What poses a significant threat among the players in the Optical retail industry is not the rival stores themselves but the very powerful and popular online shopping. Websites like Amazon and eBay allow the users to buy products from their home and it will be delivered directly to their doors within a couple of days. Currently, the market trend in the United States is shifting towards online shopping because of the savings that they can obtain by not transporting to the stores. Finally, these stores offer different designs and colors offering that the retail stores like Blink optical cannot provide to the customers. Aside from these two websites, the producers of the high end optical products are now starting to build their own websites and implement an online shopping framework.
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Current Demand for High End Optical Products
The demand for the optical products is one thing but the demand for the high end products is another (Heinn, 2011). This means that there is a separate market on the optical retail business and the positioning that the companies employ. The optical retail business have very strong demand because of the rising number of the individuals afflicted by problems in the eyes. Experts suggest that the exposure of the individuals to gadgets, computers, and large television sets contribute on the diminishing or deteriorating quality of their eye sights and therefore requiring them to wear eye glasses in order for them to see properly. Aside from this, there is also a population who have deteriorated eyesight because of their exposure to study materials like books. There is also an increasing population of the elderly which seem to be constant because aging is a natural process that will deteriorate the eyes. Meanwhile, there is a growing population of the individuals, particularly among the teenagers and young adults, which prefer to wear eyeglasses as a matter of fashion. This is when the eyeglasses do not have eye correction lenses but some consider it as a simple protection to the eyes. Further, the demand for the eyeglasses, sunglasses, or shades grows up seasonally most especially during the summer when the people tend to spend their time on the beach (Greene, 2015).
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The trend nowadays is that more and more people are attaching good qualities and attributes to very expensive high end products. This may allow them to show-off their economic capacity to purchase their products or to actually serve their utilitarian needs in protecting their eyes. Nevertheless, the companies can take advantage of the conspicuous consumption behavior which is slowly gaining traction most especially since the social media is a medium for them.
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According to Ilardi (2007), there are four groups of the consumers for the eyeglasses or optical products retail industry. These include the individuals who have deteriorated eyesight, those who wear glasses for fashion, and the individuals who merely purchased the products because of conspicuous consumption.
The market for the company specifically on the sector of those who have deteriorated eyesight is fixed because they consider the eyeglasses as a necessity and not just a mere luxury. These people prefer having checkups and direct trial and demo with the products because they want to assure that it is compatible. This is contrary to those individuals who prefer to purchase the eyeglasses online since the abovementioned considerations are not taken. Furthermore, the individuals who have poor eyesight have sufficient allocation of their financial resources for their eye care that they are willing to pay premium for a set of glasses. However, they have negative leniency against the luxury products. Despite of this, the latter categorization of the products have another sector.
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Shukla (2008) stated that the conspicuous consumption behavior of the individuals plays an important role on the market trends favoring the high end or luxury products. More and more people have a behavior of purchasing expensive products in order to show it off to their friends and colleagues. Such behavior may also be motivated by the envy towards another who possess expensive clothing or fashion apparel. Accordingly, the new generation or the “millennial which are considered to be the teenagers today are now focused on keeping with the latest fashions and developing their own style”. Aside from this, they prefer those high end brands or the designer brands because they will be more popular with their friends in this way. This attitude and behavior of the teenagers have significant difference on the attitudes of adult population.
Pros and Cons of Selling High End Optical Products
There are numerous advantages which selling high end products can provide. However, the same stance towards retailing products may be different. The point is, there are many factors which is to be considered in order for the maximum potential of the businesses be obtained. According to Heine (2011) selling high end products will be much more beneficial since the return of the money is faster. However, this is not necessarily the case when it comes to the optical products which may be considered as a necessity by some while a luxury to others.
As one of the Pros of selling high end products, as a retail store, Blink official will be able to gain attention in the social media and through word of the mouth marketing. People nowadays always talk about the recent purchase that they made most especially if it is expensive. Thus, selling these high end products will provide exposure to the company which is a free marketing tool. Accordingly, being popular for selling high end eye glasses will generate a positive perception of quality among the market. This may be taken into the advantage of the Blink Optical business since they may be able to dictate higher prices for the products.
On the other hand, selling the high end optical products like sunglasses and eyeglasses may be disadvantageous most especially if those who consider it as a necessity, may consider it as a fashion or a non-serious store in selling what they need. They will be turned off because these individuals wanted to assure that their eye wears are comfortable and has benefit. In reality, this issue is actually subjective.
Another practical disadvantage of selling high end optical products that can be listed in the “cons” list is the high capital requirement of the same. The return of investment may be very far because these high end optical products may cost thousands of dollars that it will spend a very long time on the shelves. In this regard, the company should consider the capacity of their targeted population to purchase their products before even thinking about buying high end, expensive products.
For a business like blink Optical, it is expected that they have the sufficient financial resources since they are contemplating of opening new brands. However, it will require additional investments and the earnings of the other branches cannot be depended on to sustain the expenses of the capitalization of the other branches. There are three major expenses when it comes to the establishing a new branch. These are rent, goods, and personnel (Sullivan & Sheffrin, 2003).
Washington D.C. is one of the most visited cities in the United States. Moreover, there are numerous prime locations in the area that makes the business very viable. While it seems beneficial for a company like Blink Optical, it will add to their burden because of the high rent that landlords impose upon them. In fact, Washington is considered to have one of the highest rent rates in the United States following the urban jungle of New York. Meanwhile, it is not practical that the company purchase its own land because the investment will not be returned and the area will soon deteriorate. At an estimate, there will be about $4000 per month of store space lease that the landlord will require about two months deposit excluding the bonds and insurance. Moreover, Blink Capital should be able to hire the services of professional contractors in transforming the space into a store. Therefore, the store space alone would cost about $100,000.
The second consideration is the goods to be sold on the stores. Currently, Blink Optical is contemplating of selling high end products. This will require huge capitalization as there are very few companies which allow a consignment arrangement with the retailers. Cheaper items will be at least $10 while some may cost around $10,000. The cost of transportation and taxes will be added that about a quarter million dollars ($250,000) should be invested to have a decent array of eyewear to be sold.
Finally, the personnel is essential to the business because without them, no one would sell the products to the customers. Not only are the services of the store personnel like clerk, cashier, and assistant should be availed but also a professional ophthalmologist who can handle checkups and assessments for the customers. The amount required for the human resources is very dynamic that a conservative estimate would be around $150,000 as a startup.
It seems that putting up a new branch in Washington DC is very feasible for Blink Optical. However, numerous considerations must be taken. First is that it must look out against the competitors in the business who may institute aggressive marketing drive as well as the online competitors. Meanwhile, the company should exploit the conspicuous consumption behavior of the individuals in order to sell the high end products but at the same time maintaining their integrity towards those who consider eyewear and protection as their needs. Finally, the capitalization required for the business is very high in consideration of the location and the quality of products and personnel.
Blink Optic (2015). About Blink Optic Store. Retrieved from h ttp://www.blinkoptic.com/about- blink-optic-store
Greene, F. (2015). Retail Optical Industry. Retrieved from http://smallbusiness.chron.com/retail- optical-industry-14022.html
Heine, K. (2011) The Concept of Luxury Brands. Luxury Brand Management, 1, 23.
Ilardi, V. (2007), Renaissance Vision from Spectacles to Telescopes, Philadelphia, PA: American Philosophical Society.
Shukla, P. (2008). Conspicuous Consumption Among Middle age Consumers: Psychological and Brand Antecedents. Journal of Product and Brand Management, 17, 25–36.
Sullivan, A. & Sheffrin, S.M. (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall.