We conducted a market analysis of the optical industry in Finland and in Sweden, here are some cool graphs and our views on various issues!
Finland
The total turnover for the optical industry of Finland was 297 MEUR in 2012. Five big companies (Instru Optiikka, Silmäasema, Specsavers, Fenno Optiikka, and Synsam) dominate the industry with 83% of the total market share. The remaining 17% of the market share consists of smaller retailers and online sellers.
Instru Optiikka is by far the largest with its 35% market share and well-established retailer brands Instrumentarium and Nissen. It has 194 stores (December 2013) all around Finland and it sells all kinds of eyewear – except wooden sunglasses that is. The second biggest player, Silmäasema, has captured 21% of the market share and owns 118 retail stores (December 2013), similarly selling all eyewear and premium brands.
While these companies are competitors of Pöllöt in the broad sense of sunglasses retailing, essentially the products and the target customer groups are different. Both two companies do have an online store though, and as e-commerce is likely to continue its growth in the future, it is vital for Pöllöt to build a reliable and easy-to-use online store and increase its social media marketing to achieve its growth objectives and development. To tackle the issue of customers wanting to try out the glasses before buying them, payment time of 14 or 30 days should be made available, free delivery should be emphasized and free return policy made simpler (Zalando, for example, has achieved all objectives very well).
The amount of physical retail stores was in decline between 2011 and 2012, which again emphasizes the importance of a working online store. However, retail partners come in handy when they are strategically handpicked keeping in mind the target customers who would be most likely to wear wooden sunglasses. Ultimately a statement of style and differentiation, Pöllöt would perhaps find indie and alternative fashion stores enthusiastic about selling their products. Of course, having Instru Optiikka's 194 stores as distributors would not hurt either...
As can be seen, eyeglass frames and lenses account for more than 80% of the optical industry's turnover in Finland, whereas sunglasses are much more of a niche market with a share of around 6%. From this, our opinion is that the sooner Pöllöt introduces eyeglass frames and corrective lenses to its collection the better. This would be a logical and relatively easy way of expanding, and it would help in managing the effects of seasonal variation in demand for sunglasses.
Sweden
Sweden's optical industry, with its 638 MEUR turnover in 2012, is more than twice as big as Finland's. When comparing population, the CIA World Factbook's July 2013 estimate tells us that Sweden has 9,1 million inhabitants whereas Finland has 5,3 million, so a lot of the turnover difference is simply explained by the larger number of customers.
The turnover pattern for different products is clear and natural: sunglasses and contact lenses thrive during spring and summer, as a lot of the people wear them jointly when the sun is shining. In the dark months, the demand for sunglasses is almost nonexistent, again emphasizing their seasonality and the importance of having eyeglass frames in the product line as well. As the climates of the two countries are almost exactly the same, we can assume that the monthly division between products in Finland is very similar to Sweden.
The average price in Sweden for the lenses and frames combined is close to, or even a bit over, €200, and remains relatively constant throughout the year (January's low prices are likely the result of after-Christmas sales). The frames cost around €10 more than the lenses and are not less than €100 on any month except January. The cost of lenses obviously comes from having corrective power, so Pöllöt's pricing of non-corrective sunglasses at €80 is very much affordable in our opinion. Seeing that the price of corrective lenses is around 90% of the frame price, a retail price of €150-160 for Pöllöt sunglasses with corrective lenses would not be unjustified.
PESTLE: Sweden
Political
- Political conditions are stable and the environment gives good conditions for many market possibilities for international companies
- Efficient flow of goods and services, provides also a wide range of regulations, which give the opportunity for establishing entrepreneurial activities
- Policy of transparency, which is present in all Scandinavian countries, also in Sweden is significant.
- Most market activities are available for the wide audience. This kind of approach makes customers less vulnerable on tricks and cheating done by companies.
Economic
- Sweden’s participating in European Union is a huge advantage; it makes it easier for free flow of goods, services, people and assets.
- Sweden did not join the European Monetary Union, which involves some disadvantages, for example higher cost for imported and exported products. Also the cost of exchange rate changing can affect the company if selling products on the local markets.
- GDP per capita in Sweden $54,815, while in Finland $45,635 in 2012
Social
- Social conditions are similar to Finland. The country has strong beliefs in equality of people as in Finland.
- When you look at fashion taste Sweden and Finland both have similarities with the Nordic fashion style.
Technological
- Technological advance as far as in Finland. Most of the people use for example the Internet on daily basis.
Legal
- Efficient and transparent as in Finland.
- Property rights are well protected as in Finland.
- Contractual agreements are strictly obeyed.
Environmental
- Stockholm in many occasions viewed as the fashion center of the Nordic countries, which raises possibilities for Pöllöt to be recognized as a new upcoming brand.
- The climate conditions similar to Finland and the season for sunglass sales is more or less the same.
References
Finnish Association of Optometry (FAO). 2013a. (2013, November 14th)"Toimialakatsaus 14.11.2013, Optinen toimiala" [PowerPoint slides]. Presentation available HERE
Finnish Association of Optometry (FAO). 2013b. (2013, August 28th) "Toimialakatsaus 28.8.2013, Optinen toimiala" [PowerPoint slides]. Presentation available HERE
The Swedish Industry of Optometry. 2013. (2013, November) "Branschstatistik 2013, Oktober 2013" [PowerPoint slides]. Presentation available HERE
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