Can Someone expert casually read this article to answer the concerned question according to your understanding Ever wond
Posted: Thu May 05, 2022 7:06 am
Can Someone expert casually read this article to answer the concerned question according to your understanding
Ever wonder why eyeglasses cost so much? Technology and productivity, combined with competition, has reduced prices for so many goods and services throughout our economy over the past several decades. Yet the price of eyeglasses remains persistently high. Read the following articles to find out why.
Why are eyeglass prices so high and what are possible solutions? Directly relate your answers to things you have learned .
Meet the Four-Eyed, Eight-Tentacled Monopoly That is Making Your Glasses So Expensive Ana Swanson Forbes, Sep 10, 2014 As my fellow four-eyes will know, buying new glasses can be an expensive undertaking. The fanciest frames at LensCrafters often sell for $400-500. Holding those little assemblages of glass, metal, and plastic that cost $25-50 to make in your hand, you might wonder how exactly you were roped into paying so much. The answer is basic economics. Most frames are manufactured by a single company, named Luxottica. The Italian company makes frames and sunglasses for an amazing list of brands and stores, including: Prada Chanel Bulgari Vogue Sunglasses Hut LensCrafters. Oliver Peoples Dolce & Gabbana Persol Versace Coach Pearle Vision Burberry DKNY Target Optical Sears Optical Ralph Lauren Tiffany Rayban Oakley The company also makes Google Glass - though 79-year-old Luxottica founder Leonardo Del Vecchio recently commented that he'd be embarrassed to wear the Google eyewear outside of a disco, and that his disco days are over. Meet the four-eyed, eight-tentacled monopoly that is making your eyeglasses so darned expensive. Luxottica estimates that at least half a billion people around the world are currently wearing their glasses. I don't know about you, but I am pushing them up my nose right now. Luxottica controls 80% of the major brands in the $28 billion global eyeglasses industry. This monopolistic structure of the market leads to profits that are "relatively obscene," says Tim Wu, a professor of law at Columbia University and the author of The Master Switch. In a speech given at this year's annual conference for New America, a Washington, D.C.-based think tank, Wu remarks that products in some industries seem to only get better and cheaper -- laptops, for example -- while other products, like eyeglasses, remain strangely pricey, with only superficial innovation. The difference is due to market structure. Because it controls so many prominent brands and retail chains, Luxottica is what economists call a price maker. That means it can set the price of its goods near the highest amount that consumers would be willing to pay for them, unlike more competitive industries, in which competition both encourages constant innovation and forces the price of goods down toward what they cost to manufacture. Having control over the pricing of a huge variety of different brands means Luxottica can also carefully engineer the prices of different brands to encourage. you to shell out an additional $80 for that beloved logo or streak of Tiffany blue. In certain industries, monopolies can be appropriate and natural - the power sector, for example, where it costs less for one company to set up and run a power grid than it would for multiple companies to set up competing power grids. But monopolies have no place in a low-tech consumer product market like that for eyeglasses. In this environment, monopolies create a very cynical form of capitalism - giving
1/10/17 update: We received the following statement from a representative for Luxottica: "We're proud to make some of the most beautiful and highest quality eyewear in the world, but we are in no way a monopoly. In reality, the optical industry is very competitive and fragmented. Of the close to 1 billion pairs of glasses sold worldwide last year, only 93 million of them were produced by Luxottica - less than 10%. Also, there are literally thousands of eyewear brands available to consumers today and Luxottica makes eyewear for around 30 different brands, only a few of which we actually own. Even on the retail side, half of all glasses sold in the U.S. are done so by independent opticians. The other half are sold by chains including Costco, Walmart, Solstice and many other non-Luxottica brands. So yes, while we have a fantastic portfolio, it is false to say we control the market." How badly are we being ripped off on eyewear? Former industry execs tell all Los Angeles Times BY DAVID LAZARUS, COLUMNIST MARCH 5, 2019 Charles Dahan knows from firsthand 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. In other words, Dahan, 70, knows the eyewear business from start to finish. And he doesn't like what's happened. "There is no competition in the industry, not anymore," he told me. "Luxottica bought everyone. They set whatever prices they please. 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%. I noted that if you wear designer glasses, there's a very good chance you're wearing Luxottica frames. The company's 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. And Italy's Luxottica now casts an even longer shadow over the eyewear industry after merging last fall with France's Essilor, the world's leading maker of prescription eyeglass lenses and contact lenses. The combined entity is called EssilorLuxottica. Just so you know up front, I reached out to both Luxottica and its parent company with what Dahan told me. I asked if they'd like to respond to his specific points or to speak generally about optical pricing. 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-
He said LensCrafters would turn around and charge $99 for completed glasses that cost $20 or $30 to make and this was well below what many independent opticians charged. Nowadays, he said, those same glasses at LensCrafters might cost hundreds of dollars. 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. "You can get amazingly good frames, with a Warby Parker level of quality, for $4 to $8," Butler said. "For $15, you can get designer-quality frames, like what you'd get from Prada." And lenses? "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. Butler laughed. "I know," he said. "It's ridiculous. It's a complete rip-off." In 1995, Luxottica purchased LensCrafters' parent company, U.S. Shoe Corp., for $1.4 billion. The goal wasn't to get into the shoe business. It was to take control of LensCrafters' hundreds of stores nationwide. Dahan said things went downhill for him after that. Luxottica increasingly emphasized its own frames over those of outside suppliers, he said, and Custom Optical's sales plunged. Dahan was forced to close his business in 2001. "It wasn't just me," he said. "It happened to a lot of companies. Look at Oakley." 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. Within months, Oakley acknowledged to shareholders that the talks hadn't gone well and that Luxottica was slashing its orders. "We have made every reasonable effort to establish a mutually beneficial business partnership with Luxottica, but it is clear from this week's surprising actions that our efforts have been ignored," Oakley's management said in a statement at the time. The company's stock immediately lost more than a third of its value. Luxottica acquired Oakley a few years later, adding it to Ray-Ban, which Luxottica obtained in 1999. "That's how they gained control of so many brands," Dahan said. "If you don't do what they want, they cut you off." Again, no one at Luxottica responded to my request for comment. As I've previously observed, 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. It can be a challenge buying something so central to one's appearance without first trying it on or receiving hands-on help with fitting. In the meantime, Dahan and Butler told me, federal authorities should step up and prevent price gouging for eyewear - just as they've done with other healthcare products, such as EpiPens. "Federal officials fell asleep at the wheel," Dahan said. "They should never have allowed all these companies to roll into one. It destroyed competition." Butler said it should be clear from EssilorLuxottica's practices that the company has too much market power. "If that's not a monopoly," he said, "I don't know what is." I couldn't agree more. Regulators are currently wringing their hands over further consolidation in the wireless industry, with a proposed merger between Sprint and T-Mobile raising the prospect of just three major carriers.
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Why are eyeglass prices so high and what are possible solutions? Directly relate your answers to things you have learned .
Meet the Four-Eyed, Eight-Tentacled Monopoly That is Making Your Glasses So Expensive Ana Swanson Forbes, Sep 10, 2014 As my fellow four-eyes will know, buying new glasses can be an expensive undertaking. The fanciest frames at LensCrafters often sell for $400-500. Holding those little assemblages of glass, metal, and plastic that cost $25-50 to make in your hand, you might wonder how exactly you were roped into paying so much. The answer is basic economics. Most frames are manufactured by a single company, named Luxottica. The Italian company makes frames and sunglasses for an amazing list of brands and stores, including: Prada Chanel Bulgari Vogue Sunglasses Hut LensCrafters. Oliver Peoples Dolce & Gabbana Persol Versace Coach Pearle Vision Burberry DKNY Target Optical Sears Optical Ralph Lauren Tiffany Rayban Oakley The company also makes Google Glass - though 79-year-old Luxottica founder Leonardo Del Vecchio recently commented that he'd be embarrassed to wear the Google eyewear outside of a disco, and that his disco days are over. Meet the four-eyed, eight-tentacled monopoly that is making your eyeglasses so darned expensive. Luxottica estimates that at least half a billion people around the world are currently wearing their glasses. I don't know about you, but I am pushing them up my nose right now. Luxottica controls 80% of the major brands in the $28 billion global eyeglasses industry. This monopolistic structure of the market leads to profits that are "relatively obscene," says Tim Wu, a professor of law at Columbia University and the author of The Master Switch. In a speech given at this year's annual conference for New America, a Washington, D.C.-based think tank, Wu remarks that products in some industries seem to only get better and cheaper -- laptops, for example -- while other products, like eyeglasses, remain strangely pricey, with only superficial innovation. The difference is due to market structure. Because it controls so many prominent brands and retail chains, Luxottica is what economists call a price maker. That means it can set the price of its goods near the highest amount that consumers would be willing to pay for them, unlike more competitive industries, in which competition both encourages constant innovation and forces the price of goods down toward what they cost to manufacture. Having control over the pricing of a huge variety of different brands means Luxottica can also carefully engineer the prices of different brands to encourage. you to shell out an additional $80 for that beloved logo or streak of Tiffany blue. In certain industries, monopolies can be appropriate and natural - the power sector, for example, where it costs less for one company to set up and run a power grid than it would for multiple companies to set up competing power grids. But monopolies have no place in a low-tech consumer product market like that for eyeglasses. In this environment, monopolies create a very cynical form of capitalism - giving
1/10/17 update: We received the following statement from a representative for Luxottica: "We're proud to make some of the most beautiful and highest quality eyewear in the world, but we are in no way a monopoly. In reality, the optical industry is very competitive and fragmented. Of the close to 1 billion pairs of glasses sold worldwide last year, only 93 million of them were produced by Luxottica - less than 10%. Also, there are literally thousands of eyewear brands available to consumers today and Luxottica makes eyewear for around 30 different brands, only a few of which we actually own. Even on the retail side, half of all glasses sold in the U.S. are done so by independent opticians. The other half are sold by chains including Costco, Walmart, Solstice and many other non-Luxottica brands. So yes, while we have a fantastic portfolio, it is false to say we control the market." How badly are we being ripped off on eyewear? Former industry execs tell all Los Angeles Times BY DAVID LAZARUS, COLUMNIST MARCH 5, 2019 Charles Dahan knows from firsthand 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. In other words, Dahan, 70, knows the eyewear business from start to finish. And he doesn't like what's happened. "There is no competition in the industry, not anymore," he told me. "Luxottica bought everyone. They set whatever prices they please. 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%. I noted that if you wear designer glasses, there's a very good chance you're wearing Luxottica frames. The company's 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. And Italy's Luxottica now casts an even longer shadow over the eyewear industry after merging last fall with France's Essilor, the world's leading maker of prescription eyeglass lenses and contact lenses. The combined entity is called EssilorLuxottica. Just so you know up front, I reached out to both Luxottica and its parent company with what Dahan told me. I asked if they'd like to respond to his specific points or to speak generally about optical pricing. 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-
He said LensCrafters would turn around and charge $99 for completed glasses that cost $20 or $30 to make and this was well below what many independent opticians charged. Nowadays, he said, those same glasses at LensCrafters might cost hundreds of dollars. 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. "You can get amazingly good frames, with a Warby Parker level of quality, for $4 to $8," Butler said. "For $15, you can get designer-quality frames, like what you'd get from Prada." And lenses? "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. Butler laughed. "I know," he said. "It's ridiculous. It's a complete rip-off." In 1995, Luxottica purchased LensCrafters' parent company, U.S. Shoe Corp., for $1.4 billion. The goal wasn't to get into the shoe business. It was to take control of LensCrafters' hundreds of stores nationwide. Dahan said things went downhill for him after that. Luxottica increasingly emphasized its own frames over those of outside suppliers, he said, and Custom Optical's sales plunged. Dahan was forced to close his business in 2001. "It wasn't just me," he said. "It happened to a lot of companies. Look at Oakley." 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. Within months, Oakley acknowledged to shareholders that the talks hadn't gone well and that Luxottica was slashing its orders. "We have made every reasonable effort to establish a mutually beneficial business partnership with Luxottica, but it is clear from this week's surprising actions that our efforts have been ignored," Oakley's management said in a statement at the time. The company's stock immediately lost more than a third of its value. Luxottica acquired Oakley a few years later, adding it to Ray-Ban, which Luxottica obtained in 1999. "That's how they gained control of so many brands," Dahan said. "If you don't do what they want, they cut you off." Again, no one at Luxottica responded to my request for comment. As I've previously observed, 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. It can be a challenge buying something so central to one's appearance without first trying it on or receiving hands-on help with fitting. In the meantime, Dahan and Butler told me, federal authorities should step up and prevent price gouging for eyewear - just as they've done with other healthcare products, such as EpiPens. "Federal officials fell asleep at the wheel," Dahan said. "They should never have allowed all these companies to roll into one. It destroyed competition." Butler said it should be clear from EssilorLuxottica's practices that the company has too much market power. "If that's not a monopoly," he said, "I don't know what is." I couldn't agree more. Regulators are currently wringing their hands over further consolidation in the wireless industry, with a proposed merger between Sprint and T-Mobile raising the prospect of just three major carriers.