Optical dispensing generally contributes about 50% of the gross revenue generated in optometric practice, yet ODs typically pay very little attention to it. It may be time for a comprehensive review of your optical department. In this article, I'll present ideas for analyzing your frame inventory and pricing.
Start by gathering data
Most practices do not use computer software to track and analyze frame inventory. There are pros and cons to that, but whether you collect frame data electronically or manually, we need an up-to-date snapshot of the frames you carry. Work with your optician or manager to compile a written report of the frames you currently have in stock.
Begin with a list of every frame brand you have on display right now. Start with the parent frame company (Luxottica, Safilo, ClearVision, etc.).
Under each company, list the individual brands you carry or designer names. Some frame lines do not have a brand name and in that case you can call it core product, but list those as well.
Include the sales reps name after each brand to refresh your memory of the line and to help with decisions when you consider adding or dropping a line.
Indicate the wholesale and retail price range of each brand.
Describe the frame style for that brand as male, female, unisex or child. Also describe the look and age group, such as fashion forward, funky, sporty, conservative, older patient, teens, etc.
List sunglasses under each brand but separately.
Show the total number of frames you currently have in stock for each brand. Include frames being held in understock.
Make a separate report that lists retail price points of frames and indicate the total number of frames you have in stock in each range. For example, you can list: under $100, $100 to 200, $200 to 300, $300 to 400, $400 to 500, $500 to 600, over $600. Convert the actual numbers of frames to a percentage of total inventory in each price point.
Use this report as a template and meet with your staff at least quarterly to review the frame inventory.
Don't feel overwhelmed with this task, once you start your list, the whole thing will only take an hour or two to assemble.
Design your plan
Before reviewing your report, think a bit about your practice, your local market, your patient demographics and how you want to position your practice. There is room in the market for upscale high-end and for budget-friendly value and everything in between, and your practice may cover all those bases to some extent, but figure out what is most important and what you want to focus on.
The number of frames you have on display may be a function of how much space you have, but I would start with at least 600 frames. The maximum number you will carry is variable and depends somewhat on sales volume, but I favor making your optical extremely impressive and offering the patient lots of choices. Frame inventory is a big financial investment, but it is a one-time investment and I have found there is an excellent return. I don't try to minimize the number of frames; I try to increase it within the limits of budget and space. I think 1,000 frames on display is great.
Make a list of frame brands or styles that you would like to carry, but currently do not. You may find value in talking to your colleagues, browsing local optical stores, browsing upscale department stores and attending Vision Expo. Also, give some thought about the frame retail price range you should carry.
Discuss and decide
With your inventory report, meet with your staff to discuss each frame line and brand and make notes if you think the brand is helping you meet your goals. Consider these points:
Is the brand selling well?
Does the brand have a desirable image to the public?
Does the brand evoke some degree of exclusivity? Sometimes, brands that are not well-known fashion designers have a perception that they are unique and special.
Do you have enough frames in the line to represent it well? It is better to have fewer frame lines and carry more of each one. A brand looks better when there are many styles and colors to choose from.
Do you have many brands with styles that basically look-alike?
What patient demographic or price point is under-represented or over-represented?
Which frame lines should you drop and which ones should you increase or add?
Do you currently have too much understock and need to put a hold on buying in order to sell through?
Should you mark some frames down and move them to your budget section to clear them out?
It may be tempting for the optometrist / practice owner to delegate all aspects of frame board management to staff members, but I find the best outcome occurs when several people on the staff including the OD gives input. Frame board management may not be your favorite topic, but it is far too important to the overall business to not be involved with it.
Best wishes for continued success,
Neil B. Gailmard, OD, MBA, FAAO
Editor, Optometric Management Tip of the Week
Dr. Gailmard's new book, Practice Management in Optometry: A Blueprint for Success Based on the Optometric Management Tip of the Week, is now available on Amazon.