Australia's Leading Ophthalmic Magazine Since 1975

     Free Sign Up     

Australia's Leading Ophthalmic Magazine Since 1975

     Free Sign Up     
News

Lessons behind the demise of Big W Optical: 41 stores to close, 175 jobs affected

02/05/2019By Callum Glennen
Share:
Woolworths Group has announced it will close its entire 41-store Big W Optical business. Following its 2007 launch, the chain failed to gain a foothold in Australia’s competitive high-volume optical market, or emulate the model employed by Walmart in the US.

The closure will ultimately affect 175 optical staff, including optometrists, business managers, dispensers and sales staff. Some may be redeployed to other departments within the Woolworths Group, however the company expects a number of permanent staff to accept redundancies.

Analysing the downfall of Big W Optical, Peter Ryan, director of retail consultancy firm Red Communication, told Insight the business was doomed on numerous fronts, including a failure to impose itself on the low-price high-volume market, a poorly timed business launch and a troubling consumer perception that Big W Optical was of secondary concern to the business.

In explaining the decision to depart the optometric market, a Woolworths spokesperson told Insight: “As part of our strategic review, we are working toward building a stronger and more profitable Big W for the future and therefore we have made the decision to focus on categories that are core for our customers.”

The Woolworths spokesperson stated the closure should be completed by early July.

“Additionally, we have a specialist support resource that is available to all Big W Team members and will remain available for three months after they finish their employment with Big W. Last, we will continue to work with each team member individually to understand their preferences,” she said.

Poor business case



"But when you’re talking about health, and in particular optical health, people up their cynicism levels."
Peter Ryan, director of retail consultancy firm Red Communication

Adopting a low-price high-volume business model, Big W Optical arrived to the Australian optometric market with ambitions to compete with the existing major chains. The company offered comprehensive optometry services, including dispensing, eye tests and screening for conditions such as glaucoma and cataracts.

Ryan – who has worked as a retail strategy consultant with OPSM and The Warehouse in New Zealand – believes Woolworths Group never managed to completely implement Walmart’s highly successful US business model.

According to Ryan, this was because the Big W brand built a reputation solely as a discount general merchandise store. Comparatively, Walmart established a successful three-pronged business model across merchandise, food and beverage, and services.

As such, he believes Big W failed to build a solid case to introduce an aspect to its business that required a high degree of human service, such as optometry. And when it did, it was perceived as an ‘add-on sale’ – and not central to its business – creating apprehension among consumers.

“There’s a greater degree of trust and efficacy in some categories. When it comes to low price work wear, for example, it’s almost disposable, so people are happy to go for the cheapest option. But when you’re talking about health, and in particular optical health, people up their cynicism levels, and they’re looking for reassurance that you can trust the person who’s giving you advice,” he said.

GLAUKOS
advertisement

“Additionally, without wishing to sound too arrogant, I think Australian consumers are better educated, and more discerning, it’s not purely about price. In a lot of the southern US states – and where Walmart originated – consumers are almost entirely led on price. If it’s cheap they will buy it and try it, almost regardless of quality. Strictly speaking, Australian’s aren’t solely fixated on cheap price.”

Basing an optometry practice within a discount department store would have been ineffective in attracting high-level optometrists, and this filtered through to patients, Ryan added.

“As a consumer, your first port of call is going to be an optometrist you have faith in, and generally speaking most people have an optometry relationship already, so why am I going to break that relationship to go into a discount department store for what I perceive is just an add-on sale?”

Furthermore, Ryan said Big W Optical’s arrival to the market came at a time when the wider company itself “was in decline”, meaning it may not have had the ability to invest what was required to ensure its success. It also coincided with Specsavers’ retail launch in Australia in 2008, which brought a highly focused proposition to dominate the low-cost high-volume market after famously opening 100 stores in 100 days.

“Big W’s business is based on logistics, and optometry isn’t a logistics game. Unless you have an unbelievable brand halo and connection with your customers and there’s something in the trust proposition, then really it’s very difficult to deliver the kind of service that optometry on its own requires to be successful,” he said.

“Specsavers was very clear on its purpose and provides an appropriate level of optometry service – with market leading prices – so if you’re going to go to the volume price market, that’s a pretty hard option to beat.

“I also don’t see a competitive advantage for BIG W Optical to head online, Specsavers would beat them there too; if you own the value proposition you own it – whether its physical or online retail.”

In Big W Optical stores, eye tests prescription orders will continue until 7 June. All orders need to be collected by 30 June. The Woolworth’s spokesperson told Insight that the company is working through plans to dispose of its ophthalmic equipment.

Face A Face
advertisement





Younger Optics
advertisement
Editor's Suggestion
Hot Stories

BOQ Specialist Bank
advertisement


OR
 

Subscribe for Insight in your Inbox

Get Insight with the latest in industry news, trends, new products, services and equipment!