Meiduo Optical Supermarket adopts low pricing strategy.

In Guangzhou, both the distribution costs and warehousing risks of optical goods are high. So retailers in the trade have (up to now) generally adopted a "forward sales" business model, pushing up prices to reap large profits, despite overheads.

A pair of glasses at an ex-factory price of about Rmb80 would retail at between Rmb400 and Rmb500. Optical retailers were still making great money, because the cost of the product itself only accounted for 30% of the sales price.

The competitive thrust in Guangzhou's optical market was provided by Glasses Gotook back in 2005. Prices in Gotook were condemned by the Guangzhou Optical Association as a serious act of market disruption and the Association called on the market to boycott the company.

However, through its operational approach to small profits, but quicker turnover, Glasses Gotook established a foothold in the market despite the boycott.

A relatively steady pattern pitting chain stores against wholesale marts has gradually taken shape in Guangzhou's optical retail market. But still, the prices of spectacles remain high.

The low pricing strategy adopted by Meiduo Optical Supermarket, an optical retail enterprise founded last April, has added a new dimension in Guangzhou.

The average prices offered by Meiduo Optical are generally more than one-third lower than those sold by other optical shops in Guangzhou.

It seems the company can offer such low prices mainly because it makes cash purchases of goods directly from manufacturers. That helps cut down on intermediary costs. The discount margin of individual brands sold by Meiduo can be as high as 70%.

Service is another critical factor boosting consumer confidence. Meiduo enhances service quality by offering such services as optometric consultation, free eye massage and after-sales monitor, and providing consumers with copies of the optical goods processing and inspection record.

Meiduo plans to open 10 chain stores this year, forming a string of low price optical supermarkets.

Since the financial crisis hit, the manufacturing industry has been dwindling and the prospects of China's optical retail sector are no longer promising.

By adopting a cash transaction approach to trades, Meiduo Optical Supermarket has relieved manufacturers of the cash flow pressure exerted by traditional account sales targets. Meiduo's operation is causing a revolution in the optical industry.

from Carol Zhu, Guangzhou Office