I can see clearer now. And my wallet isn’t as thin.
Apparently, I beat the monopoly out there in the business of eyeglasses.
Have you been eyeglass shopping lately?
A rough average cost is $300, depending largely on the brand of choice. There are so many styles and brand options, the prescription glasses marketplace seems wildly competitive. But that’s not all the eye can see.
A few years ago, the media introduced consumers to the name of an Italian eyeglass manufacturer with an alarming number of segments in the industry. Luxottica Group in Milan, Italy, makes prescription eyeglasses and sunglasses worn by half a billion people worldwide. You might be one of them.
The company (NYSE: LUX), which generated nearly $9 billion in U.S. equivalency in 2015, owns the Ray-Ban and Oakley companies – reportedly via hostile buyouts – and holds the manufacturing licenses for over 20 brands, including Armani, Prada and Dolce & Gabbana. Yes, high-class eyewear and lots of it.
Peel back a few layers, and we find Luxottica also owns a dozen eyeglass retailers, such as LensCrafters, Pearle Vision, Sunglass Hut and the optical divisions of Sears and Target. If that’s not enough, Luxottica is in the online space with Glasses.com and has its own insurance company, EyeMed Vision Care, which is the second-largest provider in the United States with 43 million members.
It’s a dominant player, for sure, and it’s had many people mumbling monopoly. Why?
“It’s actually fake competition,” financial columnist Brett Arends told “60 Minutes” in 2013.
Arends eloquently likened the eyewear industry to professional wrestling.
Here’s the crux of the problem: If a company makes glasses, it wants to be in Luxottica’s stores, and if a company operates stores, it wants to sell Luxottica’s brands. That opens the door to setting market prices.
“It’s what’s called a price maker,” Arends explained. “Essentially, you can set prices and other people will follow.”
A company can then charge $200 for something that costs $30 to make.
I paid $95 for my new prescription glasses.
My solution was Warby Parker. The New York City company founded by four friends circumvents traditional channels to design glasses in-house and work directly with customers. A robust website is supported by limited showrooms.
My experience went like this: 1. Got an offhand referral of the site from a friend over lunch. 2. Picked out a handful of styles I liked online. 3. While in Kansas City for other family events, I stopped in the showroom at Country Club Plaza (with my prescription in hand) to try on my selections. 4. Within 10 minutes, I had ordered the Wilkie in Greystone color with the help of a remarkably friendly hipster working on an iPad (just before the store closed and while my family was illegally parked in a loading zone, mind you).
It was that easy to this point.
There was a snag in the delivery of the glasses. I was told to expect them in the mail within seven-10 days. About two weeks in, I responded to a Warby Parker email to let them know I hadn’t. Customer service staff quickly issued another order and tracked down the mailing hang-up in New Jersey.
Once arrived, I discovered the eyeglass arms were too long for comfort, and Warby Parker offered me up to $50 to cover the cost of adjusting the frame. But I took care of that at the Vision Clinic downtown, where the staff did it in five minutes for free.
The Warby Parker glasses start at $95 a pair – and there’s a good selection at that rate. The cost rises fairly substantially if you’re in the market for progressive lenses (which I was but decided against to save $200). But also for each sale the company funds a pair for someone in need through nonprofit partners, such as VisionSpring.
Warby Parker’s not the only nontraditional option. Others like it are Zenni Optical, Eye Buy Direct, Coastal and Goggles 4U. Luxottica considers Warby Parker, Wal-Mart and Costco among its biggest competitors.
After the “60 Minutes” investigative report aired, people began Googling “brands not owned by Luxottica”. Answer: Safilo, Maui Jim and Serengeti, to name a few. And Snopes.com answered the question “Does Luxottica own 80 percent of the eyeglass industry?” That 80 percent claim was made in some media reports, but it appears thin on supporting facts.
The kicker to the monopoly claims might be a $49 billion agreement Luxottica reached in January to merge with French lens-maker Essilor. The New York Times reported the combined company would be the largest player in eyewear amassing some 27 percent of the market share. According to research by Euromonitor International, Johnson & Johnson is closest in market share with just 3.9 percent.
The point is, monopoly or not, consumers still have options. We can choose a new path with our dollars.
If you can buck the name brands, you just might save a buck.
Springfield Business Journal Editor Eric Olson can be reached at eolson@sbj.net.
