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CEO Andrea Guerra reflects on the Group’s opportunities, shares observations on business landscape of tomorrow

 
The potential of digital technology. “Renovating story-telling” about brands for new consumers and new markets. Taking a “360-degree” view of how an organization can work. These are among the observations of Luxottica Group’s CEO, Andrea Guerra, on a wide range of topics on the occasion of the company’s 50th anniversary this year, in an exclusive and thought-provoking interview with Vision Monday.

From the company’s origins as a small frame-tooling company founded by Leonardo Del Vecchio in Italy’s Dolomites in 1961, to its place today as an integrated, global eyewear leader and a public company (NYSE:LUX) Luxottica is certainly a company transformed. But so, too, now, Guerra observes, is the world, as all businesses face cultural changes, economic challenges and the emergence of new media. ■

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Q&A:

Vision Monday: We’d like to use the occasion of Luxottica’s 50th anniversary milestone to look ahead. How do you envision the key things that would impact how Luxottica will look five years from now: what are the mix, the elements of the company that might be different?

Andrea Guerra: We’re very lucky to live during this specific historical period. There are a lot of issues around the world, today, critical items in the financial world. But if we came and landed where we are, selling above 60 million frames and sunglasses a year, serving, more or less, a potential of one billion consumers…I don’t think there are many other executives in other historical periods that could say in the next 5 to 10 years we have an extra potential 2 billion customers we could serve. If we are able to reach over 60 million frames with one billion, imagine what we could achieve with an additional two billion consumers.

VM: To what do you attribute that potential?

GUERRA: Because emerging markets are not any more emerging, but there are at least five or six or seven economies growing at the rates no one could imagine, becoming markets as large as some of the European markets. And, we are talking about technologies making a breakthrough in terms of connecting people across the world, of enabling people to have access to products and brands that they didn’t think were available to them and now are. In addition, there are so many opportunities in customizing products for the Western world, different lifestyles, different moments of the day and week. And as world leaders, we have a responsibility to build platforms in order to serve needs, to assess technologies and to build at least another four to five ‘domestic’ Luxotticas across the world. We have today thousands and thousands of people in Brazil, China, India, Turkey and Mexico. But while we are there, it doesn’t mean we are yet domestic; we are foreigners who for the last 15 years have invested in those countries, offering products and services and face time. But we can do more.

VM: What does that require as a company, to be seen from the ‘inside’ and not the ‘outside’?

GUERRA: There’s a lot of cultural investment, a lot of research investment, infrastructure investments. Most of the counties are ahead of the western world in terms of digital technology. So when we look at what we do in China today, we’re investing more in alternative media than we are in Europe or the U.S. today, much more.

VM: And by ‘alternative,’ you mean…?

GUERRA: We see digital natives. Perhaps they’re not watching TV anymore or they’re making their own TV on the internet. They are people who browse more than we do. The second place in the world where RayBan.com is available besides the U.S. is China.

VM: What is the connection to eyewear, eyecare and what do brands represent to these consumers?

GUERRA: I see a lot of Western habits. We can watch how the sunglasses market in China was non-existent up to some years ago, and now it’s growing fast.

VM: Do you find you have to build new foundations of understanding about certain brands?

GUERRA: Constantly. You have to understand your assets and readapt to the specific needs. You’re not talking to countries of 50 million or 60 million, but to an audience of one billion. In the next 5 to 10 years, these countries could be in the top two, top three, top five of our business. It’s probably been 10 years since we have been working in these places and we’re starting to reap the benefit of being early investors in these places.

VM: Do you have to talk about brands differently today than say 5 years ago? And what does digital media mean for the meaning of a brand?

GUERRA: Coming out of Europe and moving to the U.S., I think we have all gone a long way in telling the brand story. But I think, especially in the sun market, the U.S. is the largest emerging market in the world. If you look to the sun premium market, there is such a long way to go. We could sit here in five years time commenting how that market has doubled compared to what it was five years before, as a total market.

VM: Why are things so ripe for that kind of growth in sun?

GUERRA: There’s been a certain push overall by American and international luxury brands. The presence in malls has expanded from the East and West Coasts to the middle of the country. We see American brand spending growing. We see TV series and sitcoms having completely different lifestyles represented from “Sex in the City” to “Mad Men.” We’ve seen Hollywood changing fast and seen sports champions representing eyewear in a new way. If you look back five years and take away the economic crisis, you can see clearly this new structure impacting sunglasses in a positive way.

 
VM: Sun, fashion, lifestyle and media raises questions about technology and lenses. This is an area where Luxottica has certainly, in the last five to eight years, made dramatic changes. What is the future here?

GUERRA: First, there has been the enormous and unbelievable breakthrough in technology that we’ve seen in the last two to three years—Rx lens digitization has led to a completely new world in having a prescription in sunglasses. We all remember back when, to have your sunglasses in an Rx from a wonderful collection, you could choose probably 10 percent to 15 percent of frames. It had to be vertical, base six, not too wide and immediately you could spot it. Today, you have almost a complete opportunity in sunglasses because of digital lenses, because you can have a Rx on deep wraps and other shapes—it’s opening a completely different world. And obviously, with Ray-Ban on one side and Oakley on the other side, this is a focus. To people my age, this is substantially changing the way we perform in sports.

A second big change is polarized. Understanding how those specific lenses are understood today by consumers. Through specific coatings, specific work and softer designs, we can enter into a world where lenses really become a personalized thing. It’s here. Sometimes, in our industry, we complain we’re becoming a commodity because of this and that. I think that because of digital technology and the communication with consumers, clinical feedback, the opportunity to come into stores and observe new things available, this opens a complete array of opportunities than we could imagine four or five years ago.

One of the tough jobs was to explain to consumers what the difference was from one lens to another. Today, from the doctor’s room to dispensing and retail, digital means it’s much easier to understand why my vision field is different, why when I drive it’s different, why when I play golf it’s different than other sports. We have so much more to talk about and explain, finally, to consumers about why we’re taking care of their eyes and [why] sometimes they can spend some money in taking care of their eyes.

VM: So, you gave us an opening there. Due to customization there is the potential, technology-wise, to provide great solutions for vision and have a customer appreciate what’s involved. Right now, throughout the industry, it feels as though there’s a big tension between what the internet presents in term of accessibility, convenience and a big reduction in the cost of doing business versus the traditional costs of eyewear and the traditional delivery of eyewear. What are you thoughts about that?

GUERRA: In any age, in any period you can find whatever you wish. Before, you could find it in the physical world, whereas today you can find it in the digital world. The real thing is to give the consumer what they wish. So if a consumer is coming into a store and wishing a certain experience and wishing to invest in vision a little bit more than a Coach bag, you can provide it there. If you want to go to the internet and find shortcuts, you can. If you want to go to the internet and find another proper service level, you will find it. We don’t have to be scared. Today, there is so much talk and so much little business on the internet. And the internet is a little like a jungle today. There are some wonderful wild animals and some poisonous creatures, too.

VM: So as a sales channel/internet, what will happen? How will you participate?

GUERRA: In the life of all of us, digital is a new channel, a new opportunity. Once, when retail was starting, we thought that was a new thing and today we have independents as well as retail networks. I think the internet is another channel, and going forward we’ll all be aware of it and know how to work wth it, use it, exploit it, [determine] what kind of stories to bring along, what categories to bring along. We’re all in the finding, exploration mode. ■



 
VM’s Editorial Director Marge Axelrad talks with Luxottica’s CEO, Andrea Guerra, at the company’s New York offices.

The Interview Continues on VisionMonday.com

New York—VM’s far-ranging discussion with Luxottica’s CEO, Andrea Guerra, continues online at VisionMonday.com.

Hear Guerra’s perspective on the way the Luxottica organization has had to adjust to its global platform, ways that brand and marketing communications are changing, the speed of change—and the need to spend more time planning.

He also discusses the translation of brands across the world, the impact of going more deeply into local markets and on Luxottica’s total production. Guerra also shares views about the need for the whole industry to leverage today’s media and exciting technologies to talk to consumers and patients about the value of quality eyecare.

And finally, Guerra explains what he thinks has not changed at Luxottica in its 50 years of growth and expansion. And learn how founder Leonardo Del Vecchio is still influencing the company’s culture. ■