Have you bought a pair of sunglasses lately? What was your reaction when you saw the price tag? Unless you bought them from the sun glass shops outside railway stations, you could easily by paying upto a few thousand rupees for a pair of slick Ray Ban wayfarers. What makes them so expensive? Let’s explore.
Sunglasses are simple objects. A couple of pieces of glass, some plastic wire, a few screws and a frame. Then why should it cost as much as a smart phone? One Reason: The world’s largest eye wear company, Luxottica, controls a huge chunk of the global sunglasses market.
Luxottica is a little known Italian company which is the largest sun glass company in the WORLD! If you’ve recently bought a pair of nice sunglasses, chances are Luxottica made them. Last year, Luxottica made 65 million eye glasses and frames that were sold globally under various brands like Prada, Chanel, Dolce Gabbana, Versace, Ralph Lauren, Tiffany, Bylgari among many others. Basically if your glasses costed you a few thousand bucks, irrespective of the brand- it was made and designed by Luxottica on behalf of the fashion company.
But their best selling brand, is a rather well known company that was not doing so well back in 1999 when Luxottica outright bought over the company. Ray Ban glasses were then taken off the shelves for close to eight years after Luxottica bought it over. Back in 1999, a pair of Ray Ban glasses used to cost somewhere around Rs 1500. When the brand was re-introduced eight years later, it started costing at least three times that amount. And soon Ray Ban became the top selling sun glass brand in the world.
Not only does Luxottica make most of the sunglasses in the globe, they also own the biggest sun glass retailers like Lens Crafters, Pearle Vision, Target Opticals and others. They also happen to own Sunglass Hut- the largest optical chain in the world. All optical retail chains owned by Luxottica rarely sell brands not manufactured by Luxottica. And when as a company you start owning the retail chains as well,- it spells bad news for Luxottica competitors. By owning the product retail chain, the company is effectively cutting access to customers for the competitors, leaving them with no place to sell their product.
Ask Oakley, a manufacturer of sports sunglasses that got into a small fight with Luxottica over pricing their products. Luxottica removed Oakley from all their retail outlets, which led to plummeting Oakley stock prices. With falling stock prices and no way to reach the customers, Oakley was in trouble. Soon they started searching for buyers to help them sail through, and any guesses who bought them over? Yup, Luxottica.
Manufacturing the most number of sunglasses in the world and owning the biggest retail channels of sunglasses has given Luxottica the “price-maker” advantage. Essentially, they can set prices of their products and others will have to follow them. Moreover, Luxottica has created an illusion of choices for customers using the brands they manufacture for, when in reality it’s just one company supplying sun glasses to the entire globe.
Here’s what the CEO of Luxottica said when asked if the sunglasses we buy are really worth the money we pay? He says, “Everything is worth the money people are ready to pay”. And sadly, he is right. People are ready to pay a lot of money for sunglasses these days. Just check Luxottica’s stock price at the New York Stock Exchange to know how much.
And with that we just want to end this article right here, hop on out, buck the system and buy sun glasses from the shop outside Lower Parel station. But the real question is, how long before Luxottica enters this market too?