In part one we covered who owns 80% of the sunglasses market - Luxottica. Now we'll lake a look at why you might never have heard of them and how monopolizing an industry can impact pricing.
Why isn't Luxottica a household name? The principles of luxury marketing;
- Sub-luxury association with the brand dilutes brand equity, clearly making the case for Luxottica being a best-kept secret.
- Luxury brands are "seen" by the company they keep. If the public acknowledged that virtually all high-end eyewear is designed and manufactured by one firm it would likely destroy franchise value and erode the "authentic" brand message to consumers.
- Luxury brands are elevated to a higher standard - that perception is paramount.
Luxottica has been known to use it's monopolized power to increase the prices of sunglasses; regularly charging as high as 20 times what they cost to produce – and this is not only aimed at prescription sunglasses.
Let's take Ray-Ban as an example, this was a brand that was worn by many and was affordable to the masses. However, in 1999 Luxottica bought the brand and raised the price from around $40 to over $150 per pair. Whilst there was a increase in pricing, the quality of the sunglasses they produced seemed to remain the same.
When Oakley wanted to dispute Luxottica's in store pricing markup, Luxottica responded by dropping Oakley from all of their shelves (Sunglasses Hut, Lens Crafters, Target Optical, Sears Optical, Pearl Vision). This resulted in a collapse in Oakley's stock price, fear not though, Luxottica came in and bought them out. Not cool.
So let's summarize - Luxottica owns the second largest eye insurance company in America, they own the factory that makes the sunglasses, the sunglasses brand (some brands they Just subcontract to D&G, Prada, Chanel) and the store that sells them.
Obviously most people would want out of this type of monopoly, but sunglasses remain an essential need for people all over the world. There are many who need sunglasses that are either prescribed or polarized in order to protect sensitive eyes. So what would the next best solution be?
The easiest way out of this money-making scheme would be to opt for smaller and independent sunglasses companies. By doing this you will get great quality sunglasses and the most important part – you will get value for your money from an honest and hardworking brand.
I do hope this doesn't come off as sour grapes, after all, the whole reason I started Faded Days Sunglasses was because I thought sunglasses were too expensive. So in a way, I should be thankful to Luxottica. But I'm in the game now and I'm trying to change it for the better, and as far as I can see it, education is key.