2nd Quarter 2009 US Optical Market Overview and Outlook October 4th, 2009 Steve Kodey, Director of...

2nd Quarter 2009 US Optical Market Overview and Outlook

October 4th, 2009

Steve Kodey, Director of Industry Research

The Vision Council*Please note that the VisionWatch information in this

presentation is for the sole use of Vision Council companies only and cannot be distributed in any form to non-members without consent from Jobson Optical

Research or The Vision Council.

VisionWatch Changes to the Program and

What It Means for SRD Members

Changes to the Program January 2008:

> Vendor Change Ocucom TNS> Change to Questionnaire> Change to Income Sampling and Weighting

June 2008:> Vendor Change TNS Ocucom> Change to Price Edits and Allocations> Improved Data Processing Techniques

June 2009:> Internalization of Report Writing (Faster Report Delivery)> Development of “Up to $30” Plano Sunglass Report

January 2010:> Possible Change of Sample Vendor (to improve quality of

raw data)> Possible Improvement to the Method of Collecting Retailer

Share Data

VisionWatch: A Collaboration of The Vision Council & Jobson Annual Sample Size: 100,000

Changes to the Price Edits and Retailer Allocation

Prior to June of 2008:> Older system developed in the 1990s was used> Edits only applied at the channel level or brand level> Sometimes led to inconsistencies between retailers and

channels.

Now:> A detailed pricing mechanism looking at:

» Retailer» Channel» Brand» Price

> More interactive, more accurate, checking mechanism

No Impact on Topline Unit Sales or Demographic Shares


New Data vs. Old Data: Differences

Shares by Channel of Trade (and Retailer):> Especially department stores, sunglass specialty stores,

mass merchants, drug and grocery.

Average Retail Selling Price:> Increased from $18-$20 per pair to $34-$36 per pair.

» Result of newer more accurate price edit rules

New Industry Dollar Volume (Annual Revenues):> Increased from $2.2 Billion to $3.5 Billion.

» Result of higher average selling prices

Change in Purchasing Patterns for Different Income Groups:> Minimal affect on topline purchasing activity, effect mostly

individual retailer shares and demographic breakdowns



New Methodology and New AHI

Weights

New Methodology and OLD AHI

WeightsOLD Methodology

and New AHI Weights

OLD Methodology and OLD AHI

Weights

Total 100.0% 100.0% 100.0% 100.0%

Optical Independent 1.5% 1.4% 3.6% 3.4%

Optical Chain 1.4% 1.3% Sunglass specialty 7.9% 7.6% 8.0% 7.8%

Sport 2.5% 2.4% 7.1% 6.8%Better Dept & Specialty Stores 3.9% 3.8% 5.3% 5.0%

Warehouse Club 2.2% 2.0% 0.7% 0.6%

Grocery 0.9% 1.1% 7.0% 7.3%

Drug 8.8% 8.5% 10.2% 10.6%

Mass 30.0% 29.3% 27.0% 27.8%

Flea Market 2.5% 2.6% 1.8% 1.8%

Other 38.4% 40.0% 29.3% 28.9%

Channel Unit Shares During the 12ME Period Mar.09 Under Different Guidelines


New Methodology and New AHI

Weights

New Methodology and OLD AHI

WeightsOLD Methodology

and New AHI Weights

OLD Methodology and OLD AHI

Weights

Total $35.27 $34.22 $17.88 $17.44

Optical Independent $127.81 $125.78 $97.86 $96.42

Optical Chain $180.47 $183.44 $97.86 $96.42Sunglass specialty $154.82 $155.74 $89.79 $89.75

Sport $54.30 $53.85 $16.78 $16.17Better Dept & Specialty Stores $99.89 $97.60 $19.08 $18.71

Warehouse Club $62.78 $60.08 $56.45 $56.01

Grocery $14.34 $14.46 $9.87 $9.83

Drug $16.67 $16.81 $8.29 $8.35

Mass $14.50 $14.70 $7.00 $6.96

Flea Market $12.68 $11.72 $9.94 $9.00Other $14.21 $13.44 $7.68 $7.36

Channel Average Prices During the 12ME Period Mar.09 Under Different Guidelines


September Custom Slot Experiment

VW Custom Slot Research Opportunities> Allows us to survey consumers each month about

special topics and subjects.

September 2009 Survey:> Will Interview 3,000 to 4,000 recent plano sunglass

buyers> We’ll ask buyers to type in the name of the retailer

where they made their last purchase.> Could lead to a permanent change in the survey if results

prove a change is worthwhile> We’re also asking about:

> Number of multiple pair purchases> Purchase motivation factors for sunglass buyers (past

and future).


New “Up to $30” Plano Sunglass Report

New Report That Was Released in June 2009> Examines plano sunglass sales priced at less than

$30 per pair

Includes:> Topline Unit and Dollar Sales Data Points> Demographic Composition of Purchases

> Age, Gender, Region, Annual Household Income> Unit and Dollar Shares by Channel of Trade:

> The same categories and groups used to look at the total sunglass market.

Trends in Vision Correction:

Is America Seeing Clearly?

Percentage of American Adults Using Any Form of Vision Vision CorrectionCorrection within Gender and Age Groups

76.5%

74.7%

78.1%

61.3%

65.1%

87.0%

94.8%

75.2%

73.7%

76.6%

58.8%

62.8%

85.2%

93.1%

75.0%

72.1%

77.8%

61.0%

62.9%

83.7%

90.9%

Total

Male

Female

18 to 34

35 to 44

45 to 54

55+

12ME Jun07

12ME Jun08

12ME Jun09


Vision Correction Usage: June ‘08 and June ‘09

193.2

146.7

34.524.8

11.9 8.7

196.9

146.7

35.3 25.612.4 9.7

Plano Sunglasses

Eyeglasses Contact Lenses

Readers 'Squinters' Surgery*

12ME Jun08 12ME Jun09

In Millions of People

* Surgery is the sum of US residents having ever had refractive surgery; not counted as vision correction users

•Categories: the number of US residents 18+ who use the vision correction alternative all or any part of the time

• Some people use more than 1 vision correction alternative

‘Squinters’: US residents who say that they need vision correction, but do not use any


Overall Market Performance By Market Sector

$8,417

$9,612

$3,540 $3,526

$629

$4,878

$2,118

Frames Lenses Contact Lenses Sunglasses* OTC Readers Examinations** Refractive Surgery

12ME Jun0712ME Jun0812ME Jun09

Inflation not taken into consideration

Vision Care Products & Services – Total U.S. Market Breakout—In Millions

*All retail includes dollars spent at all retail types at any retail location on the sale of either spectacle lenses (including Rx sun), frames, contact lenses, sunglasses (plano), OTC readers, or revenue earned from refractive surgery (LASIK only) or eye examinations. This number does not include sunglass clips and reflects the dollars spent only by those U.S. residents 18 and older. Does not include retail dollars spent by/for contact lenses and exams for those 17 years of age and younger.

All Retail*-1.0%

+5.6%

-1.2%

+6.5%

+6.4%

-29.6%

In Millions


-7.0%

Plano SunglassesOTC Readers

81.3%

84.6%

87.9%

86.9%

87.1%

82.6%

84.9%

80.8%

84.6%

87.8%

85.3%

86.8%

81.6%

84.3%

80.6%

84.7%

87.8%

86.3%

87.4%

81.8%

84.7%

55+

45 to 54

35 to 44

18 to 34

Female

Male

Total wearing 12ME Jun07

12ME Jun08

12ME Jun09

sunglasses

Percentage of Adults Currently Wearing Plano Sunglasses


16.2%

13.0%

7.3%

5.5%

10.1%

11.1%

10.6%

15.7%

12.3%

8.5%

5.9%

9.8%

12.4%

11.1%

17.0%

14.2%

9.1%

6.6%

10.4%

12.7%

11.5%

55+

45 to 54

35 to 44

18 to 34

Female

Male

Total wearing

12ME Jun07

12ME Jun08

12ME Jun09

Clip-ons

Percentage of Adults Currently Wearing Clip-on Sunglasses


Plano Sunglass Retail Sales – Dollars & Units

Nominal $s – Not revised for Inflation

$3,789.8 $3,861.7 $3,525.8

Retail Dollars(In Millions)

12ME Jun0712ME Jun0812ME Jun09

112.2 113.8

101.2

Units(In Millions) 12ME Jun07

12ME Jun0812ME Jun09

-11.1% 2009 against 2008

-9.8% 2009 against 2007

-8.7% 2009 against 2008-7.0% 2009 against 2007


US Plano Sunglass Retail Sales 12ME Jun. 2009 By Channel (Millions)

$380.8

$246.8

$201.0

$134.0

$28.2

$1,174.1

$602.9

Sunglass specialty

Grocery/Drug/Mass/Club

Better Dept Store

Optical Chain

Optical Independent

Sport

Flea Market

Retail Value ($Millions) Units (Millions)

8.2

33.0

3.7

1.5

1.5

2.5

2.3


High-End Designer Sunglass Sales as a Percentage of All Plano Sunglass Sales


61.80%

67.20%

62.80%62.10% 62.10%

65.50%

12ME Jun04 12ME Jun05 12ME Jun06 12ME Jun07 12ME Jun08 12ME Jun09

Dollar Value

13.00%

14.10%14.70%

12.90%13.30%

14.30%

12ME Jun04 12ME Jun05 12ME Jun06 12ME Jun07 12ME Jun08 12ME Jun09

Units--Pairs

17.8%

20.9%

5.0%

1.7%

11.3%

10.8%

11.0%

18.9%

21.1%

3.4%

0.9%

10.5%

11.2%

10.8%

20.3%

23.4%

3.7%

0.8%

10.9%

11.5%

11.2%

55+

45 to 54

35 to 44

18 to 34

Female

Male

Total wearing

12ME Jun07

12ME Jun08

12ME Jun09

OTC Readers

Percentage of Adults Currently Wearing OTC Readers


In millionsOTC Readers Wearers & Purchases

Ages 18+

Repurchase Cycle

0.63 years 0.63 years 0.58 years

23.6 25.3 24.8 25.6

37.240.1

42.4 42.6

12ME Jun06 12ME Jun07 12ME Jun08 12ME Jun09

Number of People Wearing Number of Pairs Sold

0.60 years


9.9% 12.6% 12.3%

78.4% 75.8% 76.1%

6.9% 7.1% 7.0%4.8% 4.5% 4.6%

12ME Jun07 12ME Jun08 12ME Jun09

Independents

Chains

Grocery/ Drug/Mass/ConvenienceOther

$630.4M -0.2%

+2.0%

-1.6%

+0.2%

-2.6%

$590.8M

% change08/09 absolute #

$629.3M

Retail Structure of Readers Market (Dollars)


OTC Readers Dollar Sales Trends: Grocery / Drug / Mass / Convenience

$300

$400

$500

12ME M

ar04

12ME J

un04

12ME S

ep04

12ME D

ec04

12ME M

ar05

12ME J

un05

12ME S

ep05

12ME D

ec05

12ME M

ar06

12ME J

un06

12ME S

ep06

12ME D

ec06

12ME M

ar07

12ME J

un07

12ME S

ep07

12ME D

ec07

12ME M

ar08

12ME J

un08

12ME S

ep08

12ME D

ec08

12ME M

ar09

12ME J

un09

-20%

0%

20%

40%

60%

80%

100%

12ME OTC Readers Sales (in Millions)

Percentage of Industry Growth Attributable to Channel


2008 Annual Meeting 24

Number of Readers Pairs Bought Per Purchase


2008 Annual Meeting 25

All Retailers1.7 Pairs Per Purchase

Grocery / Drug / Mass / Convenience

2.2 Pairs Per Purchase

2009 / 2010 Outlook

Key Points: Future Outlook A Slumping Economy, Jittery Consumers

> Poor Economic Conditions Continue » Rising Unemployment, Layoffs, Bleak Employment

Outlook» Fear of Inflation Returning as Gov. Spending Soars» Flat Productivity» Credit Crunch Refuses to Loosen

> Consumer Spending and Consumer Confidence Near All Time Lows

> Housing Market Continues to Remain Shaky

Optical Specific> Purchase Intent Down for Eyeglasses and Eyewear> Exam Intent is Flat Contributing to the Problem> Contact Lens Purchase Intent is Up, LASIK is Down

Drastically

The Silver Lining

Government Spending Seems to Be Slowing the Recession> More Economic Stimulus Money Could Raise Consumer

Spending and Consumer Confidence

Leading Economic and Optical Specific Indicators Are Rising…From Very Low Levels

Gas Prices Are Relatively Low…For Now Stock Market is Up; Feeling is that the Worst is

Behind Us; Recession May be Over After Q3 2009 The Optical Industry is Somewhat Insulated from

Declines in General Retail Spending

109113111109

10499 100

103105109110110

114111

106100100100 99

94

Rolling 6 Month AveragesAn index based on likelihood to purchase in the next six months

Each point is the average score for the six month period

*

$50+ Plano Sunglass Future Purchase Intent


Rate of change for general retail goods & eyewear purchases over the past year due to the economy.

Custom Research: April 2009 Economic Situation Study

When you make your next purchase of plano sunglasses, which of the following might apply?


When you make your next purchase of OTC Readers, which of the following might apply?


QUESTIONSSteve Kodey

The Vision Council

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2nd Quarter 2009 US Optical Market Overview and Outlook October 4th, 2009 Steve Kodey, Director of...

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