There’s Some Major Drama Happening In The Eyewear Industry
Anyone who has purchased prescription glasses knows that living a less blurry life doesn’t come cheap. Lenses and frames can make a major dent in your credit card – something that often comes as a surprise to new wearers.
And prices have only increased in recent years.
What may also come as a surprise is that a single (massive) company controls the majority of the world’s eyeglass industry.
Luxottica is the leading name in the eyeglass business of recent decades, especially when it comes to designer frames. Brands owned and licensed under the Luxottica name include names from Armani, Brooks Brothers, and Chanel to Coach, Oakley, and Versace. Yes, pretty much every brand we all know and love.
Essentially, Luxottica grew by buying its competition, one big purchase at a time.
The company also owns LensCrafters, Pearle Vision, Sears Optical, Sunglass Hut, and Target Optical. Most recently, Luxottica teamed up with Duty Free Americas to launch their second standalone store at Panama’s Tocumen International Airport.
They also run the insurer EyeMed Vision Care. In its biggest move to date, last year, Luxottica merged with Essilor, the global leader in prescription eyewear and contact lenses, to form EssilorLuxottica.
As David Lazarus highlights in a recent Los Angeles Times article, there is now virtually no competition in the eyewear industry, leaving the Italian company free to set any prices it chooses.
The result is markups for lenses and frames of up to 1000 per cent. According to Lazarus’ interviews with longtime industry insiders, the prices consumers pay for eyewear are much higher than the actual cost of making the actual frames and lenses. The latter, apparently, only costs $5-$15 to produce.
Luxottica’s journey into its monopoly into the eyeglass world – not surprisingly – wasn’t without its share of headline-making drama.
Once in control of massive retail outlets, Luxottica favoured stocking shelves with its own frames rather than those of former longtime suppliers. As Lazarus highlights, Oakley refused to lower wholesale prices at Sunglass Hut once Luxottica purchased the brand in 2001.
Luxottica took the bully approach, boycotting it from its retailers and diminishing its market value in the process so that Luxottica was able to purchase it for a lot less than it was valued a few years prior.
With control over everything from the supply chain to insurers, massive retail outlets have afforded Luxottica the ability to raise prices as its dollar-driven heart desires.
While this may be good for the bank accounts of the company executives, it isn’t exactly peachy for the average consumer, especially since glasses are considered a necessity for many people to function in life.
In our growing gig-based culture, fewer young professionals have benefit packages that’ll cover of the pricey eyewear tab too.
Those who take issue with Luxottica may be slightly satisfied to know that things aren’t exactly going as well post-merger.
Last month, shares in EssilorLuxottica slumped 22 per cent since the two brands merged. Luxottica founder, 83-year-old Leonardo Del Vecchio, accused the Essilor leaders of violating their agreement on corporate governance.
In response, Essilor execs quickly accused Del Vecchio of mounting a “de facto attempt to take control of the new group,” stating that he made untrue accusations regarding the company’s governance and management.
Despite any internal conflict, one thing remains pretty stable: the cost of a new pair of designer eyeglasses or sunglasses will continue to set you back a pretty penny (or a few hundred) for the foreseeable future.
Featured Image: Pixabay
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