A Transformation Story: Determination and Focus Rebuilds the New Freestanding Shopko Optical

By
GREEN BAY, Wis.—Many businesses have a “back story.” But not too many have a story like the one that has driven the creation of today’s Shopko Optical. One that reflects determination, spirit, investment and the commitment of an entire team of employees and eyecare professionals to not only keep a good business going but to carve out new ways of engaging with patients across a range of Midwestern and Western communities.

Shopko Optical is such an example. And its top executives and leadership teams are understandably proud of what they were able to accomplish during an intense period of transition and transformation in the past year.

Shopko Optical, which is backed by the investment firm Monarch Capital, has been a leading provider of eyecare services to Midwest communities for more than 40 years. The optical company was acquired out of bankruptcy court for $8.5 million in mid-May by Monarch Alternative Capital LP, a private investment firm with offices in New York and London.





At the time of the bankruptcy court resolution, there were only six freestanding Shopko Optical locations operating. (The former Shopko discount store retailer—where most of the Shopko optical departments were located—filed for bankruptcy and liquidated in summer 2019.

However challenging the retail landscape had proven to be for large, big box 100,000 square foot general merchandise retailers like Shopko in recent years, its 1,500 square foot optical departments were consistently thriving—and making money, with strong patient connections in the local markets in which they operated.

Shopko Optical CEO, Russ Steinhorst, and Kirk Lauterback, formerly director of optical services, but today the chief operations officer of Shopko Optical, recall that when things were looking bleak for the overall company, they were among those who thought there could be other options for the successful vision centers, their committed professional staff—and the patients who relied on those locations for their own and their family’s eyecare.





Steinhorst’s background was in accounting and finance, and he had spent 11 years with Shopko, as controller, VP finance and then CFO. “While other parts of Shopko’s general business struggled, optical grew every year. It was continuing to grow in this slowly dying host environment and we asked, ‘what can we do to keep this going?’ We pulled one optical out and into a freestanding location, a space within the strip mall nearby and with the big box just behind it—and we saw that that business didn’t miss a beat.”

In fact, the Shopko Optical team opened 80 freestanding optical centers in 180 days, another freestanding center in this year. And the company plans to open an additional 35 optical centers in 2020.

The company operates in its home state of Wisconsin, Illinois, Michigan, Iowa, Minnesota, South Dakota, Nebraska and Montana, Idaho, Utah and Washington. The company’s own central laboratory, located in DePere, Wis. always stayed part of the operational picture. The company employs 750 people, including optometrists and opticians.

As Lauterback proudly points out, “Patients have really embraced what we’ve done. Today’s new store designs, modern updates and new marketing as well as the company’s new website, Shopko.com (https://www.shopko.com/) encourages patients to ‘See The Difference.’”





He also points to the loyalty of the doctors and their staff who stayed on to share the new vision, as the company was making such a transition in a matter of months. “Ninety-five percent of our doctors stayed with us through the transition, where many of them were loading stuff in cars, and helping move to their new quarters. It was an incredible experience. They have established such solid doctor-patient relationships with their teams.”

Also, with vendors, Lauterback said, they were open and honest and kept 100 percent on board for the change. Added Steinhorst, “At the same time, we wanted to educate patients and the transition was dynamic.”

Steinhorst cited a “trusted partnership with Monarch Alternative Capital as a crucial element of the success” of the quick turnaround on the freestanding locations. He added, “Without the guidance and support of Monarch and the Shopko Optical board, in particular Arthur Rubinfeld of Airvision and Jim Eisen (a veteran optical retailer who served as a consultant to the group), these openings would not have been a reality.”

Earlier this month, Shopko added a regional manager system to oversee operations across its major geographic regions.

Investments, in people as well as the physical assets of the vision centers and future expansion are underway.

Looking ahead, Steinhorst told VM that the company could look to grow organically as well as consider acquisitions of facilities, locations. “We’re having discussions, they need to meet our model and approach and what we’re looking for, but acquisitions could be on the table.”

Added Lauterback, “We want to continue to surprise patients when they come in. We’ve tested some different merchandising displays. Keeping the equipment modern in the centers for the doctors also is a focus. We had to stand up our systems, when we separated. We’re reviewing software systems that are patient-facing, asking, can we increase our training focus with our team and give them state-of- the-art resources. At the end of the day, these elements are what enable us to take care of our team and our patients.”

Steinhorst noted, “So we’re a new optical retailer with 42 years of history. It’s why the patients stay and why our employees want to stay with us, too. The community is valuable, something we keenly recognize. It’s truly a very exciting time for us.”