The Importance of Home Markets to Spectacle Players

While global eyewear sales saw low single-digit growth in 2012, industry leaders Essilor and Luxottica are expected to post double-digit gains in full year sales. These performances were fuelled by their international operations, which contributed a majority share of both companies’ sales. We analyse the degree of influence that ‘home’ markets continue to have on global sales and strategies of the largest spectacle manufacturers in the world.

Dominant ‘home markets’

Of the top 10 global manufacturers of spectacles, Italy and Germany are home to three each. As a result, the competitive environment and range of eyewear products in these markets are among the most advanced in the world. Luxottica, Safilo and De Rigo are Italian players while Carl Zeiss, Fielmann and Rodenstock operate out of Germany. However, it is interesting to note the contrast between the two groups. The Italian manufacturers listed above have evolved into truly global entities, featuring heavily outside Western Europe; while most German eyewear companies apart from Carl Zeiss, continue to focus on their domestic operations.

Share of global revenue

The chart below illustratesthe diversified geographical presence of major lens and frame manufacturers, while also reflecting the single market dependence of upcoming players such as Augen Opticos (Mexico) and Fielmann (Germany).

Home Market vs. Global Sales

Home Market vs Global Sales

Source: Euromonitor

Due to the globally relevant supply chains of most players listed above, world spectacles sales are relatively consolidated compared to some other consumer goods industries such as apparel and personal accessories. However, locally relevant competitors do have a major role to play in some markets. In addition to the two mentioned above, other examples in this category include Indo Group in Spain, Stylemark in the US, Tokai Optical in Japan and Chilli Beans in Brazil.

It is interesting to note that France and Italy, home to Essilor and Luxottica, respectively, account for less than 10% of their global sales.

Continuing importance in operations

Although they operate distribution networks around the globe, the home markets for Luxottica, Essilor and Safilo are vital to their respective operational set-ups in one way or another. Essilor relies heavily on France in the context of innovation for spectacle lenses. Within the country, Essilor operates a dedicated Innovation and Technology Center and also enters into periodic research partnerships such as that with the National Centre for Scientific Research (CNRS). These domestic efforts contribute significantly to a dynamic portfolio, over 40% of which is less than three years old.

Housing six manufacturing facilities, Italy remains the production and innovation hub for frames manufacturer Luxottica. For the Safilo Group, three of its six production facilities are located in Italy. In addition, the country plays a major role in the group’s product design due to the siting of a ‘Style Centre’ in Italy.

Local to global?

The globalisation of spectacle companies is set to lead to a diversified production and innovation structure for the leading manufacturers. However, the speed at which this happens will vary by category. Catering for a technologically-driven product which requires scientific input from across the world, spectacle lens players are more open to employ external manufacturing facilities by forming strictly monitored partnerships with regional laboratories. On the other hand, most globally known spectacle frame and sunglass players depend heavily on their marketing and brand positioning to attract consumer attention. As such, the ‘Made in Italy’ tag attached to such manufacturers is important when distinguishing themselves from local players in foreign markets.

From the viewpoint of local players, the presence of global heavyweights such as Luxottica, Essilor and Carl Zeiss poses a significant threat to international growth. In order to explore markets outside their home countries, the initial focus for companies
such as Augen Opticos and Fielmann should be to establish themselves at
regional level, i.e. Latin America and Western Europe, respectively.