" Kering’s decision to take its eyewear business in house was dubbed an “eyewear revolution,” but what does it mean for the giants that dominate the market?
Eyewear is big business. Market sources estimate that the global market, which includes frames, contact lenses and sunglasses, is worth $90 billion, and will reach $140 billion by 2020. In 2012, Exane BNP Paribas estimated that frames and sunglasses represented 40 percent of the eyewear market. Within that segment it estimates that premium frames and sunglasses, the sort produced by fashion labels, represent 35 percent. Applying those estimates to today’s market values the premium fashion segment at just below $13 billion.
Traditionally, five specialist eyewear players have dominated the premium fashion segment of the market, developing, manufacturing and distributing their own brands, as well as entering into licensing deals to produce frames for fashion houses. Although the terms of these deals vary, the specialist players typically design the eyewear, with input from the brands, before developing, manufacturing and distributing it in the market...
The importance of eyewear as an entry-level product for its brands speaks to the other key advantage stemming from Kering’s move: control. The Exane BNP Paribas report states, “The ubiquitous distribution typical of most license contracts adds to brand trivialisation risk.” By taking its eyewear in-house, controlling development, distribution and sales, Kering could “maintain desirability through perceived exclusivity.”
What's more, Kering is now free to work with multiple manufacturing partners — including the Safilo Group — on a case-by-case basis. This freedom will allow the company to build out each of its eleven brands’ eyewear businesses in a way that is carefully tailored to the consumer profile and DNA of each brand..."
Read the full article at Business of Fashion.
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