Pearle Vision’s GM driven by founder’s instinct
Alex Wilkes is general manager for Pearle Vision, shown here checking out his frames (at our photographer's request) in a recently remodeled store in Eden Prairie, Minnesota.
Every week Alex Wilkes, the mild-mannered and conservatively dressed general manager charged with boosting franchising for Pearle Vision, gets on a call with 40 other division managers worldwide to report in to Leonardo Del Vecchio. Del Vecchio is the 83-year-old founder of Luxottica, the parent company of Pearle Vision, Lenscrafters, Sunglass Hut and more, with more with 85,000 employees and 9,000-plus stores. He's often seen on the fashion circuit in Milan with his shock of white hair and is said by Forbes to be worth $21.9 billion and the 47th richest person in the world.
“He was the visionary that grew this notion of licensed eyewear, which he forged through a relationship with Giorgio Armani,” the famous clothing designer, 30 years ago in Italy, says Wilkes, adding in addition to the weekly calls he sees Del Vecchio in person perhaps four to five times a year. “He has a phenomenal instinct on the market,” and in that weekly meeting, “he uses that time to listen and pick up on market trends.”
“Relentless” and “passionate,” Del Vecchio drives his managers even from 4,000 miles away, Wilkes says. “He’s never satisfied. He’s the prototypical entrepreneur, always provoking and pushing.” Wilkes says Del Vecchio tells employees of his far-flung empire, which enviably encompasses the entire eyeglass supply chain from lens manufacturing to frame manufacturing to insurance to retail: “Don’t be afraid to try something.”
Is Alex Wilkes like that, a passionate risk-taker like the founder? He laughs. “I’m a little bit of a different animal. I tend to be more analytical,” he says, and I take note of his conservative business clothing including stylish but low-key Ray-Bans, his carefully considered answers to my questions, plus his strict rule of not answering his phone with only one exception: If his wife calls on both his devices, which happened both times I met with him, he absolutely will take the call but also apologize.
But don’t let the conservative demeanor distract—Wilkes has an ambitious plan to drive growth in sales of franchises for Pearle Vision, leveraging the talented people he can access because of Luxottica’s huge reach, and starting with a dramatic shift in marketing strategy he initiated just a month into taking his job back in 2016. It was the kind of bold move that would make the riskiest entrepreneur proud. For the buttoned-down Wilkes, however, he made the move only after analyzing and absorbing “reams” of data.
No more BOGO
Wilkes, now 40, was a corporate consultant who joined Luxottica Retail North America’s corporate headquarters in Mason, Ohio, in 2010, working in corporate strategy at first, in 2016 he took the helm at Pearle Vision to try to stop a slide, both planned and unintended, in the number of units. Luxottica acquired Pearle Vision, along with Sears Optical and BJ’s Optical among others, in 2004. Founded in 1961, Pearle Vision once had more than 900 stores, which slid to about 350 and now is back up to 535 at the end of 2017 and growing.
On this May day he’s touring with corporate staff, his PR firm in Chicago and Mike Arends, a longtime Pearle Vision franchisee with four stores in Minnesota, including this brand new, 3,200-square-foot store that cost about $750,000 to build out, not including the expensive optometrist equipment. Wilkes points out the high-fashion eyewear brands that Luxottica owns, such as Oakley and Ray-Ban and Oliver Peoples; and Michael Kors and others that the company licenses.
When Wilkes took over, Pearle Vision was stuck in the world of deep discounting, an affliction that bedeviled other retailers, too. JCPenney, for example, was descending into the depths at about this time, after its new CEO from Apple did away with super-discounting and customers howled. But Wilkes had “reams of data that had gotten in my brain,” such as the deep discounting optical retailers like Visionworks and America’s Best Eyeglasses were doing, offering free eye exams and two pairs of glasses for $99. “They were spending $200 million a year on that message,” Wilkes recalls. “They’re commoditizing the category. I felt, they’re screaming ‘deal,’” so he wanted to go the other way.
He thought about Pearle’s roots in 1961—named for its founder, Stanley Pearle, an optometrist in Savannah, Georgia. “There’s this space for Pearle to claim the doctor-patient relationship,” Wilkes recalls. “My thought was a more emotional story-telling. I was on the job for one month, and I called our creative agency in Chicago,” Energy BBDO. “I said, I want to have a conversation to re-architect our campaign.”
The team went to Cincinnati headquarters and spent a day taking a look at other campaigns. The result was an ad campaign highlighting “small moments” that a doctor can create for a patient, and the debut ad and runaway hit was called “Ben’s glasses,” featuring a little boy with huge glasses that kept slipping down, and the sweet story of how his doctor fixed him up. (Look it up on YouTube.) Launched in the beginning of 2017, the ad garnered 2.7 million views on YouTube, received a Clio award, and had more than 140 million earned impressions “that we didn’t have to pay a nickel for.”
More to the point, Pearle was able to drop its former BOGO, buy one get one, promotions that franchisees generally despise. “Pearle also was a promotional brand. We led with BOGO a lot” up until the new campaign, which “allowed us to move away from discounting. I said, we need ideas that are so good they will allow us to remove the promotional drug that we’ve been on.”
Mike Arends, the Minnesota franchisee with four stores, including the new store in Eden Prairie Center, is a fan of management, both for the marketing that he calls “genius” and the organizational system. “My responsibility is to make sure these stores are perfect and every person they drive through this door, I can take care of. I love it,” he says, proudly showing off his new store and talking about his two adult daughters, Maggie and Jessy Arends, who are training to take over his business over time.
“The key to franchising is re-investing in the business,” he adds, saying of the new store, “I boot-strapped this one. Instead of buying a Porsche and the house on Lake Minnetonka,” referring to a tony locale, “I haven’t borrowed any money since 1997.”
Wilkes is pursuing three tactics to boost the franchise numbers from around 550 now to his goal of 1,000. First is enticing young doctors of optometry into the system, with a 100 percent financing program provided by outside financial institutions.
“We stole the model out of dentistry,” Wilkes says. “It was, hey, why aren’t we doing that?”
Second, they are trying to convert independent operators into the Pearle system, a trend across many industries in healthcare and beyond, but Pearle’s plan has a twist.
“They can re-flag their operation to Pearle, and we will baseline their revenue, and they will have to pay royalties on incremental revenue” only. “We were talking about independents, how could we incentivize them” to re-brand with Pearle. “That seems so obvious, why haven’t people thought of this?” he muses.
Third, and perhaps most important for scaling purposes, Pearle is working to sign with private equity investors. “We’re talking actively to private equity groups—could you leverage Pearle as a platform for consolidation?” The idea is the PE firm would own 40 to 50 acquired independent stores. “Then we can leverage our system to give them strength from a gross margin perspective,” explains Wilkes the analyst.
“It is ambitious,” Wilkes concedes when describing his goal of 1,000 stores in five years, but with his three growth strategies, he can see it happening.
Plus, with a new $58-billion merger this spring for Luxottica with Essilor in Paris, which will push revenue to more than $15 billion, you wouldn’t bet against him. In fact, you can almost see Wilkes analyzing the numbers in his head.