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How badly are we being ripped off on eyewear? Former industry execs tell all

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    How badly are we being ripped off on eyewear? Former industry execs tell all

    From the LA Times. March 5, 2019



    Charles Dahan knows from first-hand experience how badly people get ripped off when buying eyeglasses.


    He was once one of the leading suppliers of frames to LensCrafters, before the company was purchased by optical behemoth Luxottica. He also built machines that improved the lens-manufacturing process.









    Dahan, who lives in Potomac, Md., was responding to a column I recently wrote about why consumer prices for frames and lenses are so astronomically high, with markups often approaching 1,000%.




    owned and licensed brands include Armani, Brooks Brothers, Burberry, Chanel, Coach, DKNY, Dolce & Gabbana, Michael Kors, Oakley, Oliver Peoples, Persol, Polo Ralph Lauren, Ray-Ban, Tiffany, Valentino, Vogue and Versace.


    Along with LensCrafters, Luxottica also runs Pearle Vision, Sears Optical, Sunglass Hut and Target Optical, as well as the insurer EyeMed Vision Care.






    Neither company responded, which was the same response I received the last time I contacted them.


    Apparently EssilorLuxottica feels no need to defend its business practices. Or it understands that no reasonable defense is possible.


    Dahan, a chemical engineer by training, established a company called Custom Optical in 1977 after designing a machine capable of making prescription lenses appear thinner.


    In short order he also was designing plastic and metal frames, and proposed to LensCrafters in 1985 that he supply the then-independent company.














    Both Butler and Dahan acknowledged what most consumers have long suspected: that the prices we pay for eyewear in no way reflect the actual cost of making frames and lenses.




    Lenses, he said, might cost about $5 a pair to produce. With fancy coatings, that could boost the price all the way to $15.




    Butler said he recently visited factories in China where many glasses for the U.S. market are manufactured. Improved technology has made prices even lower than what Dahan recalled.






    Yet those same frames and lenses might sell in the United States for $800.










    Indeed, the California maker of premium sunglasses was embraced by skiers and other outdoorsy types after it released its first sunglasses in 1984.


    It raised $230 million with an initial public offering of stock in 1995. Its biggest customer by far was Sunglass Hut, which, like LensCrafters, had stores in malls across the country.


    Luxottica purchased Sunglass Hut in early 2001. It promptly told Oakley it wanted to pay significantly lower wholesale prices or it would reduce its orders and push its own brands instead.








    Luxottica acquired Oakley a few years later, adding it to Ray-Ban, which Luxottica obtained in 1999.




    Again, no one at Luxottica responded to my request for comment.


    online glasses sales hold potential for pushing retail eyewear prices lower, but the e-glasses industry still has a ways to go before posing a threat to the likes of EssilorLuxottica.










    proposed merger between Sprint and T-Mobile raising the prospect of just three major carriers.


    The eyewear market is in considerably worse shape.


    That should be clear to anyone.


    #2
    It's what we all know... just in print.

    Comment


      #3
      so....the ads I see on tv for zenni which promote $6.95 complete eyeglasses - this is not competition? Who says there is no competition? this is a total fluff piece, useless information on the reporter's part.

      Comment


        #4
        Sensationalism. No one reports on the outrageous per hr fees that auto mechanics charge, or their markups. And what about Pharms? But our industry is under sieg? Labor, overhead, free redos, all accounts in our pricing. Zenni, WP, et al, do not offer free redos if the RX is off. We do. It’s the cost of doing business. What about insurance write offs, or better yet, insurance ripoffs. Part of the price of doing business.
        The EssiLux empire, including EyeMed needs to be sanctioned for their monopoly. The organization is equivalent to the RICO act. Manufacturing equipment, frames, lenses, labs, retail, consumables and even online retail. They have free will to set prices. How is that not illegal worldwide? Lobbying governments. That is how they get it done.
        As for on line opticals, some truth in advertising will go a long way. Disclose redo policies up front. That alone will get some to shy away. Nothing worse than getting stuck with something you can never use.
        I bend light. That is what I do.

        Comment


          #5
          Originally posted by lensmanmd View Post
          The EssiLux empire, including EyeMed needs to be sanctioned for their monopoly. The organization is equivalent to the RICO act. Manufacturing equipment, frames, lenses, labs, retail, consumables and even online retail. They have free will to set prices. How is that not illegal worldwide? Lobbying governments. That is how they get it done.
          +1

          Comment


            #6
            Originally posted by lensmanmd View Post
            Manufacturing equipment, frames, lenses, labs, retail, consumables and even online retail. They have free will to set prices. How is that not illegal worldwide? .
            Not to be too defensive of Essilor, but I can buy equipment from Topcon, Nidek and various Chinese and American suppliers which are not, to my knowledge, owned by Essilor. I can buy frames and lenses from non-Essilux companies (and I do). So while there are fewer large suppliers than in the past (as in other industries), I am not so sure that there is anything special about optical. Consumers have never had so many options either. Nonsense news articles such as this LA Times crapola are pure laziness, sensationalist and big deal they found a disgruntled "insider" who may have lost his gravy train who is now "telling all". As if.

            Comment


              #7
              Their now largest participation in and of any single group ..........................

              Originally posted by optimensch View Post

              Not to be too defensive of Essilor, but I can buy equipment from Topcon, Nidek and various Chinese and American suppliers which are not, to my knowledge, owned by Essilor. I can buy frames and lenses from non-Essilux companies (and I do). So while there are fewer large suppliers than in the past (as in other industries), I am not so sure that there is anything special about optical. Consumers have never had so many options either. Nonsense news articles such as this LA Times crapola are pure laziness, sensationalist and big deal they found a disgruntled "insider" who may have lost his gravy train who is now "telling all". As if.

              optimensch,...................If you would have followed the posts on Essilor's "optical world domination " posts right here on optiBOARD, over the last few years. you would see that they are moving forward step by step without stopping, and counter no visible defensive action at this time.

              Their now largest participation in and of any single group, in quality online optical services should give you the shivers, instead of making belittling comments.

              The 2 disgruntled "insiders" you mention were the 2 owners of the original "Lenscrafters" chain, who walked away with many millions of Dollars when they sold it to Luxottica.

              Comment


                #8
                Originally posted by optimensch View Post
                so....the ads I see on tv for zenni which promote $6.95 complete eyeglasses - this is not competition? Who says there is no competition?
                Some would say that a would-be customer walking into a mall-based retail environment will not encounter a lot of non-luxottica options to buy eyewear.

                A non-competitive monopoly does not necessarily have to imply an absolute monopoly.

                Comment


                  #9
                  Originally posted by optio View Post
                  Some would say that a would-be customer walking into a mall-based retail environment will not encounter a lot of non-luxottica options to buy eyewear.

                  A non-competitive monopoly does not necessarily have to imply an absolute monopoly.
                  Malls may not be such a useful example given how they are in a general decline, and as purchases move online there are certainly plenty of non essilux players since the barrier to entry is fairly low. In Canada we have Centennial, Hoya, Zeiss and surely other non essilux choices and you can go to any major trade show and find plenty of non essilux suppliers of frames, lenses and equipment. I think there is plenty of competition at both the retail and wholesale level, not necessarily an optimal amount, and I am not here to defend essilux at all - I buy from them and I buy from many other suppliers too. Is someone forcing you to purchase from them? Is most of your competition really essilux-owned? How about the contact lens market - is the competition there sufficient in your opinion, both at wholesale and retail?

                  Comment


                    #10
                    Originally posted by optimensch View Post
                    Malls may not be such a useful example given how they are in a general decline, and as purchases move online there are certainly plenty of non essilux players since the barrier to entry is fairly low. In Canada we have Centennial, Hoya, Zeiss and surely other non essilux choices and you can go to any major trade show and find plenty of non essilux suppliers of frames, lenses and equipment. I think there is plenty of competition at both the retail and wholesale level, not necessarily an optimal amount, and I am not here to defend essilux at all - I buy from them and I buy from many other suppliers too. Is someone forcing you to purchase from them? Is most of your competition really essilux-owned? How about the contact lens market - is the competition there sufficient in your opinion, both at wholesale and retail?
                    Perhaps you and I are reading something different when we read the article. To me, the the author is reporting about rip-off mark-ups on glasses in the retail environment. His explanation for this is a Luxottica monopoly. Whether you believe there is sufficient competition in retail and wholesale lens and frame suppliers is beside the point. Do you agree or disagree that there are rip-off mark-ups for the average retail consumer? What, for instance, is your mark-up for the items the journalist is reporting about?

                    Comment


                      #11
                      I'm also going to opine that I don't think you would do very well in a basic test of reading comprehension.

                      The title of the article is: How badly are we being ripped off on eyewear?

                      I think the "we" is intended to describe people NOT in the industry. So people who aren't (for instance) opticians and optometrists. In either words, neither you nor me. Yet look at your post.

                      Originally posted by optimensch View Post
                      Malls may not be such a useful example given how they are in a general decline, and as purchases move online there are certainly plenty of non essilux players since the barrier to entry is fairly low. In Canada we have Centennial, Hoya, Zeiss and surely other non essilux choices and you can go to any major trade show and find plenty of non essilux suppliers of frames, lenses and equipment. It think there is plenty of competition at both the retail and wholesale level, not necessarily an optimal amount, and I am not here to defend essilux at all - I buy from them and I buy from many other suppliers too. Is someone forcing you to purchase from them? Is most of your competition really essilux-owned? How about the contact lens market - is the competition there sufficient in your opinion, both at wholesale and retail?
                      Why does an article written by and for non-optical people elicit a response from you detailing all your potential (optometric) purchase avenues? You aren't part of the "we" that the journalist is reporting about. You (and me) are on the "other" side of his basic argument. I'm not sure how you missed that.

                      Comment


                        #12
                        Originally posted by optio View Post
                        I'm also going to opine that I don't think you would do very well in a basic test of reading comprehension.

                        The title of the article is: How badly are we being ripped off on eyewear?

                        I think the "we" is intended to describe people NOT in the industry. So people who aren't (for instance) opticians and optometrists. In either words, neither you nor me. Yet look at your post.



                        Why does an article written by and for non-optical people elicit a response from you detailing all your potential (optometric) purchase avenues? You aren't part of the "we" that the journalist is reporting about. You (and me) are on the "other" side of his basic argument. I'm not sure how you missed that.
                        Really. Very collegial comments, thanks.

                        I started with a reply in this thread that I felt that in fact CONSUMERS have plenty of choice, I did not reference our alternative optical suppliers. In fact I pointed out that strangely, if ESSILUX is a monopoly, that it was notable that the ads I see on TV lately are by Zenni and WP, 2 major low cost alternatives to Essilux. The difference is I can also read between the lines, follow a thread and not be rude. You might consider some manners. This piece has a lot to do with the essilux monopoly and the piece is in the BUSINESS section. Where is the monopoly - at wholesale? retail? both? Is this crystal clear from this article? Why is pointing out myriad competitors at BOTH wholesale AND retail so off topic to you?

                        Comment


                          #13
                          Convenient for you to ignore my earlier post. Here it is again:

                          Perhaps you and I are reading something different when we read the article. To me, the the author is reporting about rip-off mark-ups on glasses in the retail environment. His explanation for this is a Luxottica monopoly. Whether you believe there is sufficient competition in retail and wholesale lens and frame suppliers is beside the point. Do you agree or disagree that there are rip-off mark-ups for the average retail consumer? What, for instance, is your mark-up for the items the journalist is reporting about?

                          There is no need to read between the lines. Just read what the lines say. The journalist reports:

                          “You can buy absolutely first-quality lenses for $1.25 apiece,” Butler said.
                          Yet those same frames and lenses might sell in the United States for $800.

                          If the article can be distilled into two sentences, these would be the two. I don't dispute his claim because the prices claimed are consistent with what I know about the optical industry. Now, the journalist overlooks the price of frames in there (let's say $15). So two lenses plus frames comes to $17.50. And that item is then sold for $800. Is that newsworthy? I'm not a news editor but I'm going to assume the editor of the LA Times is competent, and he deems that newsworthy so I'm going to assume it's newsworthy to non-industry folk.

                          You wrote:
                          >Where is the monopoly - at wholesale? retail? both?

                          The article is claiming a monopoly by Luxottica, and (I don't want to put words in his mouth but) it's largely implied the monopoly is occurring at brick and mortar retail. Though you appear to be in disagreement with the article (you called it a "fluff" piece), in some sense, your listing of the myriad of competitors at the wholesale level provides evidence for the article's main claim. Because in order for the retailers to buy lenses at $1.25 (which is a pretty small capital investment for a retail item), there must be an active and truly competitive wholesale environment for quality lenses to be sold at such a nominal cost. So although the journalist doesn't reference healthy wholesale competition, your post in fact is consistent with what the journalist is reporting.

                          Comment


                            #14
                            I'm also going to opine .........................................

                            Originally posted by optio View Post

                            I'm also going to opine that I don't think you would do very well in a basic test of reading comprehension.

                            The title of the article is: How badly are we being ripped off on eyewear? I think the "we" is intended to describe people NOT in the industry. So people who aren't (for instance) opticians and optometrists. In either words, neither you nor me. Yet look at your post.

                            Why does an article written by and for non-optical people elicit a response from you detailing all your potential (optometric) purchase avenues? You aren't part of the "we" that the journalist is reporting about. You (and me) are on the "other" side of his basic argument. I'm not sure how you missed that.

                            ..............................a very good point overall.

                            As having lived and worked in the world of optical retail for whatever timespan it has been, we have been used to the way it was and now is.

                            We forget that when the optical retail profession became a specialised field in the early 1900's , the times of primitive instruments, machinery and glass lenses, using a lot of manual work to make and finish a pair of glasses. If you would break a lens while finishing a job you had to restart all of it again. For that reason alone, opticians would charge a much higher markup, to cover for broken lenses and other redos, than is standard in other commercial fields. Furthermore the now standard historically higher markup in optical retail sales has survived just about a full century by one reason or another.

                            No wonder that non optical people are trying to get into this field by catering to the masses, at much lower pricing and still making money.

                            Comment


                              #15
                              I have to agree it is newsworthy to the general public...............................

                              Originally posted by optio View Post

                              There is no need to read between the lines. Just read what the lines say. The journalist reports:

                              “You can buy absolutely first-quality lenses for $1.25 apiece,” Butler said.
                              Yet those same frames and lenses might sell in the United States for $800.


                              If the article can be distilled into two sentences, these would be the two. I don't dispute his claim because the prices claimed are consistent with what I know about the optical industry. Now, the journalist overlooks the price of frames in there (let's say $15). So two lenses plus frames comes to $17.50. And that item is then sold for $800. Is that newsworthy? I'm not a news editor but I'm going to assume the editor of the LA Times is competent, and he deems that newsworthy so I'm going to assume it's newsworthy to non-industry folk.

                              You wrote:
                              >Where is the monopoly - at wholesale? retail? both?

                              Butler ..........................sold LensCrafters to Luxottica for millions of $s.

                              ........and the lenses are Polycarbonate, the easiest and cheapest ones to manufacture.

                              I have to agree it is newsworthy to the general public.

                              To follow the MONOPOLY...................just read up on Essilor ....Essilux and their worldwide progress right here on optiBoard.

                              Comment

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