60 Minutes: Sticker Shock
If you need glasses to see the world around you, it’s not like you are going to skip having your prescription filled. Many more people wear glasses as a fashion accessory. But Lesley Stahl seemed outraged that glasses have shot up to hundreds of dollars, when they used to be much more affordable. What does the company Luxottica have to do with all of this?
60 Minutes: Why Do Glasses Cost So Much?
The way glasses are made has not changed, but one thing that’s different is just how many options there are out there, with glasses that come in every color and boast features we may never have imagined.
But this is a rare example where competition has not brought prices down. Luxottica may have something to do with that, as the largest eyewear company on the planet. They are usually shy about media appearances, but who can say no to Lesley Stahl?
60 Minutes: Luxottica CEO Andrea Guerra
Luxottica CEO Andrea Guerra told her that half a billion people are wearing the company’s glasses. From its beginnings in the Italian Alps with frames made of goat horns, it has ascended to the manufacturer of 65 million sunglasses and eyeglasses annually, even though they don’t do prescription lenses.
Glasses seen by 60 Minutes at the facility were headed for China, Brazil, and of course America. Guerra defended the expense of the company’s products with a strong argument.
He said they have to look good, work well, and “be on your face for 15 hours a day,” emphasizing the work that goes into achieving all that.
60 Minutes: Prada Glasses & Ralph Lauren Eyewear
Product manager Isabella Sola said that Luxottica has changed the way the world looks at glasses. They have gone from something no one wanted to wear unless they had to, and become the ultimate stylish symbol of fashion.
The company turned to high fashion to make its splash in the marketplace, partnering with companies including Prada, Chanel, Ralph Lauren and many more. Glasses also go by a fancier name these days: eyewear.
60 Minutes: Designer Eyewear
Repositioning glasses as jewelry gave Luxottica license to ratchet up the price. Though pairs from Vogue and Coach look similar at a glance, the price difference is astronomical. As usual, the devil is in the details.
The company told 60 Minutes it can make as much as 20 times its costs back, but declined to discuss specific markups. The company designs thousands of pairs of “face jewelry,” collaborating with partners like Tiffany at every step of the process.
60 Minutes: Ray-Ban Sunglasses Price
Fashion houses send the company sketches of new collections, and attention to detail in the factory helps set each of the many brands and designs apart.
Andrea Guerra did not think that the company was hiding its own name, which is listed on the New York Stock Exchange. The company wholly owns Ray-Ban, seen in the US Army, worn by presidents, and featured in pop culture.
Luxottica’s acquisition of the Ray-Ban brand in 1999 was a turning point for the company, which stopped selling the glasses for about a year. In that time, the price went from approximately $30 to $150 after their makeover. Still, the brand is a worldwide bestseller.
60 Minutes: Luxottica Owns LensCrafters
What do you think about an iconic American brand being gobbled up by an international firm? Guerra did not see a problem with it, citing how small the world is now.
In addition to Ray-Ban, the company also owns LensCrafters, the popular chain of stores throughout North America.
60 Minutes: Luxottica Owns Pearle Vision & Sunglass Hut
LensCrafters president Mark Weikel said his company does carry some brands of glasses that are not made by Luxottica. He dodged questions about whether customers can expect a better deal on those pairs from his stores, since they are vertically integrated.
Frames and lenses in those stores might run you $300. But where can you turn if you want a better price? Don’t look at Pearle Vision, Sunglass Hut or Oliver Peoples, both owned by the parent company. You’ll be out of luck at Target or Sears optical departments too, which are also run by the company.
60 Minutes: Oakley Merger
Brett Arends, a financial columnist, said that consumers are being fooled into thinking they have choice in the eyewear marketplace. “It’s actually a fake competition,” he said.
Remember Oakley, the manufacturer of sports eyewear? Their products were pulled from all these stores in a dispute with Luxottica, and the Oakley stock price plummeted since it could not get a foothold in the marketplace.
Surprise, surprise: the two companies ended the dispute by merging in 2007. Guerra said that Walmart and Costco are its biggest competitors, meaning they are not owned or operated by her company…for now.
60 Minutes: Luxottica Competitors
You can also look online for companies like Warby Parker, or in local boutiques, but availability is of course variable in many places. Competitors say you have to play with Luxottica if you want to carry brands people are looking for.
Arends called the company “a price maker” because of its control of the market. They control the products, the prices, and the stores. Not only that, they also own a large vision care plan: EyeMed. At what point is this a monopoly?
Andrea Guerra said it best: “Everything is worth what people are ready to pay.”