Have you ever wondered why some plastic, screws and glass can often cost as much as a smartphone? Or maybe why Ray-Bans have skyrocketed in price over the past 20 years? How about why glasses’ typical going rate has remained unaffected by competition? Well, curious and intelligent reader, these answers are all centered around a little-known Italian brand called Luxottica.
You’d think you might recognize the name of the largest eyewear company on earth, especially because they have been listed on the New York Stock Exchange until 2017. However, Luxottica falls remarkably short of a household name.
But if you’re the proud owner of any expensive pair of specs or shades, odds are they were probably made by Luxottica. They own a very large portion of the most well-known eyewear brands in the world: Ray-Ban, Oakley, Giorgio Armani, Brooks Brothers, Chanel, Coach, Michael Kors, Polo Ralph Lauren, Prada, Tiffany & Co, Versace, and many more.
Here’s the (first) kicker: Because they own both the luxury and more ordinary brands, they can charge whatever they please for either.
So, prices remain at an all-time high due to the lack of genuine competition between these brands. This also presents consumers with the illusion of choice: most of these glasses are designed by the same people and made in the same factory, and therefore could just be labeled Luxottica instead of all these different brands.
Before Ray-Ban was purchased by Luxottica in 1999, you could buy a pair in a gas station or drug store for around $30. Now, most pairs have a base price of around $150, and more expensive brands can cost up to 20 times what they cost to make.
Everything is worth what people are ready to pay.
Hey, look. It’s a real quote by the CEO of Luxottica, Andrea Guerra. Bet he’s fun at parties.
The worst part is that he’s not wrong. People do pay these absurd prices for an average product, which is apparent by another quote from the same interview: “At least half a billion [people] are wearing our glasses now.” As long as that continues, nothing will change.
Another thing about Guerra’s first quote is that he essentially admits that expensive glasses are a scam. Designer brands of eyewear don’t carry any technological benefit to cheaper ones, especially if they’re made in the same factory with the same or similar materials.
Additionally, Luxottica also owns several of the largest eyewear retailers in the world, including Sunglass Hut, LensCrafters, Pearle Vision, Target Optical, and Sears Optical.
Because of this, Luxottica is able to feature their own brands in their own stores with full control. And they can utilize that advantage in some menacing ways: When former competitor Oakley attempted to dispute pricing, Luxottica simply dropped them from all their stores. Then, when their stock crashed, they bought Oakley.
Believe it or not, this gets worse. Sunglasses are widely used, sure, but they’re not essential. Prescription glasses, however, are a medical necessity for most Americans. Good thing Luxottica also owns EyeMed, the second largest eye insurance company in America.
The possibility of the same company owning your optometrist, insurance company, the factory that makes your frames, and the store that sells them to you is a bit terrifying.
But hey, at least the factory doesn’t make prescription lenses, so that’s only four out of five.
All of this information raises a simple question: who do we trust for reasonable eyewear prices and quality? The answer is harder to find than you might think. A lot of companies that aren’t owned by Luxottica either want their glasses in Sunglass Hut or want Ray-Bans in their stores. This sets further limits on the number of companies who aren’t controlled by the monopoly.
Luckily, there are a few major brands who are able to compete: Costco, Walmart, and Warby Parker. This is because they sell their own product in their own respective marketplaces: Warby Parker is able to maintain its individuality because they offer both an online and in store option. Many companies are beginning to follow their footsteps, too, which is beneficial for a consumer’s market. As for Costco and Walmart, they have their own stores to sell their product.
The eyewear produced by these companies is just as good as Luxottica in terms of quality, and with a much better price. The biggest difference between the two are the absence of top designer logos on glasses made by Costco and Walmart.
The impact that a monopoly can have on the market is both impressive and insane, and the widespread stranglehold that Luxottica has on many of its remaining competitors is wild to think about.
Don’t let Luxottica fog your vision. Next time you get some new eyewear, get the same quality for a more reasonable price.