On Monday, Luxottica and Essilor, a French lens manufacturer, announced that they had agreed to merge. We will briefly discuss how Ray-Ban rose from the ashes.
Ray-Ban sunglasses can be found all over the world today. However, the brand was struggling in 1999 when its best products were sold at convenience stores and gas stations for around $ 19. Ray-Ban’s glasses were also poor quality. They used old-fashioned tools, and the frames were fragile.
Luxottica, an Italian eyewear company, bought Bausch & Lomb’s eyewear brands for $ 640 millions in 1999. Ray-Ban was the jewel of the deal. Thanks to an aggressive plan, Ray-Ban was able to regain its reputation.
Ray-Ban’s 2000 sales of Luxottica were 252 million euros. That is 10%. This amount had risen more than eightfold to 2,065million euros in 2014, which is 27% of Luxottica’s total sales. According to Euromonitor International data, Ray-Ban accounts for 5% in the global eyewear market and is the largest brand of sunglasses worldwide.
The BBC reported Monday that Luxottica and Essilor, a French lens manufacturer, had agreed to merge for EUR 50 million. With a 30% stake, Leonardo Del Vecchio, founder of Luxottica, will become the largest shareholder in the combined firm.
Ray-Ban was a prominent American brand before its demise. This was due to films like Top Gun and Breakfast at the Diamonds. B&L made Ray-Ban a mass-market brand in order to increase sales.
Ray-Ban is one lucky brand that has managed to rebound from its worst moments. Few high-end brands who lower their prices survive to tell the story. Ray-Ban’s example is an excellent example for brands looking to regain their aura.
Stefano Volpetti is Luxottica’s chief market officer. He spoke recently about how Luxottica has been able to restore the brand’s glory and what the company is doing to maintain that momentum.
In 1929, Ray-Ban’s brand name began to be recognized in the world of spectacles when the US Air Force asked Bausch & Lomb for a new type to protect pilots from glare. Without affecting your vision. Ray-Ban’s aviator glasses were first released to the public in 1936. It was an American icon.
Luxottica purchased Ray-Ban because they wanted technical innovation and newness. He had to first clean up the brand’s reputation.
Phase 1: Better Product, Better Stores in the Early 2000s
Luxottica purchased Ray-Ban in 2000. Their glasses frames broke four times faster than other Luxottica brands. Luxottica made Ray-Ban sunglasses in a new facility in Italy in 2000. This was in addition to four other facilities around the globe that were outdated. The region of Northeast Italy is renowned for producing high-quality glasses. This area also has access to quality parts suppliers.
Convenience stores and gas stations do not lend themselves to luxury branding. Luxottica had to make the hard decision in 2000 to close 13,000 outlets, which meant that short-term revenue was sacrificed in order to reap future profits.
It manufactured glasses for luxury brands like Bulgari, Chanel, and Armani so it already had contacts with high-end shops. Luxottica used Ray-Ban’s reputation to increase prices in 2004, selling its glasses at Saks Fifth Avenue and Neiman Marcus.
The initial price of aviator glasses in 2000 was $ 79, one year after acquisition. It had risen to $89 two years later. In 2009 Ray-Ban began using lightweight carbon fiber and advanced lens technology. The entry price was $ 129. Volpetti says, “We had to clear the market from a lot low-quality parts and old models and clean up the distribution.”
Phase 2: Expanding Ray-Ban’s Horizons (2003-2015).
All Ray-Ban sunglasses sales in 2000 were non-prescription. Three years later, Luxottica took advantage of its dominance in prescription sunglasses and introduced Ray-Ban to its optical business. Ray-Ban had around 30% revenue from prescription glasses by 2015. These glasses are more costly and more profitable than those without prescriptions.
Ray-Ban also offers custom-made products. Re-Mix was launched by Ray-Ban in 2013. This service allows customers to customize their glasses by mixing various frames, materials, and styles. There are over 220,000 combinations. Re-Mix now accounts for 40% of the online revenue.
Ray-Ban began to experiment with Wayfarers last year. These sunglasses are made from leather, denim, and velvet.
In November, the brand opened its first store, a store measuring 465 square feet in SoHo. Luxottica says that this store is crucial in providing the type of experiences that Ray-Ban needs to maintain its market leadership. The store will be home to live performances, film screenings, and art shows that highlight the brand’s long-storied history.
Volpetti said that Luxottica will continue to use the lessons it has gained over the past 15 year to enter the Chinese market. Ray-Ban remains a predominantly North American and European brand. This means that they will select which stores can sell their glasses in China. However, this could mean that the brand’s access is slow to China. Ray-Ban’s innovation history and use of the glasses in Hollywood will be the focus of Ray-Ban marketing campaigns. Volpetti claims that this is something that Chinese customers don’t know.
Ray-Ban’s success lies beyond China. It has made beautiful glasses that are unique and independent of current trends. Ray-Ban also brings the most recent advances to the market. In its Liteforce collection, we see the use of ultra light and durable materials – similar to those used by aerospace firms. Ray-Ban will soon launch the “Chromance”, a lens that uses color enhancement technology to make colors and contrasts vivider.
Joe Jackman is a retail industry consultant, whose Jackman Reinvents deals in brand revitalization. Jackman says Ray-Ban is not a Jackman client.
“As long the brand balances those two dimensions, technical innovation, and counterculture style,” “Everything will be fine as long as the brand has a clear, true DNA. As long as it maintains that balance, everything should be okay.”