What a great time to be talking about sunglasses. Summer is heating up North America, and people everywhere are pulling out their shades and sunscreen. Are you in the market for a new pair of sunglasses? Here’s something you need to know before you buy…
All flash, no substance
Sunglasses are a huge industry – about $3 billion in the USA alone. Fashion sunglasses are a relatively new trend, and Hollywood is a co-conspirator, of course. Tom Cruise in Top Gun wore the iconic Ray Ban brand, and demand for fashion sunglasses started rising. So cool. Everyone had to have a pair.
If you forgot about them briefly, that’s because they were pulled off the market for a while by their new owner and distributor Luxottica, the “creepy corporation” behind this week’s post. Luxottica wanted us to forget about how cheaply priced they were, before they put them back on the market under their pricing policy. In fact, it turns out that this company Luxottica (a European entity) has quietly and very deliberately bought up most of the sunglasses market and now owns a whopping 70%. You may not have heard of them, because they stay behind the scenes. However, most popular designer brands (Burberry, Chanel, Prada, Polo Ralph Lauren, Paul Smith, etc.) are designed and manufactured by Luxottica. What? You thought Ralph Lauren designed his own designs? Don’t be silly.
Not only that, but Luxottica now owns the retailers as well as the glasses – Sunglass Hut, Pearle Vision, Lenscrafters and other huge chains are all owned by this monopolistic marketer. CostCo and WalMart remain competitors for now.
So what’s wrong with a market monopoly?
Pricing, that’s what. Luxottica now controls so much that they are officially the industry “price maker.” And they have decided to keep the prices high, at an average $300-400 per pair for something that costs under $2 in raw materials. Nice profit, huh? When asked by journalist Lesley Stahl “why so high?” no logical answer was offered. It’s a bit of plastic, a bit of glass, a bit of wire.
Ultimately, it’s pure opportunism. As long as we’re willing to pay, they’re happy to keep prices high. Salespeople will tell you “Well, that’s just what they cost these days”, and few of us have the resources or time to locate the hard-to-find alternate sources. Even if you do, the competition is happy to price similarly and profit from the price-maker’s policies. Monopolies make it very hard for Smart Shoppers to get true value.
Insurance companies (for people who need prescription sunglasses) often curb high prices in any given market and create a demand for lower-priced options. Luxottica thought of that, too, and has quietly acquired some of the major eye-wear insurance companies, who are, of course, happy to approve any sunglasses within their domain.
Amazing, isn’t it, that this all goes on very quietly and without a peep from the media? Here’s where I applaud CBS’ 60 Minutes for doing a recent episode to spill the beans, which aired June 15, 2014. Go to their website for the full story, and think twice this summer before you fork out hundreds of dollars for glasses that you think are “distinctly different.” Just like my new Prada prescription sunglasses, they are all Luxottica, packaged nicely for your continuing consumer illusion.