Article Date: 9/1/2009

How To Optimize Your Frame Inventory
frames

How To Optimize Your Frame Inventory

Increase profitability and patient satisfaction with the right mix of frames.

RUTH ANN HAM, L.D.O., A.B.O.C., N.C.L.E. Jacksonville, Fla.

One of the most challenging areas in an optometric optical department is managing your inventory. Too little frame inventory, too much frame inventory, or the wrong inventory mix can negatively affect the profitability of your optical department. So, how do you go about determining the best balance of inventory in your optical department?

Here are several points to consider in reaching the right level of inventory.

Learn your demographics

Know your patient base. Understanding the demographics of your practice is important in making the correct selection of frames. The frame choices made by patients in their 20s, 30s and 40s are different from those made by patients in their 50s, 60s or 70s. Recognize that a certain job sector, or close proximity to a university, ethnic background and location all influence the choices patients make. Also, popular recreation and sports in your area should be considered. For example, in Colorado, you would need to offer a large selection of ski goggles; in Florida, you would need to offer a large selection of dive and swim goggles.

Research indicates the number of children's and teen frames your optical should carry as well as sport protection eyewear needed by this age group. In addition, if you have a large contact lens practice or are near a LASIK center, you will want to stock your optical with non-prescription sunglasses.

Determine your mix

To determine your mix of frames:

Analyze your past sales history, and compare it to your current inventory. If 25% of your sales has been rimless frames but your inventory contains 40% rimless frames, then your inventory is out of balance. Similarly, if 5% of your past sales has been in children's frames and your inventory contains 20% children's frames, your inventory is out of balance. Further, if 50% of your frames fall into the high-end category, and 75% of your sales are in mid-range or value frames, then again, your inventory is out of balance.

Know your baseline numbers. Determine the number of patients who visit your optical department on a daily basis and what percentage of those patients are self-pay vs. managed care. This information impacts your frame mix because managed care plans often provide specific guidelines or price points of frames for their subscribers.

Ask your patient. If someone doesn't find a frame in your inventory that appeals to him, and therefore, decides to leave without making a frame purchase, ask him before he leaves what type of frame he was looking for. When you get the same response several times from other patients who decide not to purchase a frame from your optical, it is an indication to include that style in your inventory.

Once you've determined your mix, schedule an open house to reduce your inventory. Offer a considerable discount on extra inventory (those frames that are “out of balance” as discussed above), and make your profit on the lenses.

How much inventory?

Very successful opticals stock an inventory of 500 to 600 well-managed frames, and others are better served by 1,000 frames or more. The number is directly related to your volume of business. To decide how much inventory you should have, compare what you turn in 30 days vs. the money you've invested in your inventory. If your inventory expense each month is considerably higher than your wholesale volume in sales, this is money you could have in the bank. As an example, if your wholesale volume in sales is $10,000 per month and your inventory expense is $20,000, your inventory is out of balance. Keeping a watchful eye on these ratios is key to your success in today's economy — the turn rate of your inventory is directly related to your cash flow. So, establish a budget and stick to it.

Step into fashion

Having an optical dispensary means you, as an eyecare professional (ECP), have stepped into the fashion industry. As a result, you must constantly be aware of optical fashion through related journals, trade shows and by observing trends. Many fashion designers now offer a line of eyewear in addition to their sportswear, swimwear, footwear and accessories. Knowledge of these manufacturers is important, as brand recognition for some patients is a large part of their frame selection.

Building a high-performance optical department requires strategy. The inventory you stock and the manner in which it is displayed plays a big part in a patient's first impression of your optical department. Incorporating manufacturer “point-of-purchase” materials into your displays creates a draw to recognized brands. Most manufacturers now have Web sites, which provide “up-to-date” information on frame styles, availability, current “point-of-purchase” materials and displays. The Internet also provides a convenient method of browsing new frame lines.

Price vs. value

The most important concept in dispensing frames is quality, no matter what the price point. If a frame has not been manufactured with quality, it does not belong in your inventory. Eyeglasses are subject to a tremendous amount of wear and “accidents.” Your goal is/to minimize patient dissatisfaction after the sale. Quality needs to be observed in several areas: When you handle a frame during selection, you will develop a sense of how well-made the frame is and how it will hold up under normal wear compared with other frames in its price category. You will also want to pay attention to frame design, assembly and the level of difficulty of lens insertion.

What do you purchase?

You likely already have developed your own mix of workhorse frame lines (e.g. ones that suit the needs of a large portion of your patients' in both plastic and metal.) Remember though, in any frame line, your sales representative is your biggest source of information. Representatives know the best-selling frames, when new releases are available and when a frame is soon to be discontinued. How often you see a representative/depends on volume and sell-through.

That being said, a partnership with your rep is key to inventory management, but do not purchase frames based on how well you like your frame representative. The best representatives are willing to assess your inventory upon each visit and exchange styles that are near discontinuation or just not moving in your location. Some practices incorporate “frame board management” — allotting a specific number of frame board slots to each rep and assigning them the responsibility of keeping those slots stocked with frames that sell. Remember, their compensation is based on their sales figures, so they will be motivated to keep you stocked with sellers, or “movers.”

Make sure your are aware of any gifts or spiffs offered by the frame representative for purchases. This type of reward system — occurring without your knowledge — can negatively impact your frame mix and is unacceptable.

The role of value frames

Every practice can benefit from carrying quality “value” frames even though the exact percentage can vary. A large number of practices use value frame lines to accommodate the needs of managed-care patients, or for keeping up with profits while helping patients stretch their eyewear dollar. Another great use for value eyewear is multiple pair sales. Your patient will find the price points appealing when considering a spare pair or a pair designed especially for reading, computer, TV, golf, etc. You'll benefit from carrying value sunglasses as well and eliminate the need for patients to look elsewhere.

Lens considerations

Keep in mind the impact prescriptions have on frame needs. It's important your frame inventory provide a choice for all patients regardless of their prescription. For instance, high minus patients require a small and symmetrical lens area with the frame style itself compensating for some of the facial width. And, high-plus patients require a small and symmetrical lens area with a full yet stylish rim. Finally, trifocal wearers need a deep frame to allow adequate room for all three segments. You'll feel less than prepared when a patient with a complex prescription (someone who is likely self-conscious about his glasses in the first place) only has one or two choices in your frame selection.

How to display

Make sure that frame displays can be easily accessed by patients so that they can browse on their own while waiting to be served. Pay attention to the first frames your patient sees — placing high-end frames at eye level — will ensure they are noticed. Frames that are displayed under lock and key are “out of touch” and, therefore, have a tendency to be passed by. Position some of your sunglass displays near the contact lens fitting and dispensing area, as every patient that is fit for new contact lenses will need sunglasses the moment they step outside. You will find it more efficient to group together those frames that are covered by insurance benefits.

Getting the best deal

Consider many factors when determining whether you're getting the best deal on your frame inventory.

Discounts. Do comparative research to determine which source will provide the greatest discount. In some cases, it will a buying group and in others, it will be direct purchase from the manufacturer. When comparing the discount percentage charged by a buying group with the manufacturer, include the monthly handling fee that is charged back to you. Buying direct can be an attractive option when the manufacturer offers 30-, 60-, 90- and 120-billing with no interest charge.

I've had manufacturers sweeten the offer by absorbing all shipping costs on their frames, and it's common for manufacturers to incentivize ordering via the Internet by providing free shipping. Don't be afraid to ask about these offers, and don't let yourself get too busy to keep track of how much you spend on postage and handling. It increasingly eats up profit. Another unnecessary shipping cost is back-order items on stock orders. As backorder items trickle in one at a time, shipping costs add up. Some manufacturer's wave shipping costs on backorder items, but if they do charge, consider making it your policy to cancel stock order items placed on backorder unless you have a specific patient in mind for the frame.

Warranties. Familiarize yourself with frame warranties offered by the manufacturer. Most provide a free replacement on defective parts within the first year by issuing credit upon return. When ordering replacement parts, indicate they are for a defective replacement. Don't just assume this is standard policy, as this is not the case with all manufacturers.

Keeping Inventory Current. Make sure you know the manufacturer's policy on exchanges for new merchandise, whether they offer full credit on exchanges or whether they only offer a percentage on returns for exchange. Most manufacturers require a return authorization that their sales representative will provide to you at the time of your replacement order. (Always ship frames traceable and insured.) Some manufacturers allow you to order a frame “on approval,” which can be helpful when a patient would like to see his frame choice in a different color, or if the optician wants to compare sizes on a patient to ensure the best fit and function of the eyewear. In this case, the manufacturer issues full credit if an unused frame is returned within 30 days.

Replacement Parts. An additional requirement to a well-stocked optical department is having replacements (nose pads, temple tips, screws and hardware) on hand. Request kits containing these parts at the time of a stock order.

Frame categories: What will you need?

You cannot possibly buy from every vendor, so without mentioning specific manufacturers, there are categories you'll need to incorporate into your inventory in addition to your stylish workhorse frames. I recommend you buy at least two of each of the following frame category with color and size variations. A few manufacturers offer their frames on a consignment basis.

Rimless. Choose rimless frames from one or two manufacturers from whom you purchase a majority of your drill mount frames — manufacturers that have a reputation for their quality, service and style. Be wary of frames that can only be used with the simplest of prescriptions. Choose an assortment of styles that showcase their colors, lens shapes and temple design choices. In some cases, manufacturers will design their own display and provide a kit that includes a popular assortment of their choices as well as clip-on sunglass options.

Variations on rimless frames are becoming more creative with technological advances, and offering customized shapes in rimless eyewear can differentiate you from your competition. Many semi-rimless options exist for those who like the rimless idea but need something more durable.

Frames with interchangeable temples are a reasonably inexpensive way for consumers to build eyewear wardrobes without investing in multiple pairs of lenses.

Sunglasses. Sunglasses create an inventory challenge of their own. Despite the economic downturn, the sunglass business hasn't lost its sizzle. Consumers are more knowledgeable about sunwear than they were five years ago; they are better informed and have more sophisticated needs. They are also more likely to turn to authorities in the field (e.g. you and/or your optical staff) for their sunglass purchases. Fashion sunglasses, although designed for street and urban wear, often are available with a variety of performance features including polarization, grippable rubberized bridges and temple tips. These frames appeal to those who may not be athletes, but think of themselves as having an active lifestyle.

Another segment of your patients look for glamorous and elegant sunglasses — a statement of their personal style. As the style has shifted to classic large plastic frames, choose a number in basic black and tortoise that have custom-jeweled touches, wide temples with logos and striking architectural designs. A few styles in bold colors and white will round out your offering. Observe the bridge design on these large frames to ensure you have an assortment of bridge placements and sizes so they do not rest on the cheeks.

Large metal frames are also popular. Again, look for jeweled touches and architectural designs. Some drill mount rimless plano sunglass styles are available with extended screw posts to allow the frames to be glazed with prescription lenses. Manufacturers today are starting to offer angled washers for use with high-plus and minus prescriptions to allow for accurate alignment and easy adjustment for the end pieces on rimless styles.

Sports frames. Manufacturers are dressing up sports frames with hot colors and contemporary shapes without sacrificing performance, making an eyesight necessity more appealing than before. Have safety frames on hand for patients whose occupation requires something more substantial than dress frames for work. Doing so provides the opportunity for a second sale and enhanced patient satisfaction.

Children's frames. Your best choice in children's frames is a memory material — a category of material that started with metal and is now available in plastic as well. Children challenge frame durability beyond any other patient, and again your goal is to minimize patient dissatisfaction after the sale. Some of these frame manufacturers offer clip-on sunglasses to match their styles, providing an efficient sunglass alternative.

Understanding that 80% of ultraviolet exposure occurs before the age of 18, this segment of the population, including babies and toddlers, need UV protection. Parents buy for their children before themselves, so make sure you have what they need.

Unique frames. When you offer a unique product, you give your practice a competitive advange. You will find designer frame lines that allow you exclusive rights of distribution in your general area.

In addition, make sure frame inventory includes diverse exotic materials, such as rare woods, precious metals and jewels to make it unique.

A final thought

Remember: Your inventory won't manage itself. If you delegate this task, delegate it to someone who understands the impact inventory expense has on your profitability, and be sure to monitor it yourself on a regular basis. The bottom line is your inventory is either in balance or out of balance. OM

Ms. Ham is a licensed optician, certified by the American Board of Opticianry and the National Contact Lens Examiners. She has managed independent optical practices and optical practices within optometric and ophthalmological practices. She provides consulting services and training. E-mail her at RuthAnnHamInc@comcast.com.


Optometric Management, Issue: September 2009