GrandVision S.A.

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GrandVision S.A.

Tour Utopia, Cedex 3810
92071 Paris La Defense
France
Telephone: ( + 33) 1-47-67-59-00
Fax: ( + 33) 01-47-67-59-05
Web site:http://www.grandvision.com

Public Company
Incorporated: 1981 as Fotofast
Employees: 10,000
Sales: EUR 851 million ($995 million)(2000)
Stock Exchanges: Euronext Paris
Ticker Symbol: 5297.PA
NAIC: 446130 Optical Goods Stores

France’s GrandVision S.A. is Europe’s leading retail optical services and retail photographic services group. The company operates six chains of retail stores under two major divisions. GrandVision’s retail photographic services division operates the store chains Photo Service and Photo Station. Based primarily in France, these stores represent 30 percent of the company’s total sales. Photo Service is France’s leading one-hour photograph developing service, a sector the company pioneered in that country. With store sizes averaging 100 square meters, including developing lab, the 215-strong Photo Service chain represents sales of more than EUR 140 million per year.

Photo Station is the company’s discount photography services chain, with stores averaging just 50 square meters. Photo Station operates 212 stores in France, Switzerland, and Luxembourg and contributes some EUR 90 million to GrandVision’s annual sales. The company’s fastest growing division is its retail optical services division, which operates under four main brands: the flagship Grand Optical, U.K.-based Vision Express, Generale d’Optique, and Solaris. The company’s high-end brand, Grand Optical represents a network of 64 retail stores in France, and in other countries, including Switzerland and Italy. The typical Grand Optical store is 300 square meters, although the company has been rolling out a 1,000-square-foot-plus ‘megastore’ concept in locations such as the prestigious Champs d’Elysees. Grand Optical provides more than EUR 125 million per year in sales.

Generale d’Optique is GrandVision’s discount eyewear chain, with 104 stores generating more than EUR 90 million per year. Solaris, the most recent of the company-launched brands is a fast-growing chain of sunglasses specialists, with 27 stores in 2000 with an average size of 50 square meters per store. Vision Express, acquired by GrandVision in 1997, is a network of 103 optical stores located in the United Kingdom and Ireland. The company has been refitting its U.K. operations to align more closely with the Grand Optical concept, and the United Kingdom now represents the company’s fastest growth market, posting more than EUR 180 million in annual sales per year.

The company is also present in a number of other foreign markets, including Belgium, Luxembourg, Spain, Portugal, Switzerland, Poland, Czech Republic, Latvia, Lithuania, and Argentina. Grouped under its International Optical Branch, these operations oversee more than 100 stores and contributed more than EUR 65 million in sales in 1999. Traded on the Euronext Paris exchange, GrandVision is led by co-founders and co-chairmen Daniel Abittan and Michael Likierman.

The Fast Track to Success in the 1980s

England’s Michael Likierman came to France in the late 1970s in order to launch the Habitat retail chain in that country. There he met Daniel Abittan, then with Price-Waterhouse. On a trip to the United States, the pair discovered a new type of photo developing machine that allowed photographs to be developed in just one hour. Abittan and Likierman decided to introduce the one-hour photo concept in France and brought over their first developing machine. The pair launched their own company, Fotofast, in 1981. The Paris-based company quickly built up a network of film collection depots, many of which were located in the Parisian Metro; films were brought to the company’s central laboratory for developing.

Service became the company’s hallmark, comprising not only a convenient one-hour service, but also a reputation as one of the best service providers in a country where the words “service” and “retail” were rarely found in the same sentence. Fotofast was immediately successful and led Likierman and Abittan to expand the concept. In 1982, the company added developing machines to the retail stores themselves, choosing shopping malls for its new locations. Two years later, the company’s commitment to high-quality service was incorporated into its name, when the company opened its first Photo Service store. Shortly thereafter, the company changed its name as well. In 1985, all of the company’s stores were rebranded as Photo Service.

The company’s success inspired a raft of competitors. Photo Service acquired one of these, the eight-store chain Photo Hall launched by appliance retailer Darty, in 1986. By the late 1980s, Abittan and Likierman were looking for new retail territory to conquer. The pair made a three-day new trip to the United States in 1988 to search for fresh opportunities. That trip, marked by misfortune at the onset, would help bring the company new potential and profit. Arriving in New York City, Abittan broke his glasses. Extremely nearsighted, he was about to cancel the trip, reasoning that three days was too short a time to have a new pair of glasses made for him. That was when Abittan and Likierman discovered LensCrafters.

Launched by Dean Butler in the early 1980s, LensCrafters was the first eye wear retailer to offer a one-hour eyeglass dispensing service. In the mid-decade, Butler sold his company to U.S. Shoe Corporation and then left that company in 1988 in order to found a new company, operating on a similar concept, in Australia and the United Kingdom. Butler’s new company was called Vision Express.

Meanwhile, Abittan and Likierman had found their new retail niche. After a year of preparation, the pair opened its first Grand Optical store in the Belle-Epine shopping center near Paris in May 1989. Featuring its own laboratory and equipment, Grand Optical represented a new revolution in the French retail market, offering quality eyeglasses, mounted in designer frames, in just one hour. The company had started from scratch, targeting a high-end market, adding in the company’s tested service formula. As Abittan explained to L’Expansion, the company “invented a market by bringing the machines into the store, and in order to that we had to manufacturer the equipment on a reduced scale. We brought the glass craftsman back into the store.”

The company had initially grown only modestly, with plans to add a second store after its testing the Grand Optical format for its first year. However, the first store met with such success that Abittan and Likierman quickly made arrangements to roll out new stores. By the end of its first year, there were five Grand Optical stores in operation. The company took on a new name, Groupe Projets Services (GPS), placing Photo Service as a GPS subsidiary. GPS ended 1989 with sales of FFr 15 million.

Market Leader during the 1990s

By mid-1990, GPS had doubled the number of its Grand Optical stores, while continuing to build up its Photo Service and Photo Hall chains. Underscoring its high-end focus, Grand Optical opened a new flagship store on Paris’s Champs Elysees. Grand Optical rapidly overtook the company’s photography wing. Photo Service had grown to 103 stores by the end of 1993. Yet, Grand Optical, with 34 stores by the end of the 1993, was quickly overtaking Photo Service. By 1994, Grand Optical represented the largest part of GPS’s sales. The company changed its name to Grand Optical Photoservice (GOP) in 1993.

The company’s other photography business, Photo Hall, was less successful. In 1993, GOP began developing new concepts, opening nine PhotoPoints stores, a network of film collection depots attached to the Photo Hall chain. By the end of 1994, however, GOP had sold off its Photo Hall chain. More successful was the launch of a discount eye wear chain, Generale d’Optique, which opened two pilot stores in 1993. The new chain was meant to counter increasing competition, as a number of supermarkets and hypermarkets began adding discount optical departments, and other competitors, such as Tati Optic and Alain Aflelou, were attracting price-conscious consumers. Generale d’Optique enabled the company to compete for this consumer segment, while Grand Optical maintained its higher-end business.

In 1994, GOP went public, listing on the Paris Bourse’s secondary market. The listing, which reduced founders Abittan and Likierman’s holding to under 28 percent of the company’s shares, with 34 percent of voting rights, was made in order to finance the company’s ambitious expansion program. From 115 Photo Service stores and 44 Grand Optical stores at the end of 1994, GOP wanted to build the former to 200 stores and the latter to 70 to 100 stores by decade’s end. The success of GOP since the creation of Grand Optical suggested that the company was not being too ambitious; from just FFr 15 million in sales in 1989, the company had grown to more than FFr 1 billion by the end of 1994.

The 50th Grand Optical store opened in 1995. In that year, GOP made its first move internationally, entering the Spanish market. That expansion was to prove an expensive one, however. The success of its Generale d’Optique pilot stores had meanwhile encouraged the company to officially launch the chain. GOP quickly built up Generale d’Optique, which had 50 stores by the end of 1996. Meanwhile, after abandoning Photo Hall, GOP continued an opportunity to extend its retail photography operations from the one-hour format to a discount photo format. That opportunity came in 1995, when the company acquired the Photo Station chain. With prices significantly lower than competitors, Photo Station quickly captured a leading share of the photographic services market.

Company Perspectives:

The company’s mission is to develop new retailing concepts that provide outstanding service to our customers, personal fulfillment to our staff and a fair return to our shareholders.

After testing a new store format in 1995, GOP launched Solaris, a small boutique concept specializing in sunglasses, the following year. Also in 1996 the company’s new store openings gained pace, seeing 13 new Grand Opticals, 12 new Generale d’Optique stores, five new Photo Stations. The company continued to build all of its retail chains in France. Yet an increasingly crowded competitive landscape led it to look beyond France’s borders for future growth.

Organic expansion in Spain had proved costly to implement and slow to build toward critical mass for the company. Instead, for its next major international move, GOP launched a friendly takeover of the United Kingdom’s Vision Express. Likierman and Vision Express founder Dean Butler had met some years earlier and had already discussed the possibility of joining the two companies. The acquisition of Vision Express, in the form of a stock swap, was valued at FFr 1.46 billion and was to weigh heavily on the company’s financial books. Yet it created Europe’s leading opticians group, with more than FFr 5 billion in annual sales. The acquisition also gave the company a new name, GrandVision SA, as the company moved its listing on the Paris Bourse’s monthly settlements market and then onto its main board.

The stock market, however, was less enthusiastic about the acquisition, especially its short-term effects on GrandVision’s profits, and GrandVision quickly slumped. In response, the company restructured its optical operations, creating three divisions—France, England, and International—in 1998, as well as creating a new division, International Optical Branch, to oversee its growing international operations. GrandVision stepped up its store openings that same year, opening more than 70 stores in France, and nearly 30 in the United Kingdom and elsewhere. The company also embarked on a redevelopment of the Vision Express chain, which now began to adopt elements from the company’s Grand Optical format. Where Vision Express had emphasized price, the U.K. branch now focused on raising its quality of service and product range. The repositioning of the company’s Vision Express operations, which also included a 100-store strong franchised operation, was to take more than two years but provided the desired results: by 2000, GrandVision’s U.K. operations were driving its sales growth.

The company continued to invest in its retail chains as the decade and century drew to a close. Photo Station jumped to more than 200 stores in 1999. Photo Service, which had topped 200 stores by 1997, now turned to conquer the Internet as GrandVision seized opportunities offered by the growing implantation of digital cameras. Meanwhile, Grand Optical rolled out a new “megastore” concept featuring more than 1,000 square feet of selling space, at its Champs Elysees flagship store; two more megastores were to open in 2000. That year, Generale d’Optique celebrated the opening of its 100th branch. As a whole, the company opened some 120 stores in 2000 alone, 20 more than the company had originally forecast.

International Growth into the Next Century

As the company entered the 21st century, its focus turned to fueling its international growth. The company had begun adding new markets, including Belgium in 1998; the Vision Express acquisition had also brought it stores in more than 20 countries. GrandVision exited a number of these countries, such as Russia, Sweden, the Philippines, and Germany. Instead, GrandVision turned toward such countries as Italy, Spain, Portugal, and a number of eastern European countries where it was slowly building the market pressure to achieve profitability. In 1999, the company created its GrandVision International Supply subsidiary, which functioned as a central buying facility for all of its optical chains. Entering 2001, with revenues rising to over EUR 851 million, GrandVision announced an agreement with French rival Optic 2000 to form a partnership for their lens and glasses frame purchasing. The joint-venture was expected to handle a purchasing budget of nearly EUR 700 million, providing a significant savings.

Principal Subsidiaries

Grand Optical; Solaris; Vision Express (U.K.); Photo Service; Photo Station; Generale d’Optique; GrandVision International Supply.

Principal Competitors

Auchan S.A.; Carrefour S.A.; De Rigo S.p.A.

Key Dates:

1981:: Fotofast is established in Paris, offering one-hour photo developing.
1984:: Company is renamed Photo Service.
1989:: Company introduces one-hour eyeglasses dispensing in Paris and changes its name to Groupe Projets Services.
1991:: A Grand Optical store opens on the Champs Elysees.
1993:: Company is again renamed, Grand Optical Pho-toservice.
1994:: Company goes public on the Paris exchange.
1996:: The Solaris store format is introduced.
1997:: Company acquires Vision Express and is renamed GrandVision.
1998:: A restructuring leads to the creation of the International Optical Branch.
2000:: GrandVision launches its megastore format.