Luxottica Group oversees all

Luxottica Group oversees all

The Luxottica Group is one of the biggest and most successful companies in the US today, but many people do not even know that this company even exists, let alone what they do.

Founded in 1961 by Leonardo del Vecchio in Italy, Luxottica grew from a sunglass retailer to a manufacturer and by 1988 Vecchio made his first designer deal with Armani.

Some of the brands in the Luxottica Portfolio

Since then Luxottica has taken over the eyewear market. They acquired or have exclusive licensing agreements with brands like Ray Ban, Oakley, LensCrafters, Sunglass Hut, Versace, Polo Ralph Lauren, and countless other luxury brands that show themselves as possible competition.

The 2007 Oakley Merger is probably their most hostile take over, and shows just how cut throat this business has been to get to where they are now.

Before the merger, Oakley was the competitor brand in eyewear, but during the talks of merging with Oakley there were disputes over the price of this buyout as Oakley demanded a better deal. Luxottica responded by dropping Oakley from all retail stores, lowering their value far enough for Oakley to take a $2.1 Billion deal before losing too much of their business, so Oakley joined the Luxottica group.

Since then they have not slowed down in their expansion in eyewear, retail, and also eye care. This complete package shows itself as a conflict of interest for  EyeMed Vision Care, which is the second largest vision benefits company in the United States. They can prescribe people glasses which people then go buy at retail stores under the Luxottica Group which carry glasses made under the license of- you guessed it- the Luxottica Group.

I am no economic expert, but this does not seem like it should be legal, so I decided to ask Mr. Gergen what he thinks about this company.

Pullquote Photo

Absolutely it is [a monopoly]! They control their market and keep expanding. A company that big doesn’t need to keep buying smaller companies, but they want complete control”

— Mr. Gergen

I didn’t think that monopolies like this were still around today, especially since Luxottica flies so far under the radar. Mr. Gergen added, “It’s an eye glass brand. They might have been looked at by an agency, but they’re not an electronic or cable company so people don’t really care that much. It’s only eye glasses.”

He has a point. It’s estimated that only 1 out of every 6000 people in the world wear glasses, but according to Forbes.com “Luxottica controls 80% of the major brands in the $28 billion global eyeglasses industry.” Of course Luxottica denies these claims by having a representative release a statement including their own disputable numbers. “Of the close to 1 billion pairs of glasses sold worldwide last year, only 93 million of them were produced by Luxottica – less than 10%.”

But it sure does seem like they’re controlling the market, as they have teamed up with Intel to help the company get more innovative. Furthermore, Luxottica has signed with Google Glass to start producing the frames for the computer glasses giving them a whole new market. Mr. Gergen understood why Google would want this

Luxottica and Google have teamed up to create the new Google Glass

partnership,”Google really didn’t have much of a choice. They want to be able to sell their product as much as possible and with having Luxottica in control of retail, they didn’t have too many other options”

Luxottica grossed a $9,365,187,490.00 revenue in 2015. This giant of a company increased their yearly revenue by over $1 Billion dollars between 2014-2015 by making these colossal business deals that somehow miss the news. It got me wondering, how common are monopolies like this today?

The worst part about all this is their pricing. This itself is a crime. The brand RayBan was purchased by the Luxottica Group in 1999 when these designer shades had a retail price of $30. Under this monopoly’s power, the prices were raised higher than $100 within the next year. Any name brand pair of frames will run you more than that today, and the common denominator is they’re all run by this same company.

Luxottica can make the prices just about whatever they want because if one of their few remaining competitors decides to undercut their prices, they can drop that brand from all their retail stores and effectively ruin a reputable brand immediately.

Capitalism is supposed to provide a competitive atmosphere to avoid a market domination like this. It looks like the Luxottica Group has no interest in upholding the values of capitalism, but they are money oriented. Yes, this is a brilliant business plan that is somehow still legal, but I think we could go without brands like this that run an entire market.