Those are not your parents’ Ray Ban’s. Why they are not even your Oakley’s. Sunday evening we watched 60 Minutes. Generally I am leading an Adult Bible Study. But Sunday I was still determining just what was going on within my body that was making me feel much less than human.
One of the segments covered the cost of glasses, eyewear. It was intriguing. In fact, if the facts indeed are accurate then there is really only one beneficiary of the huge interest in eyewear, the Italian company Luxottica. Much like in Castro’s Cuba, Luxottica has a corner on the market on both sides of the glasses, eyewear, industry whose products are worn by a half billion people.
Lesley Stahl: 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 I wanted dates.
But Luxottica took this medical device and turned it into high fashion, by making deals to conceive and create high quality, stylish specs for nearly every brand and label you can think of.
Isabella Sola: We have Prada. We have Chanel. We have Dolce Gabbana. We have Versace. We have Burberry. We have Ralph Lauren. We have Tiffany. We have Bulgari…
Industrious I would say. The story goes on to report that Luxottica makes eyewear for many name brand fashion houses. They continue to use those brand names because no one knows who Luxottica is. Here is a brief bit about Ray Ban.
Listed on the New York Stock Exchange where Luxottica shares are soaring. The company raked in $8 billion 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Originally made by Bausch + Lomb for the U.S. Army, since JFK, nearly every president has worn them, not to mention Tom Cruise in “Risky Business” and “Top Gun.”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:
Andrea Guerra: We stopped selling sunglasses from Ray-Ban for more or less a year.
Lesley Stahl: When you bought it, you could buy them for, I don’t even know how little money–
Andrea Guerra: Twenty-nine dollars.
Lesley Stahl: Twenty-nine dollars at the drug store, at a gas station, and you took them off the market.
Andrea Guerra: We refurbished everything.
And made them upscale: today those $29 pairs can cost 150 and more, and Ray-Ban is the top-selling sunglass brand in the world.
Lesley Stahl: When Americans go to buy these glasses, I’ll bet 99 percent think they’re buying an American brand.
Andrea Guerra: 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… The world is this.
Lesley Stahl: It is the world, and we didn’t realize it, that’s the thing. Before I started working on this story, I’d never heard the name Luxottica.
And when the competition refuses to go your way, you make life difficult, then buy them under the rubric of a merger where it is better to go along. Here is the bit on Oakley.
Lesley Stahl: So is there a free market in eyewear?
Brett Arends: No, I don’t think there really is. I think one company has excessive dominance in the market.
Smartmoney.com columnist Brett Arends says the appearance of variety is an optical illusion.
Brett Arends: The reality is, it’s like you know, it’s like pro-wrestling competition. And it’s actually fake competition.
Consider what happened to Oakley, the world-famous maker of advanced sports eyewear.
Brett Arends: Oakley was a big competitor. And they had a fight with Luxottica. And Luxottica basically said, “We’re dropping you from our stores.” And Oakley–
Lesley Stahl: They refused to sell their glasses in their stores.
Brett Arends: Yeah, there was a dispute about pricing, and they dropped Oakley from the stores, and Oakley’s stock price collapsed. How is Oakley going to reach the consumer if they can’t get their sunglasses in Sunglass Hut?
Andrea Guerra: There were some issues between the two companies in the beginning of the 2000s. But both of them understood that it was better to go along.
Lesley Stahl: Better to let you buy them?
Andrea Guerra: I wouldn’t say this. We merged with Oakley in 2007.
Lesley Stahl: You bought Oakley. They tried to compete and they lost and then you bought them.
Andrea Guerra: I understand your theory, but they understood that life was better together.
So now Luxottica owns the two top premium sunglass brands in the world, Ray-Ban and Oakley.
People live under the illusion and are quite happy about it.
Andrea Guerra: I think people love diversities, people love to have different brands, people love to have different experiences.
Lesley Stahl: It’s an illusion of choice if you’re all owned by the same company.
Andrea Guerra: I think this is totally wrong. The question is, what kind of choice consumer has. It’s not a question of how many you own.
Lesley Stahl: How does the consumer benefit from all this? Your prices are still high.
Andrea Guerra: If you go to a shoe company, would you say that their prices are high.
Lesley Stahl: You’re trying to tell me it’s all worth all that money.
Andrea Guerra: Everything is worth what people are ready to pay.
And you know what? He’s right. People are ready to pay. A lot.
What is the big deal? Hundreds, if not thousands, of children cannot afford eyewear due to market conditions and what unrealistic sums of money people are ready to pay for fashionable eyewear. Yes, there are discount shops. But, read the fine print. If you have anything complicated about your prescription, it more than doubles what your costs might otherwise be.
Tommie began selling BonLook. Frames begin at $67 with your prescription. My no line, progressive, sunglass lenses and frames will cost me $300. That sounds like a lot until you learn I paid more than twice that for a pair of glasses from Lens Crafters. Who, that’s right, is owned by Luxottica.
We plan to make the shift in our glasses, eyewear. It will be BonLook for us. My first pair arrives this week. Maybe you should consider it too.