Have you bought a pair of glasses lately bet your
eyes popped when you saw the price tag. If you
don’t go to places like Wal-Mart or Costco you could
easily be spending hundreds and hundreds of dollars for a
pair that costs 30 dollars 10 years ago. Talk about
sticker shock. And it’s not as though things have changed
that much they’re still made of a couple of pieces
of plastic or wire some screws and glass. Why should
a pair of glasses cost more than an iPad. Well
one answer is because one company controls a big. Chunk
of the business. Never has there been so much choice.
Ray Bans. Oakleys. glasses for running and skiing. And even
reading. A Staggering variety of colors and designers. You’d think
the competition would force the prices down. Wow, look at
that. One reason it hasn’t is a little known but
very big Italian company called Luxottica. If you own a
nice pair of specs or shades they’re probably theirs. Luxottica
is the biggest eyewear company on earth. It shuns publicity.
But CEO Andrea Guerra invited us in for a look.
And it was eye opening. Do you have any idea
how many people in the world are wearing your glasses
right now? At least half a billion are wearing our
glasses now. Luxottica started here as a small tool shop
in Agordo. a dot of a town in the Italian
Alps, When frames were still made of mountain goat horns.
This was the factory in 1961, This is what it
looks like today. Last year Luxottica made some 65 million
pairs of sunglasses an optical frames. They don’t make prescription
lenses. We saw mountains and mountains of glasses in boxes
headed to China. India. Brazil. And above all to the
US. But they’re very expensive. They can be. Very expensive.
They can. But this is one of the very few
objects that are 100% functional. 100% asthetical. And they need
to fit your face for fifteen hours a day. Not
easy and there’s a lot of work behind them. Luxottica’s
product manager Isabella Sola. Explained that the company revolutionized. How
we see glasses. You think I look cool. Yes I
think so. I think I look cool too. It wasn’t
that long ago that glasses were uncool. You only wore
them if you absolutely had to. I can remember not
that many years ago my mother telling me that men
will never ask me out if I wear my glasses.
I was to go blind. if wanted dates. But Luxottica
took this medical device. And turned it into high fashion.
By making deals to conceive and create high quality stylish
specks for nearly every brand and label you can think
of. We’ve Prada, We’ve Chanel, We’ve Dolce Gabbana we have
Versache, We have Burberry, we have Ralph Lauren. We have
Tiffany we have Bulgary. They’re not even called glasses any
more, they’re Eyewear. Do people really wear this yet once
glasses became face jewelry. Luxottica could charge a hefty markup.
But you know something I know that that there are
some. Less expensive glasses that look very similar to the
very expensive. For example this is this is your Vogue
line which is not that expensive, and this is Coach.
Which is much more expensive. If two women walked down
the street with these on. Yes they almost look the
same, almost look that is almost. It’s not the same.
Not the same because of details on the frames like
a little Chanel C’s. Polo ponies. Or Tiffany blue. Luxottica
wouldn’t tell us their marker with glasses like these can
sell for up to 20x what they cost to make.
And all the classes are designed by Luxottica. So you
design thousands of pairs of glasses, That’s what we do,
Yes, where does Tiffany come into it. Tiffany comes in
at every stage basically. The fashion houses send in sketches
of their new collections as inspiration. And down on the
factory floor you can see the work that goes into
differentiating the brands. Clean plastic temples go through painting machine
and come out Versace. Stones are inserted one by one
into the Dolce Gabbana. And leather is carefully threaded for
that “Chanel bag” look. If People begin to know that
Chanel glasses. Were designed by Luxottica. Would it change the
way they think about Chanel glasses. You know that would
be totally wrong. That would be crazy. But why isn’t
the Luxottica name. A brand name are you in anyway
hiding it. Hiding it? Yeah. Not at all we’re Listed
on the New York Stock Exchange where Luxottica shares are
soaring. The company raked in 8 billion dollars last year
but their best seller wasn’t a fancy fashion house label.
It was a brand they outright own Ray Ban. Originally
made by Bosch and long for the US army since
JFK nearly every president has worn them. Not to mention
Tom Cruise in Risky Business . . And top gun.
But the brand was poorly managed cheapened, and eventually put
up for sale. The Italians bought it in 1999. And
had a strategy to turn things around. We stopped selling
sunglasses up from Ray Ban for more or less a
year. When you bought it you could buy them for
I don’t even know how little money , 29 dollars
at the drugstore at a gas station. And you took
them off the market. We refurbished everything. And made them
upscale. Today those 29 dollar payers can cost a 150.
And more. And Ray Ban is the top selling sunglass
brand in the world. When Americans go to buy these
glasses I’ll bet. 99%. Think they’re buying an American brand
“It is an American brand what’s wrong with it.” I
mean it’s an American brand owned by Italians. I think
the world is this. It is the world and we
don’t realize it that’s the thing. Before I started work
on this story I’d never heard the Luxottica Yeah. Which
is all the more surprising since Luxottica not only bought
Ray Ban. They also bought LensCrafters. The largest eyewear retail
chain in North America. So now they make em and
they sell em. It’s great for business but is it
great for the consumer. I asked LensCrafters president Mark Weical
how many Luxottica. Brands do you sell here? We probably
have a few bands that aren’t Luxottica. Mostly Luxottica, yeah.
So since Luxottica owns you. Does the consumer get a
break on glasses made by them and LensCrafters. What that
customer gets at LensCrafters is a variety of services and
products including this broad assortment. Frame, Mark you’re not answering
my question I’m asking if if you charge less for
frames made by Luxottica since you’re the same company. I
think every competitor every retail optical brand determines what their
price is. From whatever their brands are. That’s a No.
Customers do not get a break at LensCrafters the average
cost for a pair of frames and lenses is about
300 dollars. You may think well there’s choice in the
mall for other glasses. But Luxottica doesn’t only own on
the top eyewear chain in the country it owns another
large chain Pearl Vision. And Oliver Peoples and several boutique
chains. And it runs Target Optical. And Sears Optical. We’re
not done Luxottica also owns Sunglass Hut the largest sunglass
chain in the world. So is there a free market
in eyewear? No, I don’t think there really is. I
think one company has. Excessive dominance the market. Smart money.com
columnist Bret Arens says “the appearance of variety is an
optical illusion”. The reality is it’s like you know it’s
like pro wrestling competition in its actually fake competition. Consider
what happened to Oakley. The world famous maker of the
advanced sports Eyewear. Oakley was a big competitor and they
had a fight with Luxottica And Luxottica basically said we’re
dropping you from our stores. And they refused to sell
their glasses. It was a dispute about pricing. And they
dropped Oakley from the stores and Oakley stock price collapsed.
How is Oakley going to reach the consumer if they
can’t get their sunglasses. In Sunglass Hut?. There were some
issues between the two companies. In at the beginning of
the 2000s. But both of them understood that it was
better to go along. Better to let you buy them.
I wouldn’t say this. We marriaged with Oakley in 2007.
Bought Oakley. They tried to compete and they lost and
then you bought them. I understand your theory but they
understood that life was back to together. So now Luxottica
owns the two top premiums on last brands in the
world Ray Ban and Oakley. But Luxottica points out there
are other players. Whose your biggest competitor in the United
States. You could say Wal-Mart. Also Costco. And emerging online
companies like Warby Parker. But other competitors told us Luxottica
has them in a chokehold. If you make glasses you
wanna be and their stores. And if they have stores
you wanna sell Ray Bans. So Luxottica can set the
prices as high as it wants. Luxottica is . what’s
called a price maker. Which means essentially you can set
prices and other people will follow in its wake. Which
he says is why glasses in general costs so much
even at your local opticians. The whole point of a
luxury brand is to persuade people to pay. 200 dollars
for a product that cost 30 dollars to make. But
let me show you something. Why why is it any
different than my shoe. Well to some extent There’s actually
a lot of comparisons. The difference is that the entire
shoe industry isn’t made by one company and the same
company doesn’t own all the shoe stores. You’d think well
surely insurance companies covering vision would complain. But guess what
it Luxottica also owns the nation’s second largest vision care
plan IMed. Covering eye exams and glasses. What don’t you
own? A lot of things. Not really Why not combine
everything under one name? A lot of things — not
really — you seem to really why not combine everything
under one name? I think people love diversity. People love
to have different brands. People love to have different experiences.
It’s an illusion of choice. If you’re all along by
the same company. I think this is totally wrong. The
question is what kind of choice consumer has. It’s not
the question of how many you own. How does the
consumer benefit from all of this? Your prices are still
high. If you go to a shoe company would just
say that their prices are high? You’re trying to tell
me it’s worth all that money. Everything it’s worth what
people are ready to pay. And you know what? He’s
right. It seems people are ready to pay a lot.
I bet they cost a fortune. They’re not too expensive.
They cost almost 400 dollars. With prescription lenses the price
could jump to 600. Or more.