(Disclaimer: This is nothing but a general interest post. No marketing or any form of endorsement intended)
Economics has always been one of my favorite subjects *taking a minute as fond memories of hours (read: sleepless nights) spent over monopolies and oligopolies and perfect competition come rushing back*
As markets grew more mature and competition started getting the better out of establishments, monopolies and near-monopolies became less prominent or hidden from the public eye. In our Economics lectures, we would tick off two maybe three companies that enjoy monopoly in India - Indian Railways being the first one that would come to our mind. That was a year back. The advantage of being a curious YouTube-r is that you ending up watching multitude videos - one leading to another like a Chain Reaction. That's how I ended up watching the 2012 CBS documentary "Sticker Shock: Why are glasses so expensive?" (https://www.youtube.com/watch?v=voUiWOGv8ec). My mouth went from a tight line to open, halfway into the video.
I recently got a pair of Raybans for AED 600 from the Sunglasses Hut and wondered why and how I paid so much for glass, plastic and steel (crudely put, I agree). The logic was a no-brainer: so many many brands of eye-wear and competition should be driving prices down especially when there's hardly any innovation. There's Rayban, Versace, Oakley, Bulgari, Vogue and the list goes on. HOW do they continue making profits with so much competition in the market? Answer lies in the simple economic theory of Monopoly (or near-monopoly in this case). The company that manufactures frames and sunglasses for all of the above brands (and more) is the same - Luxxotica.
They started off as a tiny Italian glasses firm and went on to buying every eye-wear related company they could get their hands on - apparently in a rage - and roping in deals to making glasses for every fashion designer the world has ever known. As I am thinking, maybe I have a choice in selecting the retail chain I buy my glasses from, I am rudely brought back to reality as the documentary talks about how Luxxotica also owns Sunglasses Hut, LensCrafters, Pearle Vision, Target Optical, Sears Optical, etc. That's about every major retail eye-wear chain in the $28 billion (approx) global eyeglasses industry.
Luxxotica, which controls around 80% of the eye-wear brands in the market, estimates that half a billion people around the world are currently wearing their glasses. Being what economists call a price maker, Luxxotica enjoys "insane" profits by dictating the price as the highest amount consumers would be willing to pay for their products. This is unlike other competitive markets, to be a part of which for a price maker, competition constantly encourages to innovate or drive prices down (to be as close to the manufacturing cost).
Why do I sound like I am raging? For starters, I am not. I am exhibiting disbelief (?), I know not. For my next birthday, I have been eyeing a pair of Chanel sunglasses over Armani, but after the documentary I realize I have only been given the illusion of choice. As Ana Swanson puts it, a very "cynical form of capitalism". The fact that the high price is commanded by the embellished logo is common knowledge but consumers (me included) are ready to pay the price of the sticker to wear the logo.
Lenskart is an Indian eye-wear online portal which has started making a dent in the whole affair (at least in India). Founded by Peyush Banal, Amit Chaudhary and Sumeet Kapahi, the products include prescription eyeglasses, sunglasses and contact lenses. Impeccable customer service, amazing convenience (glasses can be tried in the convenience of your homes) and a wide variety of designs define the brand. It's no Chanel, but my Vincent Chase has a mean design! :) I am sure there are other online portals as well trying to break the illusion of choice in their own economic ways! And that's that.
