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?

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

Eyeglasses can be quite expensive due to the vertically integrated nature of the industry. (Anis Heydari/CBC)

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.

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Prescription eyeglasses can range anywhere from $240 to about $1,000 a pair in Canada, 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.

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 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 about $1.7 billion of sales in 2017.

And while specific numbers on EssilorLuxottica's dominance in Canada are not available, British newspaper 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 pull the brand from 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, 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 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 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).

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.

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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 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 
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 airs every week on CBC Radio One, Sundays at 12:00 p.m. (12:30 NT).

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