Luxottica: The eyewear company with "total domination" setting astronomical prices

Why DO designer glasses cost more than an iPad The eyewear company with 'total domination' setting astronomical prices Luxottica not only creates sunglasses and prescription frames for nearly all designer brands, it also owns the world's largest eyewear retailers

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UPDATED:

22:14 GMT, 9 October 2012

It's not uncommon to fork out $400 for a pair of luxury sunglasses, and now, it has been revealed why.

Luxottica, a 'little-known but very big Italian company' appears to have gained total domination over the world's eyewear production; making prescription frames and sunglasses for nearly every designer brand, from Prada and Chanel, to Ralph Lauren and Versace.

Last night, CBS‘ 60 Minutes revealed that half a billion people own a pair of Luxottica-made glasses, a fact that has resulted in an eyewear market monopoly.

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Market monopoly: Luxottica, a 'little-known but very big Italian company' appears to have gained total domination over the world's eyewear production

Market monopoly: Luxottica, a 'little-known but very big Italian company' appears to have gained total domination over the world's eyewear production

In the segment, reporter Lesley Stahl
interviews Luxottica CEO Andrea Guerra, who revealed his company also
owns Ray-Ban, which they 'refurbished' from a $29 per pair gas station
brand into the top-selling sunglasses in the world, as well as Oakley,
and Oliver Peoples.

In
addition to making the glasses, Luxottica also owns nearly every major
retail outlet that sells eyewear, including prescription eyewear chains
LensCrafters and Pearl Vision. It also runs Target Optical and Sears
Optical.

Luxottica
also owns Sunglass Hut – the world's largest sunglass chain. As well as
EyeMed, the second-largest vision care insurance plan in the U.S.

World of glasses: In 60 Minutes segment, reporter Lesley Stahl reveals that Luxottica made 65million pairs of sunglasses last year

World of glasses: In 60 Minutes segment, reporter Lesley Stahl reveals that Luxottica made 65 million pairs of sunglasses last year and made $8 billion

Behind the scenes: Luxottica makes and designs prescription frames and sunglasses for nearly every designer brand, from Prada and Chanel, to Ralph Lauren and Versace

Behind the scenes: Luxottica makes and designs prescription frames and sunglasses for nearly every designer brand, from Prada and Chanel, to Ralph Lauren and Versace

Glasses empire: CEO Andrea Guerra, revealed his company also owns Ray-Ban, which it 'refurbished' from a $29 per pair gas station brand into the top-selling sunglasses in the world

Glasses empire: CEO Andrea Guerra, revealed his company also owns Ray-Ban, which it 'refurbished' from a $29 per pair gas station brand into the top-selling sunglasses in the world

What started as a small tool shop in
the Italian alps has turned into a compnay that last year made 65million
pairs of frames, bringing in $8billion.

Brett Arends, a
columnist for SmartMoney.com, said: 'One company has excessive
dominance in the [eyewear] market. The appearance of variety is an
optical illusion.

'Oakley was a big competitor,' he continued. 'Then they had a fight with Luxottica, a dispute about pricing, so Luxottica basically said, “We're dropping you from our stores”. [Oakley's] stock price collapsed. How is Oakley going to reach their consumer if they can't get their glasses into Sunglass Hut'

Designer details: What started as a small tool shop in the Italian alps has turned into a billion dollar company

Designer details: What started as a small tool shop in the Italian alps has turned into a billion dollar company

Face jewellery: Fashion houses send in skletches of their new collections as inspiration for Luxottica, who then design and make each season's designer glasses lines

Face jewellery: Fashion houses send in skletches of their new collections as inspiration for Luxottica, who then design and make each season's designer glasses lines

Having it all: Luxottica also makes Tiffany & Co glasses - only Walmart, Warby Parker and Cosco are its main competitors

Having it all: Luxottica also makes Tiffany & Co glasses – only Walmart, Warby Parker and Cosco are its main competitors

Luxottica bought Oakley in 2007. As Ms Stahl said to Mr Guerra, 'Oakley tried to compete, they lost, so Luxottica bought them.'

Mr Guerra contends that there are 'lots of things' his company doesn’t own – Walmart, Warby Parker and Cosco are its main competitors – but it continues to hold its competitors hostage, said Ms Stahl.

Mr Arends explained: 'If
you make glasses you want to be in their stores. If you have a store
you want to sell their glasses. So Luxottica can set its prices as high
as it wants and other people have to follow in it's wake.'

Too expensive The lack of competition results in 'routinely pricing glasses at $200 or more that cost less than $30 to make'

Too expensive The lack of competition results in 'routinely pricing glasses at $200 or more that cost less than $30 to make'

Total domination: Luxottica also owns Sunglass Hut - the world's largest sunglass chain. As well as EyeMed, the second-largest vision care insurance plan in the U.S.

Total domination: Luxottica also owns Sunglass Hut – the world's largest sunglass chain. As well as EyeMed, the second-largest vision care insurance plan in the U.S.

This lack of competition results in routinely pricing glasses at $200 or more that cost less than $30 to make, he added.

Mr Guerra's explanation 'Everything is worth what people are ready to pay'.