NEW YORK — The eyewear sector is an industry on the cusp of change.
The Federal Trade Commission’s approval this month of Essilor and Luxottica’s merger marked another step in the creation of a new eyewear monolith. This adds further fire to an industry already shuddering from LVMH Moët Hennessy Louis Vuitton and Kering’s decisions to establish their own vertically integrated eyewear production firms, thus ending many of their longstanding licenses.
The eyewear industry’s many traditional players — specialty firms, mass market brands and conglomerates alike — somewhat hang in the balance with the development of these new businesses, as well as rapidly changing consumer preferences. “You either evolve or you die,” said one eyewear executive at Vision Expo East, held at the Jacob K. Javits Center here.
Marchon chief executive officer Nicola Zotta sees opportunity within the eyewear market’s shifting tides. “You cannot deny that the eyewear industry has seen a trend toward consolidation, and we have the size and scope to be one of the possible consolidators,” he said.
“We are looking at a range of opportunities in different segments and different geographies with an eye toward either completing our brand portfolio in a certain segment or bringing in certain technologies or capabilities. We are actively looking at some things and will hopefully announce at least one acquisition toward the end of the year,” Zotta added.
On the other end of the spectrum, Safilo — which has seen a notable decline in sales with the loss of its Gucci license due to the establishment of Kering Eyewear — is re-prioritizing its strategy.
In addition to Kering brands, Safilo holds multiple licenses with LVMH — some of which extend to 2022. Safilo is implementing safeguards to ensure sustained growth beyond the brands of the two leading luxury groups, should LVMH’s Thélios venture succeed. The firm has recently taken up licenses with smaller brands including Rag & Bone and Moschino. Safilo, according to chairman Eugenio Razelli, is also mulling acquisitions to add to a portfolio that includes Polaroid and Carrera.
A new “cornerstone” of the company’s strategy is to redevelop Safilo’s self-titled, independent retailer-geared brand. The label, which relaunched for men in August and will debut a redesigned women’s line this fall, is intended to offer luxury quality at a considerable value (about $280, retail). Safilo’s brand is currently stocked in 1,200 doors across the U.S.
As reported, the eyewear market is experiencing renewed consumer interest in niche, specialty brands. Independent, artisanal eyewear lines such as Blake Kuwahara and Andy Wolf are charting double-digit growth that far exceeds the market’s overall growth.
Safilo North America ceo Henri Blomqvist has noticed the change. “I would say that since 2017 there has been more and more interest toward specialty brands. Consumers are more and more concentrating on what styles look like. I think they want authenticity and if a product costs a certain amount, I think they want to know why. Consumers are for sure becoming more quality focused,” he said.
Zotta concurred, noting: “Values like authenticity are more and more relevant, I don’t think worldwide we are seeing a decline in the popularity of brands. But the interest of the consumer is toward the right design — the brand itself is not enough anymore.”
While executives including Zotta and Blomqvist said the highest and lowest ends of the market are performing best, Luxottica Wholesale North America’s president Fabrizio Uguzzoni said, “I believe what is suffering in the middle is not because of price point, it’s because they are not speaking to the consumer in the right way.”
Uguzzoni pointed to Ray-Ban as an example of a mid-tier brand that continues to perform strongly, particularly in digital channels where year-over-year sales in the U.S. have grown by “double digits.”
Luxottica North America’s vice president of marketing Chiara Bernardi added of the company’s mentality today: “We call it the luxury equation. We do not have clear evidence of a specific price point suffering, but what is suffering are brands that are not resonating with consumers because maybe they are not talking in the correct way — not using social media enough, not using digital enough or maybe because the innovation and creativity put into the product doesn’t speak to the consumer anymore. It also might be relevant, but not at the prescribed price.”
Davide Rettore, North American ceo for Marcolin, noted that “consumers are becoming more and more opinionated, they tend to be more of a connoisseur.” For that, Marcolin has made updates to various Tom Ford styles to include new blue lens technology to filter out digital screen light. “We stimulate new needs with collections aimed at innovation and adapting to factors like digital devices,” he said.
Following Kering’s 2014 decision to create Kering eyewear, Marcolin has embarked on a joint venture with LVMH. Called Thélios, the new business “aims to be the preferred partner of all LVMH brands in the future,” said Rettore, incidentally an alum of Kering eyewear.
The venture, unveiled in February 2017 previewed its first styles — designs created for Céline and Loewe — during Vision Expo East at an offsite location.
“The rationale behind this is to join forces and see Marcolin bring 60-plus years of experience in the eyewear industry with LVMH bringing a luxury approach and brand assortment,” he said.
For the venture, “Services are to be powered by Marcolin — human resources, finance, logistics — while Marcolin supported Thélios to create a new factory in Italy…51 percent is LVMH and 49 percent is Marcolin,” he said.
Kering Eyewear and Thélios executives declined interview requests.
Uguzzoni was bullish on the two conglomerates’ ventures but was cautious as well: ”I would say it’s a good move on their side because they’ve become vertically integrated on an accessory that is doing very well. It’s growing and is a very healthy industry, but they also have their resources, the size and the brand portfolio to do that. I don’t see many other companies doing that — for a single company to move in that direction would be very inefficient.” Luxoticca only holds one license with the two firms — LVMH’s Bulgari, which is up for renewal in 2020.
Zotta agreed saying, “Few companies have the resources to approach eyewear on their own. I don’t think this will push many luxury players to do the same.”
Despite the wave of market changes, Zotta categorized the eyewear industry’s positioning as “strong.”
Explained the executive: “I think the consumer is evolving, the economy is improving, the interest around fashion is growing. The price point somehow went beyond a certain threshold that was considered a limit for a certain period of time.…I think there is a growing awareness to vision care, which drives consumption….The fashion is more varied, awareness and consumer sensitivity is growing from a design point of view and I think that is a very solid combination of factors for a healthy industry.”