LUXOTTICA
Many of you might not have heard or read about this company but if you own a pair of branded glasses be it prescription or fashion then you have to know about it.
You must wonder why I am saying this?
The answer for this question is because if you do own a pair of branded glasses then it is probably made by Luxottica or that brand is probably owned by it.
SHOCKED???
If your answer is yes then I am with you to share your shock. When I first heard about this company my first reaction was "Never heard of it". But then I saw a video and was shocked to learn about this company.
This company is a Mommoth in every sense and I kid you not, keep reading and you will get to know why I am saying this. Luxottica owns some of the biggest eyewear fashion brands and retail outlets. So an obscure company that owns almost all of the major brands in the spectacle market, how is that even possible? To get the answers to these questions, first let us learn a bit about the history of this company.
History
Started by Leonardo Del Vecchio in 1961 in Agordo, Italy, Luxottica was a company that was started by selling spectacles part which were made by Vecchio. Vecchio was an apprentice to a tool and die maker in Milan but he wanted to make spectacle parts and so he moved to Agordo in 1961 to follow his dream.
He began by selling spectacle parts under the brand name Luxottica, and in the initial years of the company and after getting success in his first venture he decided to expand his company and started selling complete frames under the same brand, which also proved to be highly successful.
Buoyed by this continuous success, Vecchio decided to go for vertical integration in 1974. He acquired Scarrone, which was a distribution company, in order to distribute his products himself. This also proved to be a successful business decision and thus giving him the leverage to open his first international subsidiary in Germany in 1981. After that it was a period of rapid expansion in the international market for Luxottica.
Making of a giant
After the rapid expansion, Luxottica signed its first licensing deal with Armani in 1988 which was just the one of many more to come.
Soon after its deal with Armani, Luxottica was listed in the New York Stock Exchange.
This listing helped Luxottica to start acquiring many other brands starting with an Italian brand Vogue Eyewear in 1990, followed by Persol in 1995 and then Ray-Ban in 1999 for $640 million. Ray-Ban was a brand made famous by its Aviators and Wayfarer glasses and its prominence has grown exponentially after Tom Cruise wore them in his movie Top Gun. So acquiring of such a big brand was also a show of strength and capabilities of Luxottica.
Luxottica, then acquired Sunglass Hut in 2001, which was a retailer of sunglasses established in 1971 in Florida, U.S. At that time Sunglass Hut had 1300 stores, 430 Hut-Watch station and 228 more stores. This increased the market dominance of Luxottica to a great extent.
Luxottica was the market player which now had the ability to set prices of the sunglasses, this increase in power led to Luxottica to keep high prices for their glasses. This was not going down well with Oakley which had a valuation of $230 million in 1995. Oakley disputed the high prices of glasses set by Luxottica in 1996 which led to Luxottica dropping Oakley out of all their stores. This dispute proved costly for the growing company Oakley and their stock prices plummeted by 33%. After struggling to keep its market Oakley was subjected to a hostile takeover by Luxottica in 2007 for $2.1 billion.
In 2014, Luxottica also partnered with Google on the development of Google Glass and its integration in Luxottica's eyewear.
In 2017, Luxottica agreed on a merger with Essilor, which will result in in a market capitalization of 46 billion Euros.
Brand Luxottica
Lets see how many many major fashion brands does Luxottica actually own :
- Alain Mikli
- Arnette
- EyeSafety Systems
- Oakley
- Oliver Peoples
- Persol
- Ray-Ban
- Sferoflex
- Vogue Eyewear
These are some of the brands that Luxottica own, but this list doesn't include the brands for which Luxottica makes eyewears. If you want to know for which brands Luxottica makes eyewear then keep reading, and its a long list :
- Giorgio Armani
- Brooks Brothers
- Bulgari
- Burberry
- Chanel
- Coach
- Dolce & Gabbana
- DKNY
- Michael Kors
- Miu Miu
- Polo Ralph Lauren
- Paul Smith Spectacles
- Prada
- Ralph Lauren
- Starck Eyes
- Tiffany & Co.
- Tory Burch
- Valentino
- Versace
I am sure many of you wear glasses made by brands which are in the above lists, and you didn't actually know that it was made by Luxottica. Even I am at present using prescription glasses of Oakley and I was not aware of the fact at the time I bought it.
By now you might have got an idea of how big and strong Luxottica brand actually is, but is that a good thing for a single company to have so much power. Well, many people believe that to be true. The general opinion is that Luxottica keeps the prices of their glasses very high even if the making cost is low.
You might have noticed that over the years the price of commodities such as computer peripherals, external storage unit and other items have come down and this has happened because there is a healthy competition among different brands to give the best product at the lowest price and that brings the price of he commodity down.
But on the other hand if you look at the prices of eyewear, they have not decreased a bit and might have even increased over the years. This can be attributed to lower or no competition in this market. One major brand has the power to set the prices of the glasses at its whim and it is certainly doing that.
Apart from owning the production of various eyewear brands, Luxottica also owns a number of retail outlets, so they basically make the product and then sell the products at their desired prices. The retail outlets own by luxottica are :
- Sunglass Hut International
- Apex by Sunglass Hut
- LensCrafters
- Pearle Vision
- Sears Optical
- Target Optical
- OPSM
- ILORI
- EyeMed Vision Care
- Optical Shop of Aspen
- Laubman & Pank
- GMO
- Oliver Peoples
- Alain Mikli
- Oakley
- David Clulow
- Glasses.com
- Econópticas
- Salmoiraghi e Viganò
Just by looking at these names you can figure out the market presence of this company. It is truly a giant in every sense and is capable of setting the market price at its whim, and that is why a simple thing which is made out of plastic, some pieces of metal and glass can cost upwards of $ 400.
Even a statement given by their CEO reflects the company's thinking
Everything is worth what people are ready to pay
This statement alone reflects that the company will continue charging exorbitant amount of money to their customers under the garb of the so called Luxury Brands.
Conclusion
So now you know the reason why your spectacles costs what they cost. By holding a large chunk of eyewear market Luxottica is in a position to set the prices of the commodities to what they feel like. So till the time a new competitor does not emerge to disrupt the market, the prices of eyewea are going to remain high.
If you like this article then Upvote and Re-steem
