st 10 year have been like for the business, and talk me through some of the ups and downs? Nick Perry: That’s a big, open-ended question. The first 18 months were a bit of a blur, and it was all very exciting at that point. My business partner, Peter Winkle, and I were just trying to work out if there was actually a market for our concept. I used to go to OPSM at Broadway when I was at Sydney Uni, and I just remember it being unbelievably expensive, and it was such a bright, medical experience, and the staff didn’t seem to have a lot of passion for what they were doing. I remember thinking back then that it was the worst experience, and I didn’t understand why glasses cost $500.  At the same time, I was involved with the team that launched The Iconic, back around 2010, when Zara and Uniqlo and stuff first entered the Australian market and were kind of destroying the wholesale retail department store model. All of a sudden you could get chinos for $80 as opposed to $150, the staff were engaged, and it was really extraordinary.  I remember going to OPSM and wondering where young people bought their eyewear, and I realised there was a gap in the market big enough to drive a truck through. We’d seen Warby Parker in the US offering a different, online model, and we started setting up what would be Bailey Nelson.  At that point, there are 1 million things to do. We had to come up with a brand name, order the products, source suppliers. We built the website and started going to Bondi markets, and people started coming in to try on the glasses because it was uncommon to buy glasses online in 2012. We opened a pop-up on Williams Street, and that was a $5000 investment but pretty quickly the economics of that store looked really good and the people loved coming in.  It was quite different to what else was out there at that point, and people liked spending $100 to $150 on glasses instead of $500, but it felt too good to be true so they appreciated being able to check them out in person.  We branched out and opened a similar store in Melbourne, and saw similar economics from it, and realised we had a working concept but we needed capital to expand.  So the first few years were about proving the concept, and years 3-5 were about growing that concept. it quickly became about improving ourselves and learning more – the challenges from opening your first 10 stores are different from opening your 50th, and then your 100th.  As for many businesses, the last few years have been challenging. There’s no denying that shopping centre traffic was down, our staff were incredibly brave.  So, to sum it up, the last 10 years have been a rollercoaster. There have been some highs and some lows as well. Peter and I have been able to maintain our partnership, and we’ve got an amazing team behind us. IR: The business has obviously changed a lot over the last decade, what were some of the biggest changes Bailey Nelson underwent? NP: Well, the business started completely online, and it wasn’t working because back then it wasn’t convenient for people. The first big change was launching pop-ups to showcase the product to people.  I think the second one was introducing optometry to the initial concept – that happened within the first 12 months and completely changed the direction of the business, because it meant that we were responsible for the the health of the eyes of our customers, as well as being a retailer, so it created a very sticky relationship with them.  We got an optometrist, Lawrie Jacobson, who is still our eyecare director today. And he told us we needed optometry in the business to make it viable, otherwise it’ll stay niche. So that was a huge change for us, but when we added that in, Bailey Nelson went from a cool brand with low pricing to a really scalable concept. I think the third change was the influence of Delaney Schweitzer, she was the head of retail for Lululemon globally, and grew that business from one store to where it is now. And her advice helped us bond our team to the business. We have annual conferences developing our people, and it all flows through to create a great customer experience.  The fourth change was becoming an international business. We started out in Sydney, then expanded through Australia and went to New Zealand, but the big change was when we made a bet on expanding into Canada. It makes you look at the business in a different way when you’re serving an international market like that. IR: Can you tell us a bit about how each market differs? How do you tailor the experience to each different market, both in store and online? NP: There are some huge differences. One major one is the fact that private health insurance doesn’t really exist in the UK or New Zealand. In Australia, the market is heavily driven by private health insurance so most people get a $200 rebate that they need to use between December and January, and that shapes a lot of customer behaviour – and on top of that, Medicare covers the cost of a comprehensive eye exam.  In New Zealand and the UK, those are out-of-pocket purchases, so customers tend to be a bit more price conscious in those two markets.  Then there are a couple of big differences in Canada. It’s the opposite hemisphere, so our seasonal styles are different, and then the other big change is the way optometry is regulated there.  In Australia, New Zealand, and the UK, we’re able to employ optometrists directly, whereas in Canada, optometrists have to be independent contractors, and there are lots of controls around that. The name of their optometric operation needs to be displayed, and customers need to be able to contact them directly, they need to own their patient records, and so on. So, there are a number of controls there. The Canadian business hasn’t just been a rinse and repeat of what we’ve done in other markets.  Plus, expanding throughout one country is one thing; when we were expanding through Australia, by the time we went into somewhere like Perth we already had customers waiting for us to launch there. If you’re opening a store in Edmonton or Calgary, Canada, very few of those customers have been to Australia or heard of the brand before. But what we’ve found is that most people have resonated with our concept, and respond well to good products at an attractive price, so that’s been consistent across all our markets.  IR: We touched on the pandemic a little bit earlier, but could you go over how it affected the business, and how it has changed the way Bailey Nelson will operate moving forward? NP: Yeah, there’s no denying it was a stressful time. Most people, when they work in a business like ours, do it to take care of their community, and that was a bit more stressful because of everyone wearing masks and being worried about contracting Covid, quite rightly.  The pool of workers in Australia has been reduced as well, because we haven’t had the levels of immigration over the last few years, so that has also been a bit challenging.  It’s been disruptive. You work so hard to create a really special culture, and then you have to shut stores and stand people down. It’s awful. And then there were the changes in store densities and social distancing. But on the flip side, people want to care for themselves more now, and they understand how important health is and has become.  The exciting thing is that we were able to double the size of our Canadian footprint during that time, and I’m not sure there’s another retailer there that could make that claim. We were able to trade through it, grow the business, and our teams are still engaged and believe really strongly in what we do, which gives us extreme confidence that there are great days ahead. We’re coming out the other side now. It’s been interesting to get through, but we’re just really inspired by how resilient our team has been.  IR: When you initially started Bailey Nelson, online sales accounted for around 1 per cent of sales in the eyewear industry – how have the last few years changed that? NP: Most people tend to buy eyewear every two years or so, and so typically speaking, if people are buying single-vision glasses you’re looking to spend $300-500 from our competitors. If they’re multifocal, you’re outlaying $700 to $1000. It’s a very material purchase, and it’s not a purchase they make frequently.  Our thinking eight years ago was to push as many people online as we could, but the reality is that that isn’t really how we view the business anymore. It’s a truly omnichannel experience. More than 95 per cent of our customers will go to the website before heading in-store, or find us on Instagram, and they’ll review the product online or do a virtual try-on or something. But, our comprehensive eye exam is a medical assessment, and that cannot be done online – it’s performed by a qualified optometrist in our stores.  So, to get that done, our customers will need to go into the store.  People tend to buy from us every nine or 10 months – so it’s two or three times faster than the industry average. And people are choosing to re-order online, and then you’ll get a notification that your glasses are ready and you’ll need to come in-store so we need to adjust them to suit your eyes. It’s different from buying something like sneakers or a T-shirt. IR: You recently launched your 100th store globally – can you tell me a bit about the focus of Bailey Nelson’s store design, and how it differs from other types of retail? NP: Well, we’re price leaders in the markets that we compete in, we’re around half the price of most of our competitors.  Secondly, it’s a very modern retail experience with passionate staff. You go to some optometrists and everything’s locked away behind closed cabinets: That’s not an attractive retail experience.  I think, [more so than] other direct retail operations] we are predominantly an optometry business. We need all that equipment in all of our stores to perform eye exams and eye health assessments, which changes our stores.  Also, if you walk into somewhere like Zara and buy a pair of pants, you leave the store with your product. Whereas at Bailey Nelson, we’re making prescription glasses with lenses made specifically for that customer and their unique prescription, so they generally don’t just walk out with them. We do have sunglasses you can buy on the spot, but there are a number of touchpoints to our sales process. You come in, do the exam, you choose lenses, then you can use your health fund to pay, and come back one to two weeks later and get your glasses adjusted before you actually leave with them. I think the movement of the stock is fairly different from a traditional retailer.  IR: What’s the plan for the business in the short to medium term? NP: We’re hoping to double the size of the business over the next three years, so we’ll be expanding a lot, and we need optometrists and managers and floor staff. We need more great people. I’d really like to acknowledge how great our team is – they give us such a competitive advantage in the market.  We’re going to continue opening around 25 stores a year; we opened 27 this year, and we want to keep that cadence going for the next few years.