As I type this, the news is dominated by concerns over the economy, including unease around inflation and a looming recession. This has practice owners understandably concerned and asking, “What should I expect, and how can I prepare?”
I’m not an economist, and I don’t have a crystal ball, but I think it’s helpful to look at past history to guide current decisions and expectations. While wild swings in the economy make people uneasy (especially when it’s trending downward), it’s easy to get caught up in the short-term and lose perspective of the long-term.
Look at the Past to Inform Your Future
We don’t have to go that far back in history to analyze the past. If you were practicing in the years 2007 to 2009, you practiced through what is now known as The Great Recession. The Great Recession was the most severe economic recession in the United States since the Great Depression of the 1930s. Certainly this was a challenging time for business owners, but fortunately for the optometric industry it wasn’t nearly as challenging as other industries. If your practice followed the trends, you most likely recovered and even thrived in the years that followed.
Don’t Be Ruled by Fear
Every practice is different and as a consultant, we take a lot of individual factors into consideration when offering guidance. Some short-term planning or adjustments are probably wise during these times, but don’t let fear of the short-term derail your long-term goals. When you look at the data below, there’s reason to be optimistic.
Recessions and the Optical Industry:
- In the 5 years following The Great Recession, there was a net increase of 19.6 million eyewear and eyecare customers generating $3.8 billion in additional optical sales.
- The U.S. optical industry aligns to the state of the general U.S. economy, but tends to be lagging and sheltered, which means that a slowdown in optical industry sales does not really start to occur until 4-6 months after any particular slowdown hits the general economy.
- Early in a recession, consumers slow their spending on non-optical goods and services (clothing, electronics, entertainment, etc.) to a greater extent than optical products. Spending cuts on optical goods occur later in a recession.
- In The Great Recession, sales declined in the optical industry, but those declines were not as drastic or as severe as what other industries experienced.
- From 2007 to 2013, the number of exams at independents grew much more than chains (all non-independent).
- The number of exams at independents increased by 8.0 million or 12.4 percent.
- The number of exams at chains (all non-independents) increased by 0.3 million or 0.9 percent.
- Only independents showed an increase in the average frame retail price between 2007 and 2013, while all other channels showed significant decreases.
Dig Deeper and Be Prepared
For a deeper dive into matters of the economy and a looming recession, tune into this podcast episode where IDOC CEO Dave Brown and I discuss what to expect and how to prepare for weathering inevitable economic downturns.
For tips on minimizing the impact of inflation on your practice, read this post by Nathan Hayes, IDOC’s Associate Director of Financial Services.
Sources:
- Optometry Times: “Optical recovering post-recession, with Internet leading the way”
- Vision Monday: “Optical Industry Adds $3.8 Billion in Sales Since the Recession”
- Review of Optometry: “Can Optometry Ride Out the Recession?”
- Vision Monday: “Recession to Recovery: Comparing 2007 With 2013 Eyecare and Eyewear Trends”
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