The Great Eyeglasses Rip off

By Madeleine Kando

After procrastinating for years, I finally got my new prescription for glasses. My current glasses are at least 10 years old and I had forgotten how expensive and time-consuming it is to buy new classes.

For someone who cannot even decide on which leg to get out of bed, the choice of frames is overwhelming. Besides, trying on frames is an exercise in futility since all you see is a blurred self in the mirror.

I finally selected a frame in the midrange. But frames are not much use without lenses and those make up the bulk of the cost. I finally settled on a pair of Flexon, high-index, anti-glare titanium glasses and went home with a $500 hole in my pocket.

Barely out of the door, the thought of having paid a small fortune for 3 pieces of plastic stuck together with screws that I knew doesn't cost more than $20 to produce, gave me a severe case of indigestion . I returned them the next day.

I figured there was enough juice left in my 10-year-old glasses to research why the industry puts a 1000% markup on their glasses. Especially for something that should be fully covered by insurance, like high blood pressure medication.

The reason is simple: the eyewear industry is a near-monopoly, dominated by an Italian/French company called ‘Essilor Luxottica’.

It was founded in 1961 by Leonardo Del Vecchio. The company owns the biggest retail chains, such as LensCrafters and Sunglass Hut, and controls over 80% of the major eyewear brands, including Ray-Ban, Oakley and Vogue Eyewear. Without competition, this company keeps the prices so high that it bears no relation to reality.  It even owns Eyemed, the biggest eye insurance provider in the world. So, you see quite a big party!

Essilor Luxottica is a ‘vertically integrated’ business, which means they own the entire supply chain, from frame design and lens manufacturing to distribution and retail. *

Most respectable ophthalmology practices have a store attached to them, which is where they make most of their money. You leave the doctor’s office with a brand-new prescription and step into the eyeglasses department, where you can spend your $500. Wouldn’t it be great if your orthopedic surgeon had a store attached to his practice where you could buy an artificial hip?

The vision insurance industry is another can of worms. VSP (Vision Service Plan), the largest vision insurance company in the US, shamelessly advertises that they own retail chains like Vision Works. In other words, your premium money goes right back into the pocket of the company that sells you the glasses! It’s a marriage made in heaven.

How can an industry that controls every level of the supply chain not fall under the Antitrust law?

There are now some class action suits under way, but will they go anywhere? The Government has been asleep at the wheel all these years and once things are solidified, it is very hard to back paddle.

I am writing this with a new pair of glasses on my nose. With my ‘out-of-network’ insurance, I paid $189 at Costco, one of the very few competitors of Luxottica. It feels good to give Essilor Luxottica the finger! leave comment here

* The company has reported 14.4 billion euros in revenues. That’s more than the annual budget of many poor countries. With 14 billion dollars, we could end world hunger.

Sources:

• Glasses can have a markup of 1,000%. Two former LensCrafters executives revealed why.

• The spectacular Power of Big Lens