Have you ever wondered why eyeglasses are so expensive? Why must consumers pay such high prices for a product that is so cheap to make? The main reason is because there is a single company that dominates the eyewear industry, keeping prices artificially high and making a huge profit in the process. This company is Luxottica.
Most people are unaware of Luxottica’s near monopoly in the eyewear market because the company gives consumers the allusion of choice. Luxottica designs and produces eyewear for many designer brands, including Chanel, Coach, Tiffany & Co., and many more. The company sells these designer products for up to twenty times what they cost to make.
The company’s domination over of the eyewear market is evident in its success in buying out competition. Before Luxottica bought the brand Ray-Ban, the price of Ray-Ban glasses was very low for consumers. After Luxottica bought Ray-Ban, they took it off the market for a year, re-introduced it to the market, and jacked up the prices completely. In addition to owning Ray-Ban, Luxottica also owns Lens Crafters, the largest eyewear retail chain in North America. Many other retail chains that sell mostly or only Luxottica products are owned by Luxottica.
It is clear that consumers do not benefit from Luxottica’s near monopoly in the market for eyewear. According to its formal definition, monopoly is characterized by little or no competition, which usually results in high prices for consumers and low-quality products. Although Luxottica does offer high-quality products, its dominance over the market gives it the ability to jack up the prices. These high prices and the near absence of competition in the market give consumers no choice but to purchase extremely expensive glasses.
The only real solution to lower the price of eyewear is to introduce new competition into the market. With more producers, the market for eyewear could be made perfectly competitive. In a perfectly competitive market, prices are determined by supply and demand curves and not by producers. Thus, if the eyewear market were perfectly competitive, then Luxottica would not be able to control prices and consumers would not be forced to purchase such expensive eyewear. Instead, companies could offer consumers much lower prices for eyeglasses.
Although Luxottica controls a big chunk of the eyewear market, there is still hope that the market will become more competitive. A few eyewear companies offer more affordable options to consumers. Of these companies, one of the most interesting is Warby Parker.
Warby Parker was started specifically because of the lack of competition in the eyewear market and the alarmingly high prices that resulted. According to Warby Parker’s webpage, the company seeks to “create an alternative” to Luxottica. The company’s unique mission to offer a high-quality product at lower prices has proven to be attractive to consumers. According to fastcompany.com, the company’s annual revenue is “well over” $100 million. Fastcompany.com also recently deemed Warby Parker the most innovative company of 2015.
Hopefully, Warby Parker’s success indicates that change is possible in the market for eyewear. The control that Luxottica currently holds over the eyewear market only makes prices higher and is consequently detrimental to consumers. Thus, the introduction of new, alternative companies such as Warby Parker that offer lower prices to consumers is the only thing that can break the hold that Luxottica has on the eyewear market. If the market becomes more competitive, then consumers will certainly benefit.
“Eyewear Brands.” Luxottica. N.p., n.d. Web. 22 Mar. 2015. <http://www.luxottica.com/en/eyewear-brands>.
“History.” Warby Parker. N.p., n.d. Web. 21 Mar. 2015. <https://www.warbyparker.com/history>.
“Luxottica. Do You Know Who Makes Your Glasses?” 60 Minutes. CBS News. 26 Oct. 2013. Television.
“Monopoly.” Investopedia. N.p., 24 Nov. 2003. Web. 22 Mar. 2015. <http://www.investopedia.com/terms/m/monopoly.asp>.
“Most Innovative Companies 2015.” Fast Company. N.p., n.d. Web. 22 Mar. 2015. <http://www.fastcompany.com/section/most-innovative-companies-2015>.
“Warby Parker Arrives on Venice’s Abbot Kinney.” Fashion Trends Daily. N.p., 15 Sept. 2014. Web. 22 Mar. 2015. <http%3A%2F%2Fwww.fashiontrendsdaily.com%2Ffashion- accessories%2Fwarby-parker-arrives-on-venices-abbot-kinney>.