SIC 5995

This entry includes establishments primarily engaged in the retail sale of prescription eyeglasses and contact lenses for individuals. Establishments primarily engaged in the retail sale of binoculars, telescopes, and opera glasses are classified in SIC 5999: Miscellaneous Retail Stores, Not Elsewhere Classified.

NAICS Code(s)

339115 (Ophthalmic Goods Manufacturing)

446130 (Optical Goods Stores)

Industry Snapshot

U.S. retail eyewear stores generated $15.8 billion in sales during 1998, a 2.6 increase over 1997. Independent opticians (vendors of eye wear prescribed by ophthalmologists or optometrists), optometrists (graduates of optometry school who are trained to detect eye diseases, but not to treat them), and ophthalmologists (medical doctors who can treat eye diseases, prescribe medication, and perform surgery) accounted for two-thirds of that total. National chains like Pearle Vision, Inc. and Lens Crafters accounted for the rest. Industry observers expect annual earnings to hit $19.5 billion by the early twenty-first century. In 1999 Dun and Bradstreet listed more than 18,000 U.S. establishments under this industrial classification, with more than 65,000 employees on their payrolls.

Background and Development

The eyeglasses and contact lens retailing industry has been increasingly crowded, as opticians, optometrists, and ophthalmologists compete for the same market. Ophthalmologists and optometrists examine eyes and write eyewear prescriptions. Traditionally, both ophthalmologists and optometrists have offered to fill the eyeglass and contact lens prescriptions they write. But independent opticians can also fill these prescriptions. In the late 1960s optical stores and some small regional chains began offering eye exams along with glasses and contacts. Retail giants began to spring up, and an industry that was once considered strictly a "health-care" field became a competitive retail market.

Two 1978 legal decisions further opened the door for retail competitors. In one decision the Federal Trade Commission (FTC) ruled that optometrists and ophthalmologists must give patients their prescriptions, making it possible to shop around for glasses rather than rely exclusively on the doctor who wrote the prescription. In the second decision the FTC unanimously approved a rule preempting state law and prohibiting states and professional organizations from banning advertisements for eyeglasses, contact lenses, and eye examinations. Four years later the FTC issued an order prohibiting the American Medical Association from placing a ban on advertising by its member physicians. The Association appealed to the United States Court of Appeals for the Second Circuit, which approved enforcement of the Commission's order. American Medical Association v. FTC, 638F.2d 443 (2d Cir. 1980), aff'd, 456 U.S. 966 (1982).

These rulings transformed eyeglasses into a marketable consumer product. Retailers began advertising fast turnarounds, low prices, and convenient hours and locations. They promoted eyeglasses and contacts as fashion wear and convinced the public of the need for more than one pair — in part by offering special deals when two were purchased. Retailers introduced lighter and thinner lenses and more attractive frames, which stimulated sales. Retailers began offering contact lenses in a variety of colors, and many consumers bought several pairs because they liked the idea of changing their eye color. In recent years, the emergence of less-expensive daily "disposable" contacts has opened further marketing opportunities.

Current Conditions

At least 150 million people — or more than half of all Americans — require vision correction, and the incidence increases with age. Nearly two-thirds of all women in the U.S. wear corrective eyewear. About 26 million Americans wear contact lenses. The industry's growth rate has slowed through the 1990s from steady annual increases of around 10 percent to yearly gains as low as 4 percent, but sales are expected to rise as the population continues to age. In the late 1990s corrective laser eye surgery provided competition to optical goods retailers. At a cost of between $1,800 and $2,500 per eye, laser surgery provided a permanent solution to impaired vision for approximately 1 million Americans each year.

In the 1980s emerging retail eyewear chains grabbed a third of the market from optometrists, ophthalmologists, and independent optical goods establishments — which previously had dominated the entire market — but their total share has since remained constant. Cole Vision Corp., was the nation's largest eyewear retailer in 1998, with approximately $1 billion in sales, 2002 stores, and a 7 percent market share. Based in Ohio, Cole Vision expanded its business in 1996 by purchasing Pearle Vision, Inc., for $165 million.

In 1998 National Vision Associates, Ltd., moved to second place among national retail eyewear chains, when it purchased New West Eyeworks, Inc. and Frame-n-Lens Optical. The acquisitions gave the Georgia-based eyewear chain 919 stores in 45 U.S. states and Mexico. The next year National Vision Associates changed its name to Vista Eyecare, and looked into expanding its business further. Company executives predicted revenues in excess of $1 billion by the turn of the century. With only 858 stores, Lens Crafters led all U.S. retail eyewear chains in sales during 1998, reporting more than $1.1 billion in earnings. The Ohio-based company reported more good news for the first three quarters of 1999, when sales increased 14 percent to $965.3 million. Founded by Procter & Gamble Co. executives 17 years ago as a profoundly team-driven company, Lens Crafters has always been family-friendly. In 1999 Lens Crafters parent company, Luxottica SpA, the Italian eyeglass frame company, purchased Bausch & Lomb's sunglass business for $640 million.

Further Reading

"National Vision Associates, Ltd. Completes Acquisition of Frame-n-Lens Optical, Inc." PR Newswire, 29 July 1998.

"National Vision Associates, Ltd. Announces Extension of Offer to Purchase all Common Stock of New West Eyeworks, Inc." PR Newswire, 8 August 1998.

"Cole National Completes Acquisition of Pearle, Inc." PR Newswire, 18 November 1996.

U.S. Bureau of the Census Web site. . December 1999.

U.S. Department of Commerce Web site. . December 1999.

U.S. Department of Labor Web site. . December 1999.

User Contributions:

Comment about this article, ask questions, or add new information about this topic: