Born in Bondi with just seven frames in three colours, Bailey Nelson is now a multi-national optical retail chain with 110 stores.
Founders Nick Perry and Peter Winkle – then 20-something friends living in Bondi – started with the premise that if they were disappointed with the ‘clinical’ experience of buying glasses, then others their age would be similarly dissatisfied.
With no background in either designing frames or the optical industry, they took their lead from youth-focussed fashion disrupters such as The Iconic and Uniqlo. Their vision was a premium product at a low price, attached to an awesome customer experience. The pair then hung on for what can only be described as an ‘amazing ride’.
mivision spoke to Nick Perry about the journey and Bailey Nelson’s plans for the future.
Q. Bailey Nelson started at the Bondi Beach markets in 2013 and established two stores within six months. What were you expecting when you started your market stall?
Honestly, when you’re launching a business, there’s so much to do every day that you don’t really have the luxury of thinking two, three, five years in advance. You’re literally just like, ‘You need to come up with a name, you need to come up with a product selection, you need to start recruiting a team.’
We did start out with a website, but at that stage the category (eyewear sales) was only 1% online and our frames were at a price point that was almost too good to be true. Everyone kept wanting to touch and feel them.
So, we started a little market store. It was pretty funny because Peter had a full scholarship to go to Oxford University and he gave that up because we wanted to operate this market stall at Bondi Market. His parents were quite concerned…
We operate 110 stores now in Australia, Canada, New Zealand, and the UK. We’ve got 1,400 team members. It’s far exceeded our wildest expectations of what we really thought was possible.
Q. What were the pivotal moments for Bailey Nelson? Were there any real ‘a-ha’ moments for the business?
There were, I think, several key moments in the early days. One was we got approached (at the Bondi Markets) by an optical dispenser called Sharon Tanner and she said, “I’ve been in the optical industry for 30 years. These are the most beautiful frames at the best pricing I’ve ever seen. I want to be part of this.”
One of the real other change events was meeting an optometrist, Lawrie Jacobson, in Melbourne. He convinced us to incorporate optometry in our stores because otherwise the customer has to come and choose the frame, go and get their prescription, then come back. The whole thing’s very, very messy.
Lawrie told us: “You’ll never be anything more than a niche player unless you own the customer journey, and you are the custodian of eye health as well as the retail.” Lawrie brought in his own equipment (to one of our early pop-ups) and that first day he saw 18 patients in three hours. Every one of them bought glasses and he’s like, “I need to be part of this, this is going to change everything”. He sold his independent practice and came on board.
So, I think at various stages along the journey, we were able to attract people to the business who had skills that we didn’t have, who believed in the vision and the opportunity to have a positive impact on an industry.
It never really feels like an ‘a-ha’ moment at the time, because you’re always so busy, but introducing optometry was a really key moment, and then having an earlier investor who owned the Lululemon licence in Australia. Now, Lululemon is a very different business to Bailey Nelson, but the core of that business is connecting the store teams to the higher purpose of the brand.
And if you invest in your people and you develop them and you have a good relationship with them, that translates to a much better customer experience that people can touch and feel.
Q. Where and how did you learn to design frames that fit the face and are comfortable? And then get them manufactured?
This is a really good question because we have no background in the industry, so we were sort of coming at the design completely new and completely fresh.
In manufacturing, the best factories in the world were busy and already working with the top brands globally. Things changed for us when we met Corrado Brustio from Mazzucchelli, one of the largest suppliers of acetate in the world. He is about our age and we hit it off. He thought there was something in what we were doing so his family invested in Bailey Nelson. That meant we were able to leverage their many decades of relationships, and with their credibility, we were introduced to the best factories in the world.
That’s something that we’re really, really proud of, because despite the fact that we are a price leader, we have an incredibly premium product that you can touch and feel.
Q. You continue to design, manufacture and sell frames at affordable prices while costs escalate. What’s your secret?
We are one of the few optical retailers to be growing substantially. In the past two years we’ve increased our store base by 50%. Our suppliers believe in the business, and they believe in our potential over the next 10 years. So, we have been able to renegotiate supply prices, but it’s certainly challenging.
Q. When you sell affordable frames, the margins must be smaller than when you’re selling high end. How does this impact profitability and your business model?
We’re in the fortunate position that we’re completely vertically integrated. We only sell our own frames through our own stores. And then, because we’re negotiating for lenses for a network of 110 stores, we’re able to get incredibly good pricing.
In Canada, the average replacement cycle (for new glasses) is about every two-and-a-halfyears. In Australia, it’s about every two years. So, when we drop the prices so substantially and then combine that with an exceptional product and a wonderful experience, what we find is that our customers come back and purchase every eight to nine months.
That’s really our ‘secret sauce’. People are still spending the same amount – they’re just doing it over much more frequent purchases.
Q. In 2019, you announced a joint venture partnership model and entered your first partnership in a New Zealand practice, but then it seemed to stall. What are your plans for JV partnerships?
We chose to focus most of our energies on developing our international expansion – there’s only so many things you can do at once. We believe now we’re at the right time to expand our JV partnership program. It’s one of our major strategic priorities and one we’re really excited about.
I’ll just talk about Australia right now. I think if we roll forward a number of years, we expect probably half of our portfolio – give or take – may be a joint venture store. Now that’s not going to happen this year or anything like that because just like everything we do, we test it, and learn and make sure that it’s win-win for both partners.
We typically attract a younger optometrist, but those younger optometrists have been with us for 10 years and are now probably at the point where they’re like, “Right, I’m having a family, I’ve got a house, this is my career. I want to commit to this for the next 10 years, so I want something more than just being an employee”.
We’ve got a strong brand; it’s well known in Australia. (Our JV partners) get the benefit of all of that, plus our marketing, training, finance, and IT. We’ve got the customer’s pulse. What our JV partners need to do is take care of patients and provide an amazing customer experience.
The perfect JVP store is where you’ve got a community where the optometrists and the retail partner are living, so they can establish themselves as a presence and commit to that for the long-term. We want to make sure that we are successful and, more importantly, each of our partners are successful as well.
I believe we’ve got an extraordinary concept and we’re looking for extraordinary people to partner with us. We believe we can create something even more special than we’ve now got over the next 10 years.
