March 24, 2022
Warby Parker, one of the most popular digital startups in retail, now sees the possibility of opening more than 900 stores in the United States. Management considers the stores to be essential to support its new growth opportunities.
the eyewear retailer opened a record 35 stores in 2021 to end the year with 161. Forty are planned for 2022.
Growth opportunities include progressive lenses, which represent 20% of Warby’s mix versus 45% of all prescription eyewear sold in the United States. Progressive lenses start at $295, Warby’s highest price and highest margin.
“Incremental buying tends to lean more towards bricks and mortar given the complex nature of prescribing and the demographics of older customers,” Co-CEO Dave Gilboa said last week on Warby’s. fourth quarter call. Buyers of progressive lenses are usually 45 or older.
Stores also allow eye exams, which accounted for less than 2% of Warby’s sales in 2021, compared to 10-15% at a typical optical retailer. Neil Blumenthal, co-CEO, said the reviews “also give us more control over the customer experience.”
Finally, in-store reviews are supporting contact lens sales, which have doubled in 2021 to 4% of Warby’s sales compared to 15-20% at a typical optical retailer. Industry-wide, 70% of consumers purchase eyeglasses and contacts at the same place they get their eye exam.
The 37% revenue growth in 2021 reflects the fundamentals of Warby’s original business model. Warby avoids wholesale markups by producing its own lenses, keeping single vision eyeglasses priced at $95 — the same price Warby charged when it was founded in 2010. (Progressives sell for well under $800 at $1,000 usually paid.)
The stores, which account for 54% of sales in 2021, are aiming for four-wall margins of 35% and refunds in less than 20 months. New stores entering markets expand the overall market by more than 250% on average in the first year. Other differences include omnichannel capabilities, including online vision testing, and its “Buy a Pair, Give a Pair” program.
The potential 900 stores determined by a study commissioned by a third party last year “still represents only a fraction of the 41,000 optical stores that exist today,” Blumenthal said. “As we continue to expand our product and service offerings, we believe this will also expand our in-store footprint opportunity.”
DISCUSSION QUESTIONS: Was Warby Parker always intended to open a large chain of stores or did the expansion into progressive lenses, contacts and eye exams create more urgency around store openings? Do you see more opportunities than risks in its accelerated expansion through offers and with physical stores?
“Warby Parker has opened, lived, learned and evolved accordingly.”