MILAN — In eyewear, it’s no longer a matter of big is good. Giant is better. Luxottica and Essilor, the leading maker of lenses worldwide, have agreed to a 46 billion euro merger to form an eyewear behemoth with annual sales of more than 15 billion euros, which is expected to be approved in the third quarter of the year. This is reshaping Italy’s eyewear landscape — as well as the global one — and Italian competitors are working on building a sustainable business.
Italy’s second-largest eyewear manufacturer, Safilo Group, has been grappling with Kering’s decision in 2014 to produce eyewear internally for most of the brands in its stable, and Gucci, in particular, a longtime Safilo licensee.
Safilo’s new chief executive officer, Unilever alum Angelo Trocchia, who succeeded Luisa Delgado in February, in July updated the group’s 2020 Plan after revealing a steeper loss and declining sales in the first half. Business trends are expected to improve in the second half, with the foreign exchange impact expected to ease. But a full recovery is not seen this year, said Trocchia, who defined 2018 as “a year of transition, as we put the house in order,” looking at streamlining the organization and cutting costs.
In line with Delgado’s strategy, Trocchia plans to continue to build Safilo’s portfolio of licensed brands, emphasizing the renewal of the licenses with Fossil and Kate Spade, and the recent arrival of brands Moschino and Rag & Bone, as well as to invest in the group’s proprietary brands Carrera, Polaroid, Smith and Safilo. There is another cloud looming over the company, which targets sales of 1 billion euros by 2020, as there is mounting speculation that Thélios, the new venture created between LVMH Moët Hennessy Louis Vuitton and Marcolin, could eventually pick up Safilo’s Dior license.
In April, Toni Belloni, group managing director of LVMH, and Giovanni Zoppas, chairman and ceo of Thélios, unveiled a state-of-the art production plant in Longarone, a one-hour drive from Venice, and known as Italy’s eyewear hub. Thélios is already producing eyewear collections for Céline, previously licensed to Safilo; Loewe, which will make its debut in the second half of the year, and Fred, to bow by the end of the year.
Asked about the choice to opt for a joint venture vis-à-vis internalizing production, as Kering did, Belloni at the time said, “We thought it was best to lean not only on the district of excellence, but on a company with a long experience to compete efficaciously. The fact that [Marcolin] will continue to be on the market is a guarantee that the ecosystem will always be open to innovation. Thélios will have to deserve the brands that could potentially be added [to the portfolio].”
Marcolin Group, whose portfolio of licensed brands includes Tom Ford, Moncler, Dsquared2 and Diesel, this spring inked a license with Bally with a preview launch of the eyewear collection in the Asian market, later extending to the rest of the world — a significant choice that Massimo Renon, Marcolin’s ceo, emphasized. “The decision to present Bally in Asia is part of the focus strategy and new investments on this market, one of the most important for the Marcolin Group,” he said. The company also recently renewed its licenses with Tod’s and Swarovski.
The power and potential of all things digital is also not lost on any of these eyewear companies, which are all laying out plans to build an omnichannel business. For example, Kering Eyewear inked a partnership with JD.com in March, its first official flagship, offering designs from Gucci and Saint Laurent, among others. At the time, Roberto Vedovotto, president and ceo of Kering Eyewear, said “because China is a booming market for e-commerce sales and a region with a high growth potential in the luxury segment, it was a natural choice to partner” with JD.com.
At Luxottica, sales from the group’s e-commerce platforms in the second quarter were up by 16 percent at constant exchange. Ray-Ban.com was confirmed as the main driver of the group’s digital business, benefiting in the quarter from the exclusive launch online of special collections, such as Ray-Ban Reloaded. “The group’s digital evolution is ongoing,” said executive chairman Leonardo Del Vecchio in July. “Our e-commerce business is more and more important in our strategy and our communication is now focused on digital and social media.” In addition to its proprietary brands Ray-Ban and Oakley, among others, the company counts licenses with the likes of Giorgio Armani, Burberry, Chanel, Michael Kors and Prada, to name a few.
All this takes places as the eyewear market is experiencing renewed consumer interest in niche, specialty brands such as Mykita, Dita and Theo, and in a context of “an attractive eyewear industry,” as defined by Trocchia. The sector generates revenues of 18 billion euros that are forecast to grow between 3 and 4 percent in 2020, with an increasing aging population in need of eye-care solutions, the potential of emerging markets, and as the health and wellness trends continue to generate interest in eye care.