Transistions Optical SWOT
Transitions Optical is a large eyewear business with more than 80 percent of the photochromic lens market. Knowing the company's strengths, weaknesses, opportunities, and threats can help investors and others to understand its position in the market.
- Transitions Optical is a leader in the field of lenses that change color and block ultraviolet light from entering the wearer's eyes. These lenses are called "photochromic." The company owns the technology. That is its greatest strength and competitive advantage.
- The lenses are manufactured for prescription eyeglasses and sunwear. The worldwide market for eyeglasses is about 7.7 billion people.
- The company was founded in 1990 by PPG and Essilor, which owned 51 percent and 49 percent, respectively. In 2013, Essilor bought out PPG's interest, and now owns 100 percent of Transitions Optical. Essilor is a multi-national company with worldwide manufacturing, sales, and distribution centers. This breadth gives Transitions Optical a strong backing.
- Transitions Optical has partnerships with over a dozen manufacturers, including all of the major lens makers, offering more than 100 lens options as of 2006, and hundreds more today. The partnerships provide breadth and depth to the company and multiple outlets for the sales of its products.
- "...Essilor’s growth strategy ... is based on strong innovation in every segment of the optical industry...." Essilor's many brands are sold all over the world, including Varilux®X series™ in the United States, Crizal®Sapphire™ 360° in the United States, Transitions®, EyeZen, and others.
- Transitions Optical's financial condition is not known, because the parent company, Essilor, does not present that information in its annual reports. Instead of showing sales data for each of its many companies, Essilor instead offers the revenues of its three divisions: Lenses & Optical Instruments division, Sunglasses & Readers division, Equipment Division. A 4.3 percent growth rate overall was claimed for the first three quarters of 2018, the most recent report available.
- "The photochromic lenses industry is high concentration." The important brands in the US include Essilor (Transitions Optical), "Carl Zeiss, Vision Ease, Rodenstoc, Corning, Hoya Vision, etc. Essilor (Transitions Optical) possesses monopoly power in the relevant market. Transitions’ share of the relevant market has been at least 80 percent during each of the past five years. In 2016, Transitions’ market share was over 83 percent."
- Essilor has 61,000 employees. It is not known how many of these work directly for Transitions Optical. If the coronavirus becomes worse worldwide, it could affect Essilor's production, distribution, and sales by infecting some of the employees as well as some of it customers and providers.
- Transitions Optical has several strong competitors, including Vision-Ease Lens Ltd, Carl Zeiss, LensCrafters Inc, Visionworks, OPSM Pty Ltd, Corning, Aurolab, Hoya Corporation, Sunex Inc, and CIBA Vision Corporation. Should any of these competitors develop a superior product, then that might cut into Transitions Optical's sales.
- The continued relative wealth of the Baby Boomer generation people aged 56 to 74 means that they will continue to purchase new eyeglasses when needed. In addition, several eye diseases (including glaucoma, macular degeneration and cataracts) become more likely to develop as people age. Thus, the aging of the American population will increase demand for eye examinations.
- More than 86 percent of the older generation uses some form of vision correction, according to a 2017 survey. This is a very large and continuing market for lenses.
- In terms of employee benefit enrollment, vision benefit enrollment is reported to be higher among older employees. "New research from Transitions Optical reveals that this trend may be changing. Today, Gen Z employees—who are expected to comprise one-fifth of the workforce by 2021—are more likely to enroll in and utilize their company’s vision benefits than they were just one year ago."
- The 10th annual Transitions Optical Employee Perceptions of Vision Benefits Survey found that "six in 10 Gen Z employees (ages 18-24) are enrolled in a vision plan—compared to just half of Gen Z employees surveyed in 2018. Additionally, 44% of Gen Z employees say that whether a company offers vision benefits has been an important factor in their decision to accept a job...."
- The survey found that employees belonging to the Millennial, Gen X and Boomer generations were 33% more likely to enroll in vision benefits (eight in 10 vs. six in 10)" than Gen Z employees.
- Breakthroughs in technology could provide Transitions Optical with new products to market.
- New forms of marketing and sales of eyewear will have an effect on the way that Transitions Optical directs its business.
- Changing state regulations in the US can result in scope of practice changes for optometrists, ophthalmologists, and opticians. For example, in some states, "Employment restrictions prohibit unlicensed persons and firms from hiring optometrists. Such restrictions prevent nonprofessional firms from selling eye examinations and eyeglass or contact lens prescriptions so that they cannot offer the one-stop service provided by dispensing ophthalmologists or optometrists." This could affect sales of Transitions Optical products.
- Some of Transitions Optical's contact lens business may be lost to ecommerce companies like Hubble and 1-800-contacts that offer cheaper prices than Transitions Optical does.
- Augmented Reality (AR) eyeglasses and Virtual Reality (VR) glasses will cause a disruption in the sales and marketing of traditional eyeglasses. These "smart glasses" will attract younger consumers.
- If the mining and refining of silver should experience disruptions, then the business of manufacturing photochromic lenses would be affected.