By Chad Fleming, OD, FAAO
Jan. 20, 2016
Prior to graduating from optometry school, I spent a number of years as an optician managing an optical that had about 1,500 frames on display. What I quickly learned was that 20 percent of the frames were the ones that people bought, while 80 percent of the frames filled the board. Now, as one of two owners of a two-location, five-OD, 21-support staff practice, I’ve taken that knowledge, gained first-hand, to refine my practice’s frame inventory management to ensure profitably.
Sunwear on Dr. Fleming’s frame board. Dr. Fleming says to pursue a less-is-more strategy, rather than purchasing more than enough, and failing to sell.
Less is More
The trend is moving toward “less is more” in inventory management, as many of us used to set the number of frames by the size of practice. We have a different opinion in my practice. We have the numbers to support that less is not only more for the patient, but it is more for the bottom line of the practice.
According to Key Metrics from Essilor’s Management & Business Academy, our office should have a minimum of 1,250 frames on display with at least that many frames in excess inventory.
However, as a business owner, I do not want to tie up money that could work for me in other ways. I don’t want that money sitting uselessly in excess inventory and overstocked frame boards.
An owner must see frame inventory as cash. We display about 750 frames at our primary location and sell approximately 3-4x this in the year. Our staff re-orders frames weekly and we will switch out lines that are not moving until we get lines that do move. This allows for only the “hot” items for the year to be available, which results in an increased turn rate and better bottom line.
One of the advantages of not carrying a really large number of frames, as recommended for the size of practice that we have, is the ability to send frames back before they become clearance or not worth the full amount we paid for them. We purchase frames at significant discounts to be our package pricing. The majority of those frames are current, which allows us to warranty them or replace as necessary.
Set Time Limit for Merchandise
We try to keep a frame for a maximum of six months. If the frame has not moved by then, the vendor will most likely pull it before we have a chance to say something about it. It is in the sales reps’ best interest to have frames that move on our frame board. Our vendors are given guidelines to follow, and we usually do not have problems with them servicing our frame boards.
Offer Color Choice
Back when I was an optician, I led my optical staff to increase orders to have the best selling frames in 2-3 colors of differing sizes. The selection of color and style should move with the demand. I learned this through watching my wife work with Marchon for the 10 years she was with them as a sales rep.
Market By Brand & Horizontally on Board
Frames should be marketed in brands, and they ideally should be marketed horizontal by the brands, or each brand should have its own display. All low cost/budget frames should be along the bottom third of your display case because most people tend to buy at eye level. Also keep in mind that most people shop from right to left. This is not something we came up with; research supports this. A great reference for learning how and why your patients buy is “Why We Buy: The Science of Shopping” by Paco Underhill.
From what I’ve observed, many optometrists work with too many vendors. Even as a larger practice, we try to buy from no more than 10 vendors, and preferably five or less.
We utilize three main vendors, and have a selection of hand-picked lines that we find to have unique styling that offers a different look and feel than the bread-and-butter lines of the big frame vendors. We have decided to use frame vendors based on what lines they have to offer, and what we see available in our market. We try to offer a variation from the merchandise offered by large optical retail chains. This is not always the case in all of the merchandise we purchase, but it is something that we actively stay aware of.
Develop Relationships with Vendors
As my wife was a previous Marchon sales rep for 10 years, and given my own experience as an optician, I firmly believe in nurturing relationships with the vendors. I will meet with them initially with our buyer, but after we have developed a relationship, I will then meet with them as needed. Once a system of frame board management is in place, it only requires occasional “hellos,” and a quick, “how are things going?” As an owner-optometrist, it is extremely important to be aware of the relationships and have a presence in frame purchasing.
Plan for Seasonal Merchandise Change Develop Relationships with Vendors
The most notable time of seasonal merchandise change should be February, as you prepare for the summer season and sunglasses. This is the time that we will increase our sunglass inventory and start talking to staff about second pairs of sunglasses. Sunglasses are always important, but this is the time when people start thinking about it because of the upcoming summer and vacations to warm climates.
Another key seasonal time: in July and August, at the start of back-to-school season. This is a great time to highlight children’s frames in stand-alone displays.
Focus on Value in Children’s Eyewear
We carry about 100-150 children’s frames with a minimal number of baby frames. Two of the doctors in our practice see a large population of children, and the frame selection seems to be sufficient for the needs of our patients.
We put together pricing for frames and polycarbonate lenses that is competitive with the retailers, allowing parents without insurance to purchase their glasses through us. When a parent can get a pair of frames and polycarbonate lenses with AR under $100, we usually do not have too many who walk, or try to find something online.
Consider Consignment Merchandise Purchasing Options
It is important to note that there may be an emerging trend of companies that do consignment on your complete frame board allowing your office to reduce inventory costs to $0, and only pay as you sell the frames. I believe this to be an attractive option considering the managing company has access to virtually any frame line that you want. I am anxious to see what develops in this area as margins in the optical continue to erode. This may be another way to maintain profitability.