In Sectors

Eyewear industry : the legacy of a single man

ESSILOR, Luxottica

If you have been wearing glasses for years, like me, it can be surprising to discover that you perceive the world thanks to a few giant companies that you have never heard of.

Buying eyewear is a fraught, somewhat exciting exercise that starts in a darkened room, where you contemplate the blurred letters and the degeneration of your visual cortex, and ends in a bright, gallery-like space where you enjoy the spry feel of acetate in your fingers, listen to what you are told, pay more than you were expecting to, and look forward to inhabiting a new, slightly sharper version of your existing self.

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The $100bn (£74bn) eyewear industry is built on feelings such as this. In the trade, the choreography that takes you from the consulting room to the enticing, bare-brick display of £200 frames is known as “romancing the product”. The number of eye tests that turn into sales is the “capture rate”, which most opticians in Britain (or optometrists, as they are known in the rest of the world) set at around 60%.

During the 20th century, the eyewear business worked hard to transform a physical deficiency into a statement of style. In the process, optical retailers learned the strange fact that for something that costs only a few pounds to make (even top-of-the-range frames and lenses cost, combined, no more than about £30 to produce), we are happy, happier in fact, when paying 10 or 20 times that amount. “The margins,” as one veteran of the sector told me carefully, “are outrageous.” The co-founder of Specsavers, Mary Perkins, is Britain’s first self-made female billionaire.

Almost everyone wears glasses at some point in their lives. In developed countries, the rule of thumb is that around 70% of adults need corrective lenses to see well. In Britain, that translates to some 35 million people. But it’s hardly a topic of national conversation. To the casual observer, the optical market also presents a busy and confusing sight. In Britain, thousands of independent opticians rub alongside a few big retail chains such as Specsavers, Vision Express and Boots.

The wall displays in even a small, local optician hold several hundred frames, metal, acetate and rimless, while posters advertise a range of lenses with sciencey-sounding properties – “freeform”, “photo-fusion”, “reflex vision” – and names so bland they are hard to remember even when you are looking straight at them.

But what we see masks the underlying structure of the global eyewear business. Over the last generation, just two companies have risen above all the rest to dominate the industry. The lenses in my glasses – and yours too, most likely – are made by Essilor, a French multinational that controls almost half of the world’s prescription lens business and has acquired more than 250 other companies in the past 20 years.

There is a good chance, meanwhile, that your frames are made by Luxottica, an Italian company with an unparalleled combination of factories, designer labels and retail outlets. Luxottica pioneered the use of luxury brands in the optical business, and one of the many powerful functions of names such as Ray-Ban (which is owned by Luxottica) or Vogue (which is owned by Luxottica) or Prada (whose glasses are made by Luxottica) or Oliver Peoples (which is owned by Luxottica) or high-street outlets such as LensCrafters, the largest optical retailer in the US (which is owned by Luxottica), or John Lewis Opticians in the UK (which is run by Luxottica), or Sunglass Hut (which is owned by Luxottica) is to make the marketplace feel more varied than it actually is.

Between them, Essilor and Luxottica play a central, intimate role in the lives of a remarkable number of people. Around 1.4 billion of us rely on their products to drive to work, read on the beach, follow the whiteboard in biology lessons, type text messages to our grandchildren, land aircraft, watch old movies, write dissertations and glance across restaurants, hoping to look slightly more intelligent and interesting than we actually are. Last year, the two companies had a combined customer base that is somewhere between Apple’s and Facebook’s, but with none of the hassle and scrutiny of being as well known.

Now they are becoming one. On 1 March, regulators in the EU and the US gave permission for the world’s largest optical companies to form a single corporation, which will be known as EssilorLuxottica. The new firm will not technically be a monopoly: Essilor currently has around 45% of the prescription lenses market, and Luxottica 25% of the frames. But in seven centuries of spectacles, there has never been anything like it. The new entity will be worth around $50bn (£37bn), sell close to a billion pairs of lenses and frames every year, and have a workforce of more than 140,000 people. EssilorLuxottica intends to dominate what its executives call “the visual experience” for decades to come.

The creation of EssilorLuxottica is a big deal. It will have knock-on consequences for opticians and eyewear manufacturers from Hong Kong to Peru. But it is also a response to an unprecedented moment in the story of human vision – namely, the accelerating degradation of our eyes. For several thousand years, human beings have lived in more or less advanced societies, reading, writing and doing business with one another, mostly without the aid of glasses.

But that is coming to an end. No one is exactly sure what it is about early 21st-century urban living – the time we spend indoors, the screens, the colour spectrum in LED lighting, or the needs of ageing populations – but the net result is that across the world, we are becoming a species wearing lenses. The need varies depending where you go, because different populations have different genetic predispositions to poor eyesight, but it is there, and growing, and probably greater than you think. In Nigeria, around 90 million people, or half the population, are now thought to need corrective eyewear.

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There are actually two things going on. The first is a largely unreported global epidemic of myopia, or shortsightedness, which has doubled among young people within a single generation. For a long time, scientists thought myopia was primarily determined by our genes. But about 10 years ago, it became clear that the way children were growing up was harming their eyesight, too. The effect is starkest in east Asia, where myopia has always been more common, but the rate of increase has been uniform, more or less, across the world. In the 1950s, between 10% and 20% of Chinese people were shortsighted. Now, among teenagers and young adults, the proportion is more like 90%. In Seoul, 95% of 19-year-old men are myopic, many of them severely, and at risk of blindness later in life.

At the same time, across the developing world, a slower and more complex process is underway, as populations age and urbanise and move indoors to work. The history of eyewear tells us that people do not, as a rule, start wearing glasses because they notice everything has gone a little out of focus. It is in order to take part in new forms of entertainment and labour. The mass market in spectacles did not emerge when they were invented, in 13th-century Italy, but 200 years later, alongside the printed word in Germany, because people wanted to read.

In 2018, an estimated 2.5 billion people, mostly in India, Africa and China, are thought to need spectacles, but have no means to have their eyes tested or to buy them. “The visual divide”, as NGOs call it, is one of those vast global shortcomings that suddenly makes sense when you think about it. Across the developing world, straightforward myopia and presbyopia, the medical name for longsightedness, have been linked with everything from high road deaths to low educational achievement and poor productivity in factories. Eye-health campaigners call it the largest untreated disability in the world.

It is also a staggering business opportunity. Essilor and Luxottica know this. It was Essilor that worked out and first publicised the 2.5 billion statistic, in 2012. “For 2,000 years people were living mainly outside,” said Hubert Sagnières, Essilor’s chairman and chief executive, when we met recently in Paris. “Suddenly, we live inside, and we use this.” He tapped his mobile phone on the table. The legal and technical details of the EssilorLuxottica merger will take a few years to iron out, but Sagnières was transparent about its mission: to equip the planet with eyewear over the coming decades. “I am driving a very profitable company,” Sagnières told me. “You know, between 2020 and 2050, governments will not solve all the problems of the world.”

The looming power of EssilorLuxottica is the subject of morbid obsession within the eyewear world.

And it is true of EssilorLuxottica and, to some extent, the business of vision itself, because it is – to an amazing degree – the legacy of a single man.

Leonardo Del Vecchio is the patron, legend and haunting spirit of the global eyewear business.

Over the next half century, Del Vecchio grew his company, which was called Luxottica, into the world’s greatest maker of glasses frames. In an industry that was traditionally fragmented and small-scale, the totality of Del Vecchio’s ambition took his rivals by surprise. He sought to control every element in the business, from the metal alloys of the hinges to the stores where eyewear is sold. “Never assume that you have arrived, or look at the world as your only point of reference,” he liked to say. In a series of audacious takeovers, Del Vecchio acquired brands such as Ray-Ban and Oakley and Persol, and signed contracts with fashion houses such as Armani, Ralph Lauren and Chanel. He built factories in China, acquired vision insurance schemes in the US and retail chains on four continents.

Since 1994, Del Vecchio has been Italy’s highest individual taxpayer and the country’s second-richest man. A few years ago, people thought his career had run its course. But in January 2017, at the age of 81, Del Vecchio announced the greatest deal of his life, in which he also secured the final missing part for his frames – the lenses – when Luxottica agreed to merge with Essilor. “He wants to do this merger,” a former colleague said, “thinking he will leave behind this great company that will last for 100 years.”

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He built the empire of Luxottica on two ideas. The first was to do everything itself. After the company’s initial progression from parts to frames in the early 1970s, it set out, step by step, to control the entire process of making and selling glasses, from acquiring the raw materials to selling its own products in its own stores.

Del Vecchio was also the pioneer in transforming eyewear into fashion accessories by boosting the collaborations with high-end fashion designers. The fusion of the fashion industry and the optical business is now regarded as complete.

(Source: The Guardian )

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