Affordable eye care player, Specsmakers, aims to set up 500 stores by the year 2020 by going deeper into the current market and entering new markets such as Hyderabad and Pune. It also plans to raise US $10 million to fuel its expansion plans.
Pratik Shah’s entrepreneurial quest began after he graduated with a degree in business management from the U.S. After a year-long stint as an analyst in New York, he returned to India in 2004 with an idea of fulfilling his desire to become a business owner. “Coming from a family of entrepreneurs, I was keen on setting up something of my own,” says Shah. While he weighed the pros and cons of entering the financial or dotcom business, he decided to build on something that his family was familiar with – the optical business. “My father used to be a supplier of lenses and used to run a wholesale unit. He understood that the opportunity is in the retail business but was not keen on expanding,” recalls Shah. The junior Shah instead took the retail route and opened his first store, Venkateshwara Optics, in 2005.
Aside from the familiarity aspect, Shah also understood the huge growth potential of operating in a Rs. 2,000 crore market in 2005, of which only one per cent comprised organized players. His work experience in the U.S. further exposed him to the nitty-gritties of international optical chains, thus helping him realize the gaps in the Indian market. “There were very few trusted opticians offering good quality, value for money products and services. Moreover, people had to commute long distances to buy the products that they wanted” says he, adding, “I decided that if I wanted to create a chain of stores, I needed to create a brand. I wanted to connect to the masses.” He wanted to break the myth that if something is cheap, the quality is bad. Instead he decided to deliver affordable eye care with great service. Thus was founded Specsmakers in 2007. The company opened its first store in Chennai, with a strong focus on quality, service, warranty and affordability. Within two years, with the inauguration of its tenth store, it shifted from a multi-brand outlet to a single brand outlet, and also began retailing its own brand of lenses and frames.
Taking Baby Steps
In the early days, Shah’s regular travels to countries like China gave him exposure to better pricing and quality of eye care products. In fact, one of the strategies he and his team had adopted; that of opening smaller stores in Chennai, soon helped them crack the model of being an affordable optician. “Today, there are four reasons why people come to us: reasonable price, value for money, unconditional warranty and service,” he adds. Once the company was confident that it understood the model well, it decided to enter Madurai but soon understood that it couldn’t open beyond two to three stores there. “Our key sales come because of advertisements. So, more the number of stores in a city, the lower the advertisement cost per store,” says Shah. Hence, it altered its market entry strategy to focus on those cities which allowed it to open around 50 to 100 stores. With this policy, its next destination was Bengaluru, which it entered in January 2016. By December the same year, the number of outlets rose to 30 in Bengaluru. “On the whole, we have 91 stores now in the three cities; Chennai, Bengaluru and Madurai,” shares its founder. The company plans to hit the 100 milestone shortly by March 2017.
A Test of Growth
When the company was incorporated, the main challenge it faced was in making people understand that eye care is important and not something they should consider on a need-basis. Moreover, the presence of many smaller stores led to customers facing a dilemma in deciding among brands and outlets. “These apart, educating the market still remains a challenge. There are not many eye care colleges or sales training institutes here,” voices Shah. For example, it’s not easy to find a qualified optometrist because there are not many training institutes in the city. More importantly, there is a scarcity of English training optometry schools. “There are a lot of schools but the communication skills are poor and this is a vacuum. We are trying to create an academy where people with optometry qualification can get trained,” says Shah.
While the company faces stiff competition from online and offline channels, Shah believe that they have carved a niche for the brand by specifically targeting the middle and upper middle class markets, where affordability is a key criterion. That being said, Shah is also quick to add that, “A lot of premium customers have started coming to us because they also want value for money.”
With a keen eye on marketing, the company spends around 10 percent of its revenue on advertisements and plans to increase this to 15 per cent to 18 per cent by 2017. Its activities include press, television, digital marketing and BTL activities around the store. “Our sales have grown substantially in 2017 owing to our aggressive advertising campaigns,” says he.
Specsmakers doesn’t believe in sporadic expansion; it prefers to open multiple outlets in each city in a shorter span of time. And, to compliment this pace of growth, it hires 20 per cent in excess, typically, 10 hires in advance before entering a new city.
The Design Aspect
While Shah, on one hand, travels extensively to industry events to understand design and engineering of lenses and frames, his in-house design team in China and Hong Kong, on the other hand, stays on its toes to create relevant styles for its customers. “In this aspect, this industry is quite simple. You can look at what brands are creating and create the same moulds in your design. Anything that moves fast gets accepted in India,” says he. However, design trends are more local according to the personality of the demographics of the region. With respect to lens manufacturing, the company has outsourced this process to three laboratories in India. The company also plans to start its own facility shortly for edging in cooperation with an international laboratory. The company sources around 15,000 pairs every month. The frames, on the other hand, are imported from China where it has a tie up with seven factories.
Where to from here?
Specsmakers’ expansion strategy is to get anywhere where there is a combination of a residential and commercial population. “We have understood that we need to be present every three kms,” says Shah. The company doesn’t believe in sporadic expansion; it prefers to open multiple outlets and deep dive into each city in shorter spans of time. In fact, by year end, it aims to increase the number of stores to 100 in Chennai and 100 in Bengaluru, taking the total number of outlets to 200 by the year end. All of Specsmakers outlets are company owned and they are now exploring the franchisee route for expanding in the Tier 2 and Tier 3 markets.
With such an aggressive expansion strategy in place, it seems to have planned its manpower requirements wisely as well; it hires 20 per cent in excess to compliment its growth. Says Shah, “If we are looking at entering a new city, 10 people are hired in advanced.” The company currently has a staff strength of 370, which consists typically of salesmen, store managers and optometrists.
Going forward, Specsmakers has set clear targets for itself; to open 200 stores in 2017, 300 by 2018 and 500 by 2020. And, to execute this, it plans to enter two more cities: Hyderabad and Pune. “We are also planning to raise US $10 million by July and create a core management team, make the middle management stronger, train second line of people and recruit good talent,” shares Shah, on a concluding note.
- Reach 500 stores by 2020
- Raise US $10 million by July
- Create a core management team
- Make middle management stronger
- Train second line of people and recruit more talent