Eye Glasses Monopoly

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One company, Luxottica, dominates the world market in eyeglasses and monopolizes the business.

 If you don't go to places like Walmart or Costco, you could easily be spending hundreds of dollars for a pair of glasses that cost $30 ten years ago. 

Ray-Bans, Oakleys, glasses for running, and skiing, and even reading. You'd think the competition would force the prices down.  One reason it hasn't is a little known but very big Italian company called Luxottica the biggest eyewear company on earth. At least half a billion are wearing Luxottica glasses now. Last year, Luxottica made some 65 million pairs of sunglasses and optical frames. They don't make prescription lenses.

Luxottica  has Prada,. Chanel,. Dolce Gabbana,. Versace,. Burberry,. Ralph Lauren,. Tiffany,. Bulgari... Vogue line which is not that expensive. Coach., which is much more expensive. If two women walked down the street with these on you wouldn’t know the difference. Also   Persol  and Tory Burch.

Chanel Cs, Polo ponies, or Tiffany blue. Luxottica wouldn't tell us their markup, but glasses like these can sell for up to 20 times what they cost to make. 

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.

Today those $29 pairs can cost $150 and more, and Ray-Ban is the top-selling sunglass brand in the world.

Which is all the more surprising since Luxottica not only bought Ray-Ban, they also bought LensCrafters, the largest eyewear retail chain in North America. So now they make 'em and they sell 'em. It's great for business, but is it great for the consumer? I asked LensCrafters' president Mark Weikel.

Lesley Stahl: How many non-Luxottica brands do you sell here?  Mark Weikel: We probably have a few brands that aren't Luxottica.

Lesley Stahl: Mostly Luxottica?  Mark Weikel: I would guess, mostly Luxottica. Yuh.

Lesley Stahl: So since Luxottica owns you, does the consumer get a break on glasses made by them in LensCrafters?

No. Consumers do not get a break. At LensCrafters, the average cost for a pair of frames and lenses is about $300. You may think -- well, there's choice in the mall for other glasses.

But Luxottica doesn't only own the top eyewear chain in the country, it owns another large chain: Pearle Vision, and Oliver Peoples, and several boutique chains. And it runs Target Optical and Sears Optical. And we're not done, Luxottica also owns Sunglass Hut - the largest sunglass chain in the world.

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.

Consider what happened to Oakley, the world-famous maker of advanced sports eyewear.

 Oakley was a big competitor. And they had a fight with Luxottica. And Luxottica basically said, "We're dropping you from our stores."

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?

 Oakley was forced to sell themselves to Luxottica. They tried to compete and they lost and they were bought.

So now Luxottica owns the two top premium sunglass brands in the world, Ray-Ban and Oakley. But Luxottica points out there are other players -

Lesley Stahl: Who's your biggest competitor in the United States?

                 some of the Companies Owned by LUXOTTICA:


Andrea Guerra: You could say Walmart. Also Costco and emerging on-line companies like Warby Parker. But other competitors told us Luxottica has them in a chokehold: if you make glasses, you want to be in their stores; and if you have stores, you want to sell Ray-Bans! So Luxottica can set the prices as high as it wants.

Which he says is why glasses in general cost so much, even at your local optician's.

Brett Arends: The whole point of a luxury brand is to persuade people to pay $200 for a product that cost $30 to make.

You'd think well, surely insurance companies covering vision would complain. But guess what? Luxottica also owns the nation's second largest vision-care plan: EyeMed, covering eye exams and glasses.

See the 60 Minutes Interview http://www.cbsnews.com/8301-18560_162-57527151/sticker-shock-why-are-glasses-so-expensive/

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