In a recent Vision Monday article, Andrea Guerra, who has led Luxottica Group for over 10 years, spoke at last month’s 8th annual VM Global Leadership Summit. Guerra called the U.S as the world’s “biggest emerging market” in terms of sunwear as well as consumers’ new attitudes and the undeniable trend toward exciting retail experiences for eyewear.
Following are excerpts from the Q&A.
VISION MONDAY: Last year, Luxottica talked about strategizing very much toward the NA market, and that it was strategically important for the company.
ANDREA GUERRA: When you’ve got 55 percent to 60 percent of your business in North America, you must say that is an important part of your business and you have to focus on that. I think that will always remain our primary focus and our primary objective. On the other side, the world is changing and it’s changing fast. There are five countries that only five years ago represented less than 5 percent of our business. These are 14 percent of our business and some of those businesses are growing 100 percent a year.
VM: And those countries are?
GUERRA: We said six years ago that there were five countries in the world where we would become ‘domestic.’ That would mean we would have become a very important local player and, in order of importance at that time, it was Brazil, Mexico, Turkey, India and China.
And in some of those markets, in six years, we tripled, in some of those markets, we doubled. I can tell you that today Brazil is as big as France. I can tell you that our sun sales in China doubled in the last year, basically going from 1 percent to 2 percent. There are people who tell me the story of exponential growth. You don’t see it, you don’t see it, you don’t see it…and then finally it’s big and I think that our sun business in China is going down that path.
VM: When it comes to other things that are particular to the U.S. market and the U.S. consumer, can you point to those characteristics in contrast to consumers in other markets. Or, do you find that is no longer relevant?
GUERRA: I think there is a big difference, and it is one of those things that makes me really happy about this market. When people ask me what I think about emerging markets, how are we behaving in emerging markets, what we’re doing in emerging markets, I always say, when we are talking about premium sunglasses the U.S. is the largest and most potential emerging market in the world.
It’s the largest opportunity we have and we have seen it. I mean everyone has seen the change, the evolution and the revolution of Sunglass Hut in the last 10 years. It was a ‘Hut’ and was a place I was shopping sunglasses. Today it is something else. It is display, merchandising windows, brand, music, songs, lights, mirrors and I am happy, I enjoy myself, I enjoy shopping sunglasses there. Just like I enjoy shopping iPads or a sleek pair of sneakers … and that has radically changed the environment.
I am always saying to our guys, the average like-for-like growth of SGH has been more or less in the 10 percent range. So I am saying, guys, you are great, but on other side, this market is getting bigger and this market (North America) is the smallest market in terms of penetration (for sun) in the largest market in the world, and it’s growing fast.
VM: So when it comes to sun or that kind of passion about a product or excitement about the retail, is that something that can be brought into the prescription side of things and what are some of the things you are trying to do with that?
GUERRA: First of all there is a world, especially in this arena, which is the plano sun, which is a good world. It’s not bad, and people come more frequently to buy it and people can be more attracted by it and that gives traffic and that gives frequency. On the other side, and we all know this with the new technologies, 90 percent of sun today, you can prescribe it and you can adapt it. The curves are all technologically viable and that is a market that is growing pretty fast. I can tell you that LensCrafters comps are one third driven by prescription sun today, and a little bit of plano. Even if they argue that the average transaction price is lower when it’s just plano, I say it can be twice or three times or four times (the dollars) in a year.
VM: What are some of the issues having to do with technology in the optical side of your business that you are paying special attention to?
GUERRA: I want to share a nightmare I have. We all heard the panel before, I heard Carlo Privitera talking about Glasses.com and our friends at Essilor talking about similar things and we are all trying our best experimenting and understanding it. Will it (online) be quicker, slower…? I do not know. I think that we all have to be engaged there, because we all don’t really know how fast it will be.
But I do know that there is a lot of browsing. When people browse, they are looking for freedom and finally, what is happening is that frequently there is not an interface of media between themselves and lenses.
My biggest nightmare is not the internet or online sales, that doesn’t worry me for the next 2 or 4 years. What worries me is the freedom of the consumers and their browsing and understanding or not understanding the value of specific segments of lenses compared to others. So, the sustainability of the value of lenses and price of the lenses is a nightmare to me sometimes. I wake up and say, oh gosh, we need to do better work. And technology today is helping us there. Making them understand how different things are. How a progressive lens is different from some time ago. How digital surfacing, how coatings are different. This is so critical for all of us and, finally, technology is allowing us to show the difference and we need to use it.
VM: So the storytelling is something you feel you can achieve through digital communications as well as in the stores?
GUERRA: Yes, sure. And the other part of technology and digital technology is our ability to follow up with consumers. When the consumer is deciding or not deciding to go back to buy a pair of prescription frames and lenses—we can debate if it is two years or whatever, but basically it is 18 months off, 6 months on—the important thing is our ability to follow up with consumers over those 2 years.
I think that the use of technology, the great opportunity we have today, is that technology is so available. The access to technology, databases, CRM, is so available that we need to make great use of that in getting linked to consumers for 24 months, not for the week or the day. I think that is even more critical today, where we are spending our money, and it can be a big company or a small company.
It doesn’t make any difference but we need to talk, to interact much more with the consumers compared to the past. We need to be in the middle of the conversation. We need to talk, they need to talk. We need to have a fantastic conversation. We have implemented this probably a couple of years ago and it is paying off, absolutely paying off.