Kenneth Stann is president and chief financial officer of SVS Vision, a 40-year-old, Michigan-based regional optical retailer. The company opened its first location and laboratory in Sterling Heights, MI, in 1974. Now headquartered in Mt. Clemens, MI, SVS operates 77 locations and its own fully automated, state-of-the-art lab.
1. You became involved in the optical industry in an unusual way. Would you describe what happened? My professional background is in public accounting. Specifically, post practicing as a CPA, I was in acquisitions and divestures for a subsidiary of National Beverage Corp. I had just completed the acquisitions of EverFresh Beverage and La Croix Beverage. It was like starting a new company as we were replacing and hiring a lot of people. One of the human resource firms I was working with called me and said that they were working with an optical chain that was interested in my skill set. It turned out to be the equity group that had just purchased AVC/NuVision from the original founder. They were really struggling, and they needed a young aggressive accountant. They thought with my bankruptcy experience I’d be a good fit. I drove up to Flint, MI, and interviewed. We both agreed it was a good fit, and they brought me on.
2. What happened next? The equity group ended up realizing that their business model to convert to a franchising operation was a mistake. They ended up divesting, and within a year of me getting there they sold to Cole National out of Warrensville, OH. I ended up switching teams and then assisted the Cole management team with the acquisition and ultimate consolidation. I stayed on with Cole on the Sears Optical side of the business for approximately one year past the AVC/NuVision acquisition.
3. How did SVS get its name? The story I was told was that there was a legal issue between Sterling Vision Shops and the Sterling Vision on the East Coast. As a result, our name was changed from Sterling Vision Shops to SVS Vision. The acronym stands for Service, Value and Selection.
4. You and your wife (Lisa) work together. How do you split job responsibilities? Lisa is our chief operating officer, so production, manufacturing, procurement and retail report to Lisa. I still maintain the CFO title, and the administrative side of the company reports to me. We split marketing. Lisa handles most of the day-to-day responsibilities there with our team, and I try to be active with branding and the strategic direction of the company.
5. How do your business backgrounds differ? As previously discussed, I’m a bean counter at heart. Lisa is a trained optician and began her retail career here at SVS. She went through multiple positions within the company all the way through to executive management. She looks at things in a very detailed, operational manner, while I have a much broader scope and vision of the company.
6. Why do you think it works? I think it works great because we complement one another. We have the same passion to take SVS Vision forward. What makes us a great team is I can see something on a macro level while Lisa can list out all the challenges or problems we’ll face on a micro level. Between the two of us, we can solve those issues and keep moving forward. I truly believe that we make a great team.
7. Is there a downside to working together? Being husband and wife, we truly work seven days a week. That can and has been an issue. I have a little easier time turning it off – Lisa never seems to do that. She has so much passion for our business, and she’s pushing all the time. But she loves what she does and it shows.
8. What is SVS Vision’s company profile? Currently we have 77 retail locations. We’re in eight different states, and by the end of the year we’ll have 80 locations in nine different states. The new state will be Kansas. We have roughly 650 employees and we have complete vertical integration. We own a fully licensed, regulated insurance company. We operate and own our own manufacturing facility, and as we’ve discussed we own and operate our optical retail locations.
9. Would you explain the advantages of vertically integrating SVS Vision? As a result of owning our own lab we have absolute control over quality and margins. I’d put our costs up against any manufacturing facility regardless of size, and that’s because of Fred Chandonnet, who runs our lab. He’s incredibly knowledgeable and runs our operation very efficiently. We’re able to service all of our retail locations with impressive turnaround times. The frames on the board are the frames we stock in the lab. So that process is seamless. And, our retail locations can speak directly to the lab, which helps them understand the various technical capabilities of the products we sell, and in turn they can communicate this to the patient.
10. What’s the process of opening new locations? We have a strategic growth plan, and we’ve identified where we think the best geographic opportunities are for our company. All of our growth comes from our organic cashflow. We are more conservative than some of our competitors, but we believe in a controlled growth model and it’s worked for us.
11. How do you determine what products to carry at the retail stores? Debbie Fink, VP of merchandising and procurement, and her team along with Lisa and Fred on the manufacturing side work very closely with the overall plan for our retail operations. Debbie has the innate ability to know what frames to stock and what brands and licenses are going to be hot. They determine what lines we carry, what inventory to stock, how the stores should look, and how we merchandise the stores. They keep me in the loop, but honestly, it’s not my area of expertise and that’s fine with me – they are the experts. We have some brilliant opticians at the retail level, both as managers and in dispensing, and they understand what their local market is demanding.
12. Would you describe you’re marketing partnerships with major Detroit sports teams? We’re the official optical provider for the Detroit Lions, and we are sponsoring partners with the Tigers, Red Wings and Pistons. With the Lions, we have naming rights within Ford Field and we have 100 yards of SVS Vision concourse with signage. We can also use the Lions logo and say we’re the team’s official provider in any form of advertising with prior approval.
13. How did you decide to get involved with professional sports marketing? I grew up just north of Detroit. My entire family are huge Detroit pro sports fans. I went to Wayne State in Detroit, and therefore I’m not a “Michigan Guy” or a “Michigan State Guy.” I’m a “Detroit Sports Guy.” So getting involved with these teams is like a dream come true.
14. What percentage of your total marketing budget is dedicated to the sports teams? About one-sixth of the total marketing budget, which is probably not as much as you thought. When we first started sports advertising (in 2004), the Tigers weren’t playing too well and our sales rep comes in and puts on a big presentation. Everyone watching baseball now is familiar with the static back pads behind home plate. Every time the pitcher throws, the audience sees your ad behind the catcher. Our rep says ‘I’ve got a deal for you. I’ll sell those to you for $4,000 per series.’ I said, ‘No I’ll give you $800.’ We agreed on $1,400. Now those same back pads sell for $17,000 per game!
15. How has your relationship with the sports teams changed over time? That’s a great question, and the answer is we’ve grown together. Back then they weren’t very good, and we weren’t very big. Our relationship with the teams is very important. Early on it played a significant role in how we developed the brand.
16. Would you explain how your insurance company works as part of the overall strategy for the company? It’s called Single Vision Solution, and when the company was started it was positioned with many of the union automotive companies as a provider of eyecare insurance. Here in our home state of Michigan, the ‘Big 3’ automotive companies along with the union workforce really drove optical insurance. It was a great funnel for our optical retail business back then. However, as we’ve grown the brand, we haven’t had to rely on the insurance side of our business to generate patient traffic.
17. You’re turning 50 this year, what’s the end goal for you? I still have a lot of fuel in the tank. I’d like to see SVS continue on its path of becoming a true regional powerhouse. We’re different because of our vertical integration, which gives us significant advantages over competitors. We believe our lab is the finest in the industry, and it differentiates us from competitors not only with a great product but also with very fast turnaround times combined under the umbrella of providing great service. Ultimately, I want to make people’s lives better as they enjoy the activities that they perform with passion. And I believe with the technology we have that we can do that.
18. What are the most difficult challenges facing optical retail operations today? There is a tremendous amount of upheaval with consolidations in the industry. And when there’s upheaval, everyone is going to fight for market share. Most people get nervous, and the retailers, wholesalers and carriers will scramble for a share of their respective markets. What we all need is patient traffic.
19. What do you see as the greatest opportunities? You’d just have to flip that around and say it’s also the largest opportunity. During this time of upheaval, optical retailers that understand market dynamics will do very well. If you don’t become better, faster and stronger you’ll simply fall behind or be swallowed up. For those of us who can compete, it’s going to be a fun, fast-paced profitable 36 to 60 months ahead of us.
20. What major investments are you planning in the next three years? We just completed a very expensive investment in our manufacturing facility, which puts us in great shape for the foreseeable future. Even with all of the investments in 2018 we are still planning on purchasing a new strip and dip system and a new coater sometime in 2019. You’ll always have the odd piece of equipment that you’ll need. But now the investment in the lab has been made, significant investments will shift back to optical retail – investing in new stores, going through our lease cycle and renovating older stores.