“Halfway through”: Inside Specsavers’ massive store refit program

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ing behind the new projects, the challenges and opportunities it faced in 2022, and their plans for the next calendar year.

Inside Retail: Can you tell me about Specsavers performance over 2022?

Dean Batchelor: Sales wise, we’ve certainly up on three years prior to Covid-19, and we’re very happy with our growth, especially from a volume point of view regarding customers and site tests. To balance that, it’s still a challenging environment as far as labour costs, [and] occupancy costs with landlords also growing. The cost of building stores is up, as everyone’s finding with materials and shortage of labour and all those things.

Some of our landlords have [seen] sales growth as an opportunity to increase our rates, despite our costs going up as well. It’s been a challenge finding landlords that want to work with us long term. Another challenge is landlords delivering tenancies on time.

While sales are up, there’s a lot of other challenges to combat.

IR: Can you discuss the 200+ plus projects? Was that the goal at the beginning of the calendar year, or did it occur organically over time? 

DB: We set ourselves a target on how many new stores we’ll open each year. Relocations and expansions are driven out of necessity, and by us identifying that there’s an opportunity to grow [our store network] for our customers. We also refitted a number of stores, recognising that it was time to lift their look and appearance.  

This year, we’ll have opened 18 stores, [conducted] 62 relocations and expansions, and completed 124 store refits. 

IR: Are you able to provide a breakdown in terms of area where these projects occurred?

DB:  It’s pretty much across our network, and it’s quite evenly spread across Australia and New Zealand depending on the number of stores we have in place. But the location of our new stores followed [a bit more of] a pattern. Victoria, New South Wales and Queensland were the three biggest regions where we’ve opened new stores this year.

IR: Are you looking at towns or areas that don’t have Specsaver locations?

DB: Absolutely. We have quite a bit of detail about our customers, and we can identify where there are gaps in the marketplace. As simple as using Google, we can work out where our competitors are based, and understand where there are gaps in the market. We use that data in making decisions about potential Specsavers locations.

IR: Can you discuss the positive outcomes In terms of these new projects?

DB: It’s difficult for us to pinpoint one particular thing that’s had an impact across our stores, because there are so many variables, and we’re changing so many things at once. For instance, if we relocate a store, we’re traditionally taking it from something like 120 sqm, to 250-350 sqm. It’s a big jump in size but at the same time, we’re putting in illuminated shelves [and] building the stores to a higher standard. All these things impact our sales growth.

One of the things that we’ve noticed is – with our illuminated frame displays – customers are looking at our glasses in a different way. They highlight our frame designs far better than before. We’re seeing customers value our frames more than what they have in the past because they can see the detail and the quality in them. New stores will have those illuminated frame displays in place and, by the end of February 2024, I expect that all our stores will have [been upgraded]. We’ve got 431 stores, so we’re about halfway through refitting the network.

We’ve never gone from a type-A to a type-B fit out, but when you look back five or 10 years, you can see that the design of our stores has evolved incredibly. We’re producing an amazing looking fitout compared to what we had 20 years ago.

But it’s still recognisable to our customers as Specsavers. 

IR: How have you seen the performance of Specsavers leading up to Christmas and end of year.

DB: Christmas and New Year are the busiest times for optical [businesses]. This year, [our] portfolio is better placed to take on the increasing volume of customers, given the amount of expansions, relocations and new stores that we’ve introduced. Customers are better equipped to make an appointment with us when and where they want which is really important.

IR: In terms of plans over the next year, do you kind of have a set number of projects in mind?

DB: When we look at the projects coming up next year, we have far more in the pipeline than we had the year prior. We’re looking to open more stores over the next 12 months [and] we will continue to complete our store refits.

While we have completed 200 projects this year, I expect that we will finish in excess of that [next year].

IR: You mentioned the cost of materials and so on, which seems to be increasing. Do you think that’ll have an impact on next year’s plans?

DB: I don’t think so to be honest. Because we offer great value for money, customers seek us out when they are more conscious of purchase price. So, we’re likely to see an increase in customer numbers. We [also] want to make sure that there’s opportunities for new and dispensing optometrists to open and own a business for themselves, which is quite unique in the marketplace.

IR: Anything else you’d like to add?

DB: We have a reasonably large team that helps to deliver all these projects. What motivates them is that they want to make sure that our customers can access our products and services where and when they want.

We also tie it back to how many customers we can see and help, and how these projects [can assist with] health outcomes.

It means a lot to our team when seen through that lens.