Mission and strategy
Luxottica delivers on its mission through a vertically integrated business model with manufacturing excellence, focus on service and a geographically diversified footprint. This has led to greater efficiency, flexibility and speed in product design, engineering, manufacturing, supply chain and logistics, and uncompromising quality.
A Unique Vertically integrated business model
The Strategic pillars
Luxottica’s long-term strategy is to continue to expand in the eyewear and eye care sectors by growing its various businesses, whether organically or through acquisitions. The Company will continue to focus on the following strategic pillars:
One of the competitive advantages underpinning the Group’s past and future successes is the vertically integrated business model that Luxottica has built over the decades.
The Group’s present structure, covering the entire value chain, is the result of a far-sighted choice made by the Company’s founder and current Executive Chairman, Leonardo Del Vecchio, who understood the potential of a vertical integration strategy when he decided to make entire frames rather than just components. Vertical integration of manufacturing was gradually accompanied by the expansion of distribution, first with wholesale, then in 1995 with retail and later with e-commerce, and by the creation of a key presence in the high value-added business of lens finishing.
Over the decades, the Company has vertically integrated all phases of the production process to attain a level of efficiency in line with the quality of products and services it offers. Direct control of the entire production platform makes it possible to verify the quality of both products and processes, introduce innovations, identify synergies and new operating methods and optimize time and costs.
Direct distribution enables Luxottica to offer its products in major developed and emerging markets and achieve a unique understanding of consumer needs and tastes both globally and locally. This capability is viewed as a strength by fashion houses that come to Luxottica to produce their eyewear collections and access the Group’s global and widespread distribution network.
Design and technological innovation
Innovation is Luxottica’s founding principle. From the research of new materials and product development to manufacturing, distribution and digital platforms, innovation can be found in every corner of the Company. While wearable technology is in its early stages, Luxottica has taken a leading role in exploring and developing smart eyewear through partnerships with Google and Intel.
Brand portfolio management
Building strong brands that create enduring relationships with consumers is key to Luxottica’s sustainability in the future. The Company has a strong and well-balanced brand portfolio that includes a number of proprietary and licensed brands. Its composition is gradually modified by the acquisition of new brands and licensing agreements, along with the removal of brands no longer deemed strategic. These actions are taken in order to continually attract a wide range of consumers around the world with different tastes and lifestyles.
Luxottica is committed to maintaining and strengthening its leading position in the markets where it operates. It also focuses on evaluating opportunities to further penetrate emerging markets, a key driver of its long-term growth strategy. Luxottica aims at increasing its market expansion through stronger retail distribution while consolidating its wholesale network and further growing its presence in e-commerce, department stores and travel retail.
Luxottica has delivered solid sales growth, while maintaining a strong focus on operating profitability, return on investment and cash flow generation in order to provide a solid basis for future growth. While it continuously invests in the business, the Company closely monitors working capital management and focuses on debt optimization to help further strengthen its financial position, accomplish its key objectives, and ultimately improve the rate of return for shareholders.
Highly qualified, motivated and committed employees are critical to the long-term success of the Company. Luxottica carefully manages the hiring and training process with the goal of recruiting and retaining top talent. It also designs comprehensive succession plans to ensure effective development and continuity.
EYEWEAR INDUSTRY SECULAR GROWTH DRIVERS
The eyewear industry is a structurally growing market. It is estimated to grow by approximately 20% over the next five years, from today’s sales of approximately 900 million frames to approximately 1.1 billion, driven by the demand in both emerging and developed markets.
- Additional 2.9 billion vision correction wearers by 2030
- Increased need for eye correction due to behavioral changes
- 60% of global population has vision needs but only 25% gets vision correction
- Evolving and elevating the eyewear category in all markets and channels
- The smallest and fastest growing category within accessories