Kits Eyecare (KITS) RBC Capital Markets Consumer & Retail Day 2024 summary

Market opportunity and business model

• Optical is an $80B North American market, largely undisrupted, with 80% of adults needing vision correction.

• Company focused on simplifying eye care, prioritizing high quality and value, and passing savings to customers.

• Achieved a CAD 140M revenue run rate, growing 30% annually, with 65% of revenue from repeat customers.

• Strategic approach: start with contact lenses for recurring revenue, then invest in in-house optical lab for glasses.

• Online-only model leverages automation, with Millennials driving rapid category shift online.

Pricing, marketing, and customer acquisition

• Frames with prescription lenses are priced at $28, digital progressives at $98, disrupting traditional $350+ pricing.

• Cost savings achieved by eliminating stores and vertically integrating manufacturing.

• Early customer acquisition included a 'first pair free' campaign, leveraging word-of-mouth and influencer marketing.

• Influencer channel is now the largest and lowest-cost growth driver.

• Brand originated from Kitsilano, Vancouver, and has built recognition through direct and referral-based tactics.

Competitive landscape and industry trends

• 50% of the market remains fragmented among independents, with rapid online migration post-pandemic.

• Online share of eyeglasses rose from 6-7% to 16-17%, and contact lenses from 18% to 42%.

• Few direct online competitors; brick-and-mortar players struggle to adapt to online-only models.

• Recurring revenue is prioritized, with over 60% of sales from repeat customers.