Luxottica Announces $250 Million Investment In North American Expansion
By Anna Rose Welch, Editorial & Community Director, Advancing RNA
Expansions, renovations, and omni-channel ventures planned for parent of optical retailers Lenscrafters and Sunglass Hut
At the company’s Investor Day event on October 8, Luxottica executives announced that over the next three years, the Italian eyewear company will be investing $250 million in North American business units. The company plans to open hundreds of new Lenscrafters stores, triple the size of Target Optical retail businesses, and upgrade Sunglass Hut stores located in Macy’s and shopping malls. This investment is part of Milan-based Luxottica’s goal of growing U.S. retail business by 20 percent to $3 billion by 2016. Currently, sales in North America account for 60 percent of the Italian company’s total sales, making North America a vital market for the company.
The North American region currently has 4,800 stores employing more than 40,000 workers. In the U.S., Luxottica operates as Lenscrafters, Pearle Vision, Sears Optical, and Sunglass Hut, and Target Optical, with in-house brands including Ray-Ban, Oakley, Vogue, and Oliver Peoples.
Market Expansion Through Licensing, Brick-And-Mortar, And Online
Luxottica plans to open 69 new Target Optical locations inside Target stores by 2016. Target has proven to be an important outlet for Luxottica, enabling the company to reach the “busy, financially comfortable 30-something female,” while also enhancing its online presence. According to Luxottica Retail Optical North America Group (RONA) president and general manager, Mark Weikel, Target has helped pioneer the group’s prescription.com, which now ranks as the third largest volume prescription optical retailer in the U.S.
The company also aims to relocate and remodel many of its Sunglass Hut stores located within Macy’s department stores, due to the great impact remodeling has had on sales in the past. For instance, remodeling locations in Las Vegas, South Beach, and Tampa led to 50 to 110 percent sales gains. Roughly 700 Macy’s stores have Sunglass Huts operating within them because of licensing deals. Weikle says, “We are three times bigger than their next biggest license operator. We do this business very well. In fact, in the last four years, we have quintupled the business.” Luxottica also has licensing deals to sell premium-priced eyewear in a dozen other companies, including Tiffany, Chanel, Versace, Coach, and Prada. However, Luxottica plans to establish more licensing deals with large retailers throughout the nation’s malls and cities, citing Manhattan as a prime location in which the company hopes to see future expansion.
Lenscrafters, in particular, holds the potential to be one of the stronger assets for the company. While Lenscrafters has 1,000 stores serving more than 4 million customers, Luxottica plans to add 400 new stores in North America. New technology for making antireflective lenses in an hour, as well as AccuExam — the digital scanning procedure for eye exams — has led to increases in sales, units, exams, and patient satisfaction. These offerings, currently available in 90 stores, will be included in 170 stores by next year.
Investing In Omni-Channel
In addition to brick-and-mortar expansions and renovations, Weikle says optical is “ripe for change” with omni-channel’s increasing popularity and the increasing purchasing frequency among consumers who are engaging with companies both in-store and online. While online sales collectively account for less than 5 percent ($100-105 million) of the Luxottica RONA group’s total sales, Weikle predicts that the percentage will increase within the next three years. He says this $250 million dollar investment will help define “the digital journey and some of the capabilities we want to develop like customer relationship management, mobile, Rx e-commerce, and imaging to elevate the game and enhance our relationships with customers to infuse the optical category with new experiences.”
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