Germany's Opticians Are Quite a Spectacle As Competition Rises
Mar. 24, 1995
When optician Siegmund Reiss walked into his new store on Stuttgart's elegant Koenigsstrasse, he couldn't believe his nose.
Saboteurs had stashed rotten meat behind the wall paneling during construction, turning what was supposed to be a joyful grand opening into a smelly fiasco. Customers who put up with the stink were soon hustled out of the store by police after a bomb threat. And a few hours later, someone pretending to be Mr. Reiss ordered in the fire brigade, another false alarm.
In short, a typical day in the life of a German optician.
Giving a literal meaning to the idea of ``an eye for an eye,'' Germany's opticians are waging an extraordinary war against each other that includes smashing windows, gluing up doors and filing lawsuits aplenty.
The principal cause of all this is Guenther Fielmann. A 55-year-old entrepreneur and unabashed self-promoter, Mr. Fielmann has turned the business of selling glasses upside-down in Germany. By introducing aggressive pricing and modern marketing to a sector that had never experienced real competition before, he has rapidly built up an empire with 296 retail outlets. The more traditional German opticians have been reduced to fighting over the scraps.
In September, Mr. Fielmann became the first German optician to go public, raising 227.8 million marks ($162.4 million at current rates) in a stock offering. (Mr. Fielmann and his 5-year-old son Mark together hold 67.3 percent of the stock.)
Mr. Fielmann sells one out of every three pairs of spectacles bought in Germany. ``The traditional optician sells six pairs of glasses a day,'' Mr. Fielmann says flatly. ``We sell 13,000.'' He calls traditional German opticians ``the Stone Age hunters of late capitalism.''
Fighting back against Mr. Fielmann can be risky, as Franz-Josef Krane found. In 1989, Mr. Krane, one of Germany's top five opticians, and two former employees of Mr. Fielmann drafted an anonymous letter to the eyeglass mogul. The letter, which complained about alleged unfair practices, was leaked to the press. Mr. Fielmann, furious at what he calls a ``smear campaign'' and anxious to find out who was behind the letter, hired a private detective to investigate.
For four months, the detective observed Mr. Krane's home from a van, waiting for a chance to dig through his garbage. When he did, he retrieved shredded pieces of the letter in question and delivered the evidence to his enraged client. Mr. Fielmann promptly started what has become a five-year lawsuit that may end up in Germany's highest civil court. So far, Mr. Fielmann has paid several million marks in legal fees, not to mention the 500,000 marks he paid the detective.
``If Mr. Fielmann had decided to let go years ago, he could have saved a lot of money and energy. But this is a personal matter. A matter of honor between two men who can't stand each other,'' says Thomas Loehr, Mr. Fielmann's former director of distribution.
And that's only one of his lawsuits. Just before Mr. Fielmann took his company public, the Central Association of German Opticians, an industry group, tried to start an ad campaign discrediting ``discount spectacles.'' It was a blow clearly directed at Mr. Fielmann, the association's biggest contributor. His lawyers quickly nipped the campaign in the bud.
For a once-serene profession, such capers are downright unsightly. Until the late 1970s, the nation's 6,000 opticians coexisted in peace and harmony, hardly tousled by the winds of competition, and enjoying profit margins of as much as 300 percent. Optical stores had all the allure of a dentist's waiting room, and spectacles came in eight standard frames paid for by the nation's health-care system. Anything fancier cost extra.
Then Mr. Fielmann entered the picture. He used the ad slogan ``You are the customer,'' a marketing idea that still hasn't widely penetrated the German service industry. He successfully negotiated a special deal with the health authorities that enabled him to offer 90 different frames free of charge to the customer. ``We don't sell prostheses,'' he exults. ``We sell sexuality.''
In 1992, Mr. Fielmann pulled off his other innovation, opening his own production facilities in eastern Germany. A unique move for an optical-goods retailer, it allowed him to slash prices.
His enemies notwithstanding, Mr. Fielmann appears to have successfully combined mass marketing with knowledge of German customers, apparently a crucial combination.
Mass marketing alone didn't work for Pearle Vision of Dallas, a unit of Grand Metropolitan PLC, which pulled out of Germany in 1993, taking a substantial loss.
Randy Henry, a Pearle senior vice president who oversaw the German operation, complains that the old guild mentality prevalent in Germany is fundamentally protectionist. But Pearle also discovered that Germans didn't warm to its main marketing tool, one-hour service.
``Glasses are not made within an hour in Germany, like shoe soles,'' says Hans G. Schubert, a management executive with Carl Zeiss, the nation's leading maker of lenses.