Luxottica

Luxottica

Luxottica: the world leader in eyewear production

Luxottica
Luxottica Eyeglasses

 

Luxottica is the world leader in the design, production and marketing of sunglasses and eyeglass frames in the medium-high and high end of the market. It is listed on the New York (1990) and Milan (2000) stock exchanges. The company was founded in 1961 by Leonardo Del Vecchio who, after a brief experience as an engraver and medal printer, decided to strike out on his own in the sector of small metal parts for eyewear.

The base of activity of the fledgling Luxottica is in Agordo, in the Belluno area, where almost all Italian eyewear manufacturers are located. The small company (ten people) specialised in the contract production of eyewear components. In 1967 came the great strategic intuition: while continuing to make semi-finished products for third parties, it began to produce the complete pair of glasses, marketing them under the Luxottica brand.

 

Luxottica
Sculpture of the iconic logo

 

The birth of the brand

An apt choice for Del Vecchio as, after only four years, he abandoned the third-party business and devoted himself exclusively to the production and sale of his own ‘brand’. The year was 1971 and the first Luxottica collection was presented at Mido, the International Optics Exhibition. “We had made an innovative product. Basically we were subcontractors specialising in producing all the components for the various factories.

The day we assembled them, we were able to sell these parts cheaper than anyone else. And then we made a sample book with such competitive prices that wholesalers came in droves,’ recalls Leonardo Del Vecchio.

The growth path of the small workshop began. The reasons for success are production efficiency and research, vertical integration, internationalisation, corporate culture, marketing strategies and prudent finance. Efficiency and research are, for Luxottica, essential values to achieve and maintain an advantage over competitors.

The pursuit of efficiency, in turn, leads to the centralisation of all production steps, which allows quality control of the finished product and, consequently, winning and keeping customers. A virtuous circle is established that allows costs to be lowered, revenues to be increased and investments to be made in research.

Currently, the company is able to produce around 125 thousand glasses per day in 6 factories. To maintain leadership, however, at Luxottica they have realised that it is not enough to be a good producer, but that it is also necessary to know the market. Hence the brilliant idea of integrating downstream, absorbing wholesalers, in order to understand and meet the needs of both sales outlets and consumers. The acquisition of the first distribution company, Scarrone, dates back to 1974.

 

Luxottica conquers world markets

Thanks to its efficiency, production specialisation and vertical integration, Luxottica has had the levers to conquer world markets since the early 1980s. The management understood, however, the need to create a commercial structure abroad as well.

Thus, in 1981, with the creation of the first sales subsidiary in Germany, the strategy of expansion abroad began, implemented through the establishment of subsidiaries and, in some cases, joint ventures. Today, the company has 29 subsidiaries and 100 independent distributors serving 120 countries.

Luxottica
Luxottica in China

 

This is Luxottica’s winning mix: the ability to combine concentrated production in a few proprietary factories with the ability to quickly meet the needs of the market, which is constantly monitored through the distribution network. Finally, an important place that has led to the company’s undisputed success is occupied by marketing strategies: the partner’ship with world-famous designers and the acquisition of famous brands.

 

The collaboration with Armani

The first collaboration with the fashion world in the form of a multi-year licensing agreement with Giorgio Armani, which was followed by other agreements with world-famous labels, dates back to 1988. Signed product lines enabled Luxottica to conquer the higher end of the market and boost the Group’s image. Subsequently, from the 1990s, the company embarked on a campaign to acquire prestigious brands.

Luxottica
Luxottica for Giorgio Armani

 

In this scenario, the use of financial markets had a positive strategic implication. For a company that manufactures and markets all over the world, the consideration of the financial markets can become an excellent business card, from the point of view of notoriety and credibility. Despite the company’s excellent financial indicators, it decided in 1990 to list on the New York Stock Exchange and in December 2000 in Milan.

Three other strategic moves enabled the eyewear giant to acquire its current size. The first is the acquisition in 1995 of Us Shoe Corporation, owner of Lens Crafters, which, with over 860 shops, is the largest optical retail chain in North America. The second is the diversification into the sunglasses business.

 

Luxottica Sunglasses

At the end of the 1980s, 90 per cent of Luxottica’s production focused on prescription glasses. However, the market began to shift towards sunglasses, an item that followed the evolution of fashion and was therefore subject to more frequent turnover. Luxottica therefore diversifies its strategic horizon through a number of acquisitions.

After buying the Italian brands Vogue and Persol, in 1990 and 1995 respectively, it made the big leap in 1999 when it took over, from Bausch & Lomb, the historic brand Ray Ban, which was then sailing in bad waters. After a slimming cure, based on a more effective distribution network, an improvement in quality and a massive communication campaign, Ray Ban regained its once-lost polish.

 

Acquisition of Sunglass Hut International Inc.

Finally, in March 2001, it acquired Sunglass Hut International Inc., the world’s largest chain of sunglass shops with over 1600 outlets in North America and 250 in the rest of the world. This operation had a twofold positive effect: on the one hand, it allowed consolidation in the US market; on the other hand, it allowed the company to promote its own lines in the same shops. In January 2003, a ten-year worldwide licence agreement was signed for the design, production and distribution of sunglasses and eyeglasses, with the Versace, Versus and Versace Sport brands.

Shortly before, in November 2002, the non-renewal of the licence agreement with the Armani Group had been announced. Luxottica currently produces around 2450 models of prescription frames and sunglasses.

Luxottica
Versace x Luxottica

 

Production is almost entirely carried out in the six production plants in Sedico, Pederobba, Turin, Agordo, Rovereto and Cencenighe. In addition, the company has a factory in China for the production of metal frames. The models are marketed both under its own brands and under licence.

 

Brands under Luxottica

Its portfolio consists of the following brands: Ray Ban, Vogue, Persol, Arnette, Killer Loop, Revo, Sferoflex, Luxottica, T3 (under ownership); Chanel, Versace, Versus, Ferragamo, Bulgari, Byblos, Genny, Ungaro, Tacchini, Moschino, Web, Anne Klein, Brooks Brothers (under licence). As well as collaborations with influencers, including Chiara Ferragni. It is present in 120 countries on 5 continents, has a sales network of over 1,000 agents, 29 branches, and 100 independent distributors reaching 200,000 points of sale worldwide.

Luxottica
Chiara Ferragni x Luxottica Collection

 

In 2002, the Group posted sales of Euro 3132.2 million, plus 2.2 per cent compared to 2001, an operating profit of Euro 601.5 million (plus 18.1) and a net profit of Euro 372.1 million (plus 17.6 compared to 2001). The group’s net sales in the first quarter of 2003 were Euro 704.5 million, operating profit Euro 111.4 million, and net profit Euro 65.6 million. To date, the group has about 30 licences in the production of eyewear for the big fashion names.

 

Recent Years

In addition to a WHOLESALE GLOBAL presence touching more than 150 countries on five continents, the Group operates an extensive retail network of about 9,000 shops including LensCrafters and EyeMed in North America, OPSM and LensCrafters in Asia-Pacific, GMO in Latin America, Salmoiraghi&Viganò in Italy and Sunglass Hut worldwide. With around 85,000 employees worldwide, Luxottica Group ended 2017 with sales of around €9 billion.

Luxottica
Luxottica flagship

2017 also marks 20 years of Luxottica’s activities in China. After twenty years of growth and development, the Dongguan production site now represents the perfect transposition of the model of Luxottica’s Italian factories in China, albeit with the specificities of the local culture.

Today, it produces frames, components and decorations to the same quality standards as the Group’s other factories, with state-of-the-art processes and plants and a great deal of attention to sustainability issues, environmental impact and the development of innovative welfare policies for the local context. he Chinese pole is responsible for around 46% of the Group’s total production. It was also the first location owned by a foreign eyewear company in the country.

 

Luxottica between expansion and collaborations

In August 2019, Luxottica makes another important move. Indeed, the brand acquires Barberini S.p.A., the world’s leading manufacturer of optical glass sunglass lenses. The transaction allows the Group to strengthen its “made in Italy” production and know-how in glass sunglasses and prescription lenses, which has always been a factor in the success of the iconic Ray-Ban and Persol models, adding to its manufacturing presence of excellence in Italy the Barberini production hub in Abruzzo.

In May 2019, OneSight, an independent non-profit organisation founded and supported by Luxottica, extended its partnership with Essilor Vision Foundation (EVF). The goal is to combat vision defects worldwide and help people see the beauty in life. The novelty of this collaboration on a global scale lies in the combination of Essilor and Luxottica employees. They will be volunteers in 16 eye clinics in Cambodia, India, Indonesia, Chile, Peru, the United States, Colombia, Mongolia, Thailand, Nepal and Tanzania.

 

Google x Luxottica

Luxottica and Google agree to work together through multiple endeavours on the creation of innovative iconic wearable devices. Through this relationship, Luxottica and Google, who are setting the pace in their respective industries, will pair high-tech developers with fashion designers and eyewear professionals. Specifically, the two companies will create a team of experts dedicated to working on the design, development, processing and engineering of Glass products that straddle high fashion, lifestyle and innovative technology.

 

The rise of EssilorLuxottica

EssilorLuxottica
EssilorLuxottica

Founded in 2018, EssilorLuxottica is the result of the merger of two outstanding and complementary businesses, Luxottica and Essilor, who leveraged their unique advantages to transform the eyewear and eyecare sectors globally.

Some of the most adored and well-known brands of eyewear and eye care in the world can be found at EssilorLuxottica. Their unmatched portfolio of offerings, which caters to the needs of their clients and consumers, includes top-notch frame brands like Oakley, Persol, and Ray-Ban; cutting-edge lens technologies like Transitions, Varilux, and Crizal; tools and prescription laboratory equipment; and creative solutions. In addition, they are creating brand-new, ground-breaking product categories to meet the world’s expanding needs for vision care, including myopia, with offerings like Stellest.

The company uses a completely integrated strategy that includes product development, R&D, and a strong supply chain to create complete pairs of branded frames with cutting-edge lens technology. With a robust go-to-market strategy that includes direct-to-consumer brands and a Professional Solutions network of 300,000 third-party stores, ranging from independent opticians to distribution chains, they offer a true partnership with eyecare professionals that is based on patient care and product innovation. Their global manufacturing network embodies their culture of excellence.

The merged brand operates a vast 18,000-store retail network in addition to 200 e-commerce platforms. Due to their daily interactions with millions of customers, they have a unique understanding of market trends.

 

The group´s business model

For the benefit of all parties involved in the industry, this enables EssilorLuxottica to meet the highest standards of quality and optimize the service. The whole value chain is covered, from innovative thinking to distribution. Thousands of researchers, engineers, and designers are dedicated to transforming the corporation into a testing ground for med-tech, growth, and innovation.

In addition to providing consumers and eyecare professionals with an unparalleled array of all-inclusive solutions, they strategically differentiate themselves by the caliber of their goods and services. To show off the benefits of vertical integration and make the dream of the ideal complete pair a reality, they brought frames and lenses together under one roof. From the start, the creation of the frames and glasses is done in a fully integrated method.

The most widely recognized instance of the Group’s seamless brand experience is Ray-Ban Authentic, which pairs each frame with an exclusive and precisely fitted lens. They address every stage of the process of creating value, placing a special emphasis on service, excellence in manufacturing, and a geographically diverse footprint.

Additionally, EssilorLuxottica is an open network business that adds value for all of its stakeholders, including its suppliers, business partners, customers, employees, shareholders, and the communities in which it operates. To encourage the industry’s growth in the upcoming years, this business model aligns with their primary business operations.

 

“See more and be more”: EssilorLuxottica mission

This directs their strategy, motivates their approach to sustainable development, and ultimately fuels their goal of eradicating a generation’s worth of neglected poor vision. Clear vision is a fundamental human right. It has the capacity to achieve our greatest potential, improving our learning, keeping us safe, and fostering a more diverse society. Yet, 1 in 3 people worldwide suffer from untreated poor vision.

 

OneSight EssilorLuxottica Foundation

Luxottica
“Vision for Everyone”

Motivated by their fervent desire to enable individuals to “see more and be more,” the group established the OneSight EssilorLuxottica Foundation, which seeks to contribute to the eradication of untreated low vision by 2050 through promoting the value of healthy vision and establishing long-term access to eye care.

It is the biggest foundation in the world promoting universal access to vision care, brings together all of the Group’s charitable and advocacy efforts around the world, and offers a venue for maximizing the dedication of our partners and staff. The Foundation’s global initiatives include building sustainable access points, coming up with cost-effective solutions, providing free or heavily subsidized services, raising awareness and advocacy, encouraging participation, and forming alliances with governments and other like-minded nonprofits to increase access to eye care.

They are committed to raising the significance of good vision as both a fundamental human right and a crucial lever for global development. The company represent a strong champion for the cause of vision, an ardent advocate for increased awareness, and a trailblazing innovator with solutions and styles that bring ever-greater improvement. With the backing of over 20 NGOs and prominent figures in the field of eye health, they unveiled their ground-breaking roadmap “Eliminating Poor Vision in a Generation” at the UN General Assembly in 2019. In 2021, EssilorLuxottica greeted with joy the news that the UN member states had unanimously approved the “Vision for Everyone” resolution, which aimed to provide access to eye care for all by 2030.

 

EssilorLuxottica as synonym for innovation

Luxottica
EssilorLuxottica production

Innovative thinking has always been rooted in the company’s DNA and serves as a key pillar of their strategy, given their rich past.

With all of its unrealized potential, the industry’s future inspires them to develop, test, and apply novel concepts and technologies, from ground-breaking innovations in eyewear and vision care to product development, manufacturing, distribution, and digital platforms.

By combining the complementary skills of two industry pioneers, the R&D teams have experimented with novel materials, technologies, and techniques, some of which have never been used in the optical industry before, to bring to life some of the biggest innovations for lenses and frames.

A customer-centered approach for innovation:

Their approach to innovation focuses on understanding changing consumer needs from initial research through product development and wearer testing, from product and design innovation to reimagining the consumer experience. The industry faces significant R&D challenges and opportunities due to factors such as extended life expectancy, shifting consumer lifestyles, changing vision needs associated with major socio-demographic factors (such as intense digital screen exposure), and increased awareness of health-related issues. Furthermore, it is predicted that more than 50% of people on the planet will have myopia by 2050.

 

You can also find this issue in italian here.

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National Institute of Fashion Technology

Shelabarger, Patty