Similar to beauty and jewelry categories, glasses also have the function of “stepping in” for primary consumers to enter the world of luxury goods, while beauty makeup and less conspicuous jewelry, which are not easily recognized, occupy about half of the human face. Glasses with an area of also have a high degree of recognition and styling functions, and have a lower average price than bags and shoes, so it is suitable for primary luxury consumers who regard luxury as “social currency”. That said, glasses are their more cost-effective choice.
According to Statista, a global business data platform, the global eyewear market, consisting of frames, contact lenses, sunglasses and other eyewear products, is estimated to be worth about $154.22 billion in 2022 and is expected to reach $197.2 billion by 2027.
Present Situation
The Safilo Group, the world’s second largest eyewear manufacturer from Italy, will see a comprehensive recovery in 2021 after experiencing the departure of top cooperative brands, the pandemic crisis and the strong attack of the industry represented by Kering Eyewear.
According to the company’s 2021 financial report. In the 12 months ended December 31st, Group sales reached EUR 969.6 million, an increase of 26.3% in constant currency from EUR 780.3 million in 2020 and an increase of 7.5% over 2019. Adjusted net profit excluding non-recurring costs was €27.4 million in 2021, compared with an adjusted net loss of €50.1 million in 2020 and a net loss of €6.5 million in 2019. Although the net profit in 2021 has not been able to make up for the losses of the previous two years, the significant improvement in performance shows that Safilo Group has found a way to revive after going through difficulties.
Among them, the steady business transformation and the increase of new licensing cooperation are important reasons why the Safilo Group can get out of the predicament and usher in a revival.
Previous Competition
Throughout the twentieth century, large luxury conglomerates such as LVMH and Kering used to leave the eyewear business to large specialist manufacturers such as Luxottica and Safilo. As the second largest eyewear company in the world, Safilo once represented more than half of the luxury brand eyewear business. But since 2014, Safilo Group’s territory has been rapidly eroded by its peers.
In 2014, former Safilo Group CEO Roberto Vedovotto created Kering Eyewear, an eyewear division for new owner Kering Group. Two years later, Kering Group took back the Gucci brand glasses licensing business that had been cooperating with Safilo Group for 20 years and handed it over to Kering Eyewear. Because of the termination of the agency contract two years in advance, Kering Group did not hesitate to pay Safilo Group a compensation of 90 million euros in three installments, and the partnership between the two parties was officially terminated on December 31, 2016.
Safilo Group has ceased cooperation with the Gucci-branded eyewear business. The operation opened the way for the luxury giant to take back the eyewear business from specialist manufacturers. Subsequently, the Safilo Group successively lost the rights to manufacture glasses for luxury brands such as Celine and Amarni.
In 2017, the LVMH group invested and held a 51% stake in Italian eyewear maker Marcolin. At the end of 2019, the LVMH group successively announced that the licensing agreements between its brands Dior, Givenchy, Fendi, etc. and the Safilo group will expire and will not be renewed. At that time, Safilo had already stated that the loss of the license rights of the LVMH group’s brands would lead to a reduction of the group’s annual sales by a full 200 million euros.
Innovation
Aware of the crisis, Safilo Group immediately announced a new business plan for 2020-2024: balancing the proportion of licensed brands and private label businesses to 50% each; adjusting the sales target of the sunglasses business to 55%, and the remaining 45%. % will be handed over to the optical glasses business, and the group will carry out efficient digital transformation as soon as possible. Group CEO Angelo Trocchia said: “We have put too much energy on sunglasses in the past and will have to gradually turn to optical glasses in the future, and at the same time will focus on developing our business in emerging markets, which are expected to account for sales in Asia by 2024. 20% of the total, online business is expected to account for 15%, and the company will also be committed to digital transformation.”
Safilo Group has ceased cooperation with the Gucci-branded eyewear business. The operation opened the way for the luxury giant to take back the eyewear business from specialist manufacturers. Subsequently, the Safilo Group successively lost the rights to manufacture glasses for luxury brands such as Celine and Amarni.
In 2017, the LVMH group invested and held a 51% stake in Italian eyewear maker Marcolin. At the end of 2019, the LVMH group successively announced that the licensing agreements between its brands Dior, Givenchy, Fendi, etc. and the Safilo group will expire and will not be renewed. At that time, Safilo had already stated that the loss of the license rights of the LVMH group’s brands would lead to a reduction of the group’s annual sales by a full 200 million euros.
Aware of the crisis, Safilo Group immediately announced a new business plan for 2020-2024: balancing the proportion of licensed brands and private label businesses to 50% each; adjusting the sales target of the sunglasses business to 55%, and the remaining 45%. % will be handed over to the optical glasses business, and the group will carry out efficient digital transformation as soon as possible. Group CEO Angelo Trocchia said: “We have put too much energy on sunglasses in the past and will have to gradually turn to optical glasses in the future, and at the same time will focus on developing our business in emerging markets, which are expected to account for sales in Asia by 2024. 20% of the total, online business is expected to account for 15%, and the company will also be committed to digital transformation.”
The new crown pandemic that began in 2020 did affect Safilo’s plans to a large extent, but the strong market potential of the eyewear business, while the entire category is still receiving greater investment, Safilo has also ushered in new partners, including Including Missoni, Levi’s, Isabel Marant, Ports and Under Armour.
The Safilo Group currently has five private labels (Safilo, Polaroid, Carrera, Smith and Oxyd) and more than 30 licensed brands. Designs, manufactures and sells prescription frames, sunglasses, sports glasses, ski goggles and helmets, and cycling helmets, with factories in Italy, Slovenia, the United States and China.
After more than 15 years of specialize in designing, crafting and manufacturing, Hisight Optical has become the most important supplier and partner of lots of world well-known brand or chain store. Even during the hard time of epidemic situation, we are still keeping growing.
Post time: May-03-2022