Jack Chapman Optical Laboratory, an independent Brisbane-based business, has been placed in liquidation. Accounting firm Worrells has taken control of the business, and frames that were fitted with or awaiting lenses have been returned to practices.
The laboratory, which provided optometry practices with lenses from many different manufacturers, was started by Jack Chapman in 1977. Brendan Burke joined the company in 1983, becoming sales manager and subsequently the owner.
Business consultant Mark Overton said the closure is a bad omen for the optical industry.
If we lose too many of the smaller suppliers, we will not be better off
“It’s never good when any business has to close. One of the keys to a healthy supply chain is diversity. In terms of optometry, the more competition and options practices have, the better they will be in terms of value, technology and service.”
Mr Overton continued, “This is not a situation that is unique to lens labs. We have a similar problem with the smaller frame importer/ distributors. Many are under great pressure, and some have not been able to continue. This is particularly a problem in the current environment. Life was not easy before COVID, but coping with reduced cash flows and increased costs has been a no-win situation for some.
“Many smaller suppliers are also feeling the pressure from the purchase of practices by corporate entities and franchises. The practices being sold are nearly always the bigger and more successful ones, and after purchase, the new owner will change suppliers to those holding agreements. This hurts the smaller suppliers that relied on the relationship, particularly if those larger practices are a significant part of the business sales,” he added.
This was certainly the case for Jack Chapman Optical Laboratory, as Mr Burke explained.
“Many years ago all optical practices purchased lenses from labs like ours, and we supplied them with lens blanks sourced from the global manufacturers – Essilor, Hoya, Zeiss etc. Then the lens manufacturers established local laboratories to do all the grinding, coating and fitting themselves. The prices they could offer – due to their economies of scale and ability to invest in equipment – reduced our market, however we were able to retain a number of practices that were committed to buying from an independent lab and appreciated our customer service and expertise.
“Most recently, the consolidation of optometry practices further impacted our businesses when the practices that once supported us were directed to purchase lenses from global labs under arrangements negotiated by their new owners,” Mr Burke added.
Mr Overton believes the presence of locally owned and operated businesses, like Jack Chapman, is positive for the economy and community because it supports and enables workers to be upskilled. Additionally, he said smaller laboratories often have the flexibility to offer practices access to unique products and services, supported by personalised service.
In an industry that has changed significantly since deregulation, Mr Burke says the ability to pick up the phone to ask about a complex prescription was something his customers particularly appreciated.
“Many practices used our lab as an extension of their own so their patients and staff all benefited,” he said.
“The majority of optical dispensers and lens representatives used to train as optical mechanics so they understood the complexities associated with making a lens to suit the patient and the importance of selecting a frame to work with the lens rather than the other way around. That’s not the case today and so, as an independent laboratory, we would spend a lot of time educating our reps and dispensers, answering calls, and providing solutions to complex visual problems so that practices could provide their patients with the very best value in terms of a finished pair of spectacles to optomise their vision,” he said. “I would like to thank everyone who supported us at Jacks over the last 44 years.”
Although the strong push, by medium and large suppliers, for vertical and horizontal integration and mergers “is not always a bad thing” Mr Overton cautioned that it can represent a potential problem for practices, particularly independent ones.
“If we lose too many of the smaller suppliers, we will not be better off – we will be left with limited choice,” he said. “Think about supporting local and smaller frame and lens suppliers. They don’t need much support from each practice to make a difference.”