences and prescription. CostHelper Health reports a national average of $196 with lows starting at $8 for drugstore “cheaters” to highs of $600+ for designer frames with special lenses and coatings. All About Vision estimates that contact lenses cost “roughly $220 to $260 for a year's supply of lenses and another $150 to $200 on contact lens solutions, for a total annual cost of roughly $370 to $460 to wear contact lenses.”
These costs make insurance attractive to consumers. The CDC estimates 58% of people with private insurance have optional vision coverage and 44% of people with public insurance have optional vision coverage. And vision networks are growing – here’s a summary of some trends that we’re seeing in NetMinder.
A unique component of vision networks is retail chains. In NetMinder, we define these chains as having at least 4 locations with or without an ophthalmologist or optometrist on site. When analyzing vision networks, we found that nearly 20% of locations in national vision networks are part of a national retail chain with the largest concentrations in the WalMart, Lenscrafters, and Vision Source brands.
And this is where Walgreens comes in. Retail chains account for more than half of the revenue in the vision market even though they are only one-third of the locations. The brands are popular and heavily advertised and some competitors, WalMart and Target, area already in the market. Walgreens has more than 8,000 stores in the US and, as of August 2016, 76% of the US population lives within 5 miles of one.
How does this potential new retail network affect your network? Is it a prospective partner? A competitor?