Business, Company, Feature, Frames, Products, Report, Retail

Australia a snug fit for Safilo’s optical objectives

Australia was a shining light for global eyewear supplier Safilo last year. But the company holds even greater hopes for the country’s thriving independent market and has plans to significantly expand its presence here in 2021 and beyond.

In recent years Italian eyewear giant Safilo has made no secret of its ambition to return to its origins as a go-to supplier of optical frames and rely less on its sunglass business.

What few people may not realise is the role Australia is set to play in this evolution when Safilo’s South East Asia and Pacific regional headquarters in Singapore relocates to Sydney later this year.

As Safilo’s senior director of Asia Pacific Mr David Pearson explains, there are several reasons behind investing in Australia, partly motivated by the country’s healthy optical market underpinned by strong reimbursement mechanisms and patient-centric eyecare professionals.

David Pearson, Safilo senior director of Asia Pacific.

“Singapore is a great place to reach the South East and North East Asian markets, but one thing COVID-19 taught us is that you don’t have to be right next to the market to be effective. We see Australia – as well as China – as one market that’s really going to grow over the next five-to-10 years, so we want to be part of it,” he says.

While the bulk of Safilo Group’s business is conducted in Europe (44%) and North America (43%), Australia is a top 10 market and a major contributor to the Asia Pacific business, with Asia Pacific accounting for around 8% of the group’s revenue.

Pearson acknowledges 2020 was a tough year for the group, whose revenue shrunk 21% for the first nine months of 2020 compared with 2019. But a third quarter rebound surprised analysts when sales grew 6% at constant exchange rates compared with 2019.

Looking ahead, Safilo wants to reinstate its position as a leader in the global optical frames market. Its history can be traced to 1878 with the establishment of Italy’s first lens and frame manufacturing site in the Venetian Alps. The Safilo name itself dates back to 1934 when Guglielmo Tabacchi bought the production facility and founded a new eyewear company, making it the oldest player in the Italian eyewear industry.

In an interview with Insight in 2019, Safilo Group’s chief financial officer Mr Gerd Graehsler explained that until the 1980s – before Luxottica’s expansion – Safilo was the number one maker of optical frames. Since then, it diversified to incorporate sunglasses, which grew to account for two thirds of total revenue, while optical made up the rest.

With a portfolio of 27 licensed brands and six house brands, Pearson says re-imposing Safilo on the optical market is now a central focus across all regions.

“That’s for a couple of reasons. We were an optical company from the start so that’s where we want to be and that’s who we are deep down,” he says.

“Secondly, the fundamentals of optical frames and retail offers much more stability. It’s a steady business whereas sunglasses can fluctuate more in terms of fashion and brands. If you get the fundamentals right in optical frames, you can really support the customer and the retailer a lot better.”

With this in mind, Pearson says shifting the South East Asia and Pacific regional headquarters to Sydney aligns with Safilo’s optical objectives. Importantly, Australia displays some of the best fundamentals in patient-driven optical retail in the region.

“Australia has strong support in the form of legislation and government to ensure people have great access to eyecare – and that’s going to stay. It also has fairly strong support from the private health insurance system,” Pearson explains.

“Traditionally Australia is also a strong sunglass market for us, and the optical market has really good practitioners who care about their patients, so we want to be a part of that. To support this we are investing more heavily in the design and size of our optical collections, with 2021 set to have the largest collections allowing us to support more patient segments in terms of style, brand and price.”

Australia was also the region’s “shining light” during the COVID-19 pandemic thanks to government support for business, speedy recovery and an emphasis on galvanising client relationships during the turbulent trading period.

“South East Asia has been difficult with countries in lockdown. March, April and May were really tough, but since then we have grown progressively stronger each month, and the business is travelling well into the peak period. Overall, we have had a strong second half of [2020] in Australia.”

Focusing on the fundamentals  

As part of the 2021 plan, Safilo’s Australia will move out of its stylish Surry Hills office in inner Sydney and into the new South East Asia and Pacific regional headquarters. Likely to be in suburban Sydney, the new site will need to accommodate space to combine its commercial operations with the warehousing and logistics division.

The company is doing away with the frills and Pearson says it’s part of a strategy that places more emphasis on service and delivery.

“That’s the other thing we learned from COVID-19 – having a beautiful office in a lovely location doesn’t really help our customers that much,” he says.

“Getting the product out on time and making sure it’s to the customer’s requirements is really important, especially in the Australian market, so we are bringing the commercial and logistical and warehousing operations back together. That will be happening mid-2021.”

In terms of its Australian product portfolio, in 2020 Safilo launched the Eyewear by David Beckham collection in February, and the latest female collection from Italian luxury fashion brand Missoni in September.

The new Missoni collection.

Pearson says the David Beckham range – aimed at the premium male segment – had a strong start in Australia. Backed by a major name with a reasonable price point ($280 to $470), it filled a distinct gap in the market.

David Beckham Eyewear.

“And everyone has been excited by the Missoni collection. It’s got some real points of difference; having the fabric inlaid inside the frame, it’s very traditional and made in Italy. It’s a beautiful range with amazing history behind the brand, so we have been excited about those two brands.”

Safilo’s home brand Carrera has also performed well, while the company reaped the benefits of making Jimmy Choo and Kate Spade accessible to a broader market via price reductions.

For 2021, Safilo has confirmed two launches for Australia. It will feature a new collection from iconic French fashion luxury label Isabel Marant. The other is Love Moschino, a colourful and playful feminine range with an affordable $120 to $150 price point.

Another major announcement, Pearson says, is expected for the Smith Optics proprietary brand. “We have plans to grow that brand and make it a powerhouse. It is, in my opinion, the coolest, best brand we have. In the US it’s a mega brand so we see it has a lot of the fundamentals to be great for the Australian public.”

While Safilo has never lacked in quality brands and portfolio diversity, Pearson says nailing the fundamentals has never been more important.

“No one drives to work as an independent optometrist thinking about whether Kate Spade is cool or not. They’re thinking about how they can make their customer happy and get them interested in a certain frame. We want to help by being in-store, and making our sales teams super local, friendly and helpful to understand their requirements so we can help with the basics of business and selling the product through.

“Gone are the days of just making a sale into the customer; now it’s about how are we going to help you merchandise it, train your staff and make it look awesome to your patients. Are we are going to supply it on time, and what’s the right pricing? That can be confronting – sometimes being helpful means saying no or doing something different to the way the practice has in the past.”

Global style with local service

One independent practice that has benefitted from this approach is Eye Mechanics in the burgeoning greater Sydney suburb of Gregory Hills in the south east.

Practice director Mr Andrew Pham set up the greenfield practice with his sister Dr Andrea Pham – a therapeutically-endorsed optometrist – and their mother Anh in a small shopping centre during the December 2019 bushfires before the pandemic took hold.

Dr Andrea Pham, her mother Anh and brother Andrew, of Eye Mechanics.

“Safilo are by far our largest frames supplier,” Andrew Pham explains. “We wanted to partner with them because they have a lot of those all-star brands, but we also wanted a supplier with reliable distribution, and the after-sales care from the reps feels really interpersonal.”

Pham believes the independent market is narrowing, but partnering with a big-name supplier who focuses on independents has made it easier for the young practice to swiftly carve out its market. Safilo also provides substantial support and rebates for marketing assets.

“With there being so many large franchise players, for us to still offer that familiarity of product is important. When people see Givenchy or David Beckham banners at the front of the practice, they walk right through the door,” Pham explains.

“That brand recognition helps us with patient acquisition, but when people see there is quality behind the brands – the frame doesn’t warp or bend at the slightest touch – it soon becomes retention and they know they can always come back to us.”