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   Wondering why your glasses are so pricey? One company controls almost
   everything about them

Social Sharing

   [21]Cost of Living

Wondering why your glasses are so pricey? One company controls almost
everything about them

   Prescription eyeglasses can range anywhere from the mid-$200s to more
   than $1000 a pair in Canada. They're an expensive, but necessary,
   product for many. But why are they so expensive?

Social Sharing

One single company owns a huge part of the industry: from lenses to frames to
retailers

   CBC Radio · Posted: Sep 20, 2020 4:00 AM ET | Last Updated: September
   20
   Eyeglasses can be quite expensive due to the vertically integrated
   nature of the industry. (Anis Heydari/CBC)
   (BUTTON)
   comments
   Listen4:22

   A global eyewear giant could be one of the reasons that eyewear is so
   expensive for consumers in North America.

   As part of a series answering listener questions, CBC Radio's The Cost
   of Living took a closer look at the cost of sight for Canadians and why
   it can be pricey.
     * The Cost of Living ❤s money — how it makes (or breaks) us.
       Catch us Sundays on CBC Radio One at 12:00 p.m. (12:30 p.m. NT).
       We also repeat the following Tuesday at 11:30 a.m. in most
       provinces.

   Prescription eyeglasses can range anywhere from $240 to about $1,000 a
   pair in Canada, [22]according to the Canadian Journal of Ophthalmology.

No competition often means higher prices

   The answer to these high costs, in part, may be due to the market
   dominance of a single player.

   EssilorLuxottica is a single company that reported more than $27
   billion in revenue for 2019. It makes everything from the lenses to the
   frames in a pair of glasses.

   The company also owns many of the retailers that sell to Canadians, and
   even runs an American insurance company that pays out vision benefits.
   The merger of Essilor and Luxottica created one of the largest eyewear
   makers in the world. (Kai Pfaffenbach/Reuters)

   It was formed in 2017 when Italy's Luxottica — owner of Ray-Ban and
   Oakley glasses — merged with France's Essilor, owner of Crizal,
   Transitions, Clearly and other brands.
     * [23]Essilor and Luxottica to merge and create world's biggest
       eyewear firm

   The combined company now owns or controls many of the popular names in
   eyeglasses that Canadians know and shop from, including LensCrafters,
   Sunglasses Hut, and Pearle Vision. They also own or licence many other
   eyewear brands, including Prada, Oakley, Armani or Tiffany and Co.

   Essentially, the company tries to own a piece of everything to do with
   a pair of glasses. The merger of Essilor and Luxottica also stopped the
   two companies from competing each other in their previous core
   businesses — Luxottica in making frames, and Essilor in making lenses.

   European Union regulators [24]approved the merger on a similar
   principle. Despite receiving complaints that there could be negative
   effects on competition, the deal was deemed OK because essentially,
   each company primarily operated in related, but not directly
   competitive fields — the lenses versus the frames.

Billions of dollars influenced by one company

   Prescription eyeglasses are big business in this country, accounting
   for [25]about $1.7 billion of sales in 2017.

   And while specific numbers on EssilorLuxottica's dominance in Canada
   are not available, British newspaper [26]The Guardian reported in 2018
   that Essilor alone controlled more than half the world's prescription
   lens market.

   The companies have reportedly used their market power to increase
   prices, with Ray-Ban aviator glasses being a key example.
   Luxottica acquired Ray-Ban in 1999 and then proceeded to [27]pull the
   brand from [28]thousands of retailers.
   Aviator sunglasses used to be more of a mass-market item, before
   Ray-Ban was sold to Luxottica. (Luxottica/Associated Press)

   Upon reintroduction, Luxottica only placed the glasses in higher-end
   outlets. Instead of being able to purchase a set of Top Gun style
   sunglasses at a gas station, you had to go to pricier stores.

   In 2018, prior to merging with Essilor, [29]Luxottica reported that
   Ray-Ban alone accounted for more than $3.7 billion of its net sales.
   That's a lot of aviator glasses.

Cheaper alternatives avoid EssilorLuxottica suppliers

   EssilorLuxottica does not own every player and retailer in prescription
   glasses. Smaller competitors are popping up, such as Warby Parker,
   Bailey Nelson and Ollie Quinn.

   Part of how they are lowering costs — and therefore the price to
   consumers — is by changing suppliers, according to an [30]an analysis
   by faculty at the UCLA Anderson School of Management.
   This profit margin analysis from the UCLA Anderson School of Management
   shows potential price structures for both a Luxottica pair of glasses
   and from competitor Warby Parker (anderson.ucla.edu)

   According to the UCLA analysis, Warby Parker was still able to maintain
   a profit margin while charging approximately $125 Cdn less than
   Luxottica through working directly with lens and frame suppliers and
   avoiding the licencing costs that come with the brand names offered by
   the competing eyewear giant (such as Prada).

   Retailer Ollie Quinn echoes that, saying that controlling its own
   supply chain results in lower costs for its customers.
   Smaller eyeglass retailers, such as this Ollie Quinn outlet in Calgary,
   control their own supply chain to avoid higher prices from dominant
   players such as EssilorLuxottica. (Anis Heydari/CBC)

   "We do work very closely with independent manufacturers and frame
   manufacturers, lens manufacturers," said Ollie Quinn operations manager
   Priscilla Anderson.

   "Our lens manufacturer is right here in Canada," explained Anderson.
   "It allows us to control … our own supply chain. That means that all of
   those savings and not having to pay for brand names and branding
   rights."

It's about what customers will pay, in the end

   The federal Competition Bureau has [31]noted that online competitors
   have resulted in lower prices at times, though EssilorLuxottica does
   have a piece of that market as well, through both e-commerce versions
   of its existing brands and ownership of online retailers such as
   EyeBuyDirect and Vancouver-based Clearly (formerly Clearly Contacts).
     * [32]Clearly Contacts bought by Essilor for $445M

   Smaller competitors such as Ollie Quinn, Bailey Nelson or Warby Parker
   are also only a small fraction of the market. For example, Ollie Quinn
   told CBC Radio's The Cost of Living that it's only targeting about five
   to ten percent of the total glasses market and focusing on the middle
   price range, starting at $165.
     * Don't feel like waiting for your dose of The Cost of Living on
       Sundays?
       To listen anytime, [33]click here to download the show to your
       podcast player of choice.
       Subscribe to get episodes automatically downloaded to your device.

   The Cost of Living reached out to EssilorLuxottica, as well as
   representatives with subsidiary companies for comment and did not
   receive a reply.

   But in an interview with the [34]CBS newsmagazine 60 Minutes in 2013, a
   Luxottica company representative said "everything is worth what people
   are ready to pay."
     __________________________________________________________________

   Written and produced by Anis Heydari, with files from The Associated
   Press and Reuters.
   Click "listen" at the top of the page to hear this segment,
   or [35]download the Cost of Living podcast.
   The Cost of Living airs every week on CBC Radio One, Sundays at 12:00
   p.m. (12:30 NT).

More from this episode

     * [36]Why baby formula prices have doubled every 10 to 15 years in
       Canada
     * [37]What modern monetary theory is and what MMT could mean for
       Canada's budget deficits
     * [38]The Criminal Code bans interest rates above 60 per cent — so
       how are payday lenders legal?
     * [39]FULL EPISODE: The Cost of Living on the cost of stuff: payday
       loans, baby formula, glasses and ... modern monetary theory?

Related Stories

     * [40]Competition Bureau says eyewear shoppers deserve more choice
       online

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