Are all the sunglasses of Ray-Ban, Oakley, PRADA and CHANEL made by one manufacturer?
In addition to Ray-Ban, Oakley, PRADA and CHANEL, there are also the own brands of Vogue, Persol, Oliver Peoples and Alain Mikli and the authorized brands of Armani, Bulgari, Burberry, Coach, D&G, MK, Tiffany, Tory Burch, Versace and Ralph Lauren, which all come from Luxottica, a spectacle manufacturer in Italy.
Luxottica now has a market value of 24 billion Euros, a sales volume of 9 billion Euros (2015) and an EBITDA of 1.9 billion Euros and accounts for 14% of the global spectacles market shares. It is the manufacturer of all the sunglasses of leading brands that you see in the market. Luxottica has 7,200 chain shops of spectacles and nearly 20 retail brands of spectacles around the globe. Del Vecchio, the founder of Luxottica, was born in Italy in 1935 and lost his father in his early years. His mother was unable to support him and had to turn him over to a orphanage. When he was young, he worked as an apprentice in a forge plant, where he picked up exquisite handwork skills. While losing interest gradually in the forging of large pieces, he began to pay more attention to the technology for forging small choice pieces. In 1961, he set up his own enterprise—Luxottica and started to make spectacles.
In 1967, he began to directly sell the spectacles of Luxottica brand. Because of their exquisite workmanship and high cost performance, the commodities quickly found a ready market throughout Italy. In 1971, his enterprise became one of the largest spectacles manufacturers in Italy.
Not satisfied with 2B business, Luxottica launched its 2C business in 1974 by acquiring a chain retail enterprise of spectacles in Italy and became the largest player of the Italian market in 5 years of time. Faced with a saturated Italian market, it started global expansion in 1981 and set up its first branch in Germany to expand the sales channel.
After getting listed in the United States in 1990, Luxottica carried out a series of M&A to expand its brand line and retail channels:
- In 1988, it was authorized by Armani to make the sunglasses of the brand (Armani is now the third largest shareholder of Luxottica);
- In 1990, it acquired Vogue, a native Italian brand of spectacles;
- In 1995, it acquired Persol and Lenscrafters, name brands of spectacles and retail respectively;
- In 1999, it acquired Ray-Ban (another interesting company, which was formally under B&L of the United States);
- In 2001, it acquired Sunglass Hut in chain retail;
- In 2007, it acquired Oakley at the cost of $2.1 billion.
It’s just not true that Luxottica is without equal in the world. Instead, it faces the competition from Kering and Safilo in the market of high-end sunglasses. Under Kering, there are the brands of Gucci and Alexander McQueen. Safilo is a partner of LVMH and owns the brands of Dior, Fendi and Céline. In the chain retail market of spectacles, it faces the competition from retail giants Walmart and Costco. (Since spectacles needs offline experience service, Luxottica does not deem Amazon as a direct competitor).
In the market of myopia spectacles, it faces the competition from Essilor, the world’s largest manufacturer of myopia spectacles, which has a current market value of 23 billion Euros, a sales volume of 6.7 billion Euros in 2015 and an EBITDA of 1.6 billion Euros.