Officials of Luxottica indicate that they have decided to lower from 70 to about 50 percent the volume of Lenscrafters' eyewear frames represented by its own products, in order to avoid antagonizing other US retailers. On the other hand, the Italian group will conduct certain tests to see if it can double the proportion of Luxottica frames sold in its recently acquired Sunglass Hut chain, which now stands at about 15 percent.
These moves by the world's leading eyewear supplier call again into question the opportunity for the suppliers of controlling the distribution at the retail level in certain countries, a bit like the major fashion houses that own stores under their own name, but not under their own banner and selling competitors' products as well. Luxottica had bought Lenscrafters to help raise its own market share in the USA, but even so, the latest polls indicate that it's still number three there after Marchon and Safilo, which both stress that they don't want to control any retail chains. Marcolin has decided to acquire an established wholesaler to raise its sales in the world's largest market.
De Rigo bought Dollond & Aitchison in the UK and General Optica in Spain to help increase sales of its own products in those two markets, but it's hesitating to make similar moves in the USA, France and elsewhere. Observers speculate that De Rigo may be drawn into a joint venture with Marchon in the USA, considering that both brands have been recently confirmed as licensees of Fendi, the Italian fashion house in which LVMH and Prada have equal shares.
Sofar, De Rigo has been relatively cautious in its relations with D&A and GO as a wholesale supplier. The proportion of De Rigo eyewear frames in D&A stores rose to about 10 percent last year, and it should work its way up to a 25 percent share by the end of 2001. The goal at GO is a 15 percent ratio by year-end, up from less than 3 percent at the time of the takeover, and it could move up to about 20 percent in 3 years' time. De Rigo didn't acquire Salmoiraghi & Vigano in Italy along with GO because of its already strong market position in its home country, but its relations with the leading Italian chain have improved considerably since the takeover of GO, and De Rigo's market share in Salmoiraghi's stores is set to rise from 10 to about 15 percent.
On the other hand, De Rigo is keen on improving the profitability of its own retail operations, which now represent about 70 percent of its sales and profits. GO's operating margin (Ebit) is already over 10 percent, and De Rigo would like to take it to about 15 percent in the medium term. The medium-term goal for D&A's is a margin of only about 8 percent, up from last year's ratio of 4.5 percent, because of the higher cost of leases and personnel in England, where optometrists play a big role.