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vertical integration

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Product development (Design & Engineering)
Manufacturing
Logistic
Distribution Wholesale | retail
e-commerce
Customers
DESIGN AND PRODUCT DEVELOPMENT Design is the focal point where vision, creative inspiration and technology converge. Beginning wth the first style sketches, the idea quickly takes shape in the design and development stages. Prototype makers transform designs into one-off pieces, crafted by hand with meticulous precision and later, the mold workshop designs and assembles the equipment needed to make the components for the new model. Designers use 3D technology to print very unique objects and complex shapes, which were previously difficult to produce using traditional techniques.   At every phase of the process – from design to industrialization – Luxottica performs rigorous and accurate quality tests. Every year the Group adds approximately 2,000 new styles to its eyewear collections, each frame an expression of Luxottica’s DNA: product excellence, commitment to innovation in technologies, styles and materials and unparalleled craftsmanship.
MANUFACTURING Luxottica’s manufacturing operations are located in Italy, China, the United States, Brazil and India. Italy, with its six italian plants – five in the Northeastern region and one near Turin, is at the center of Luxottica’s luxury eyewear production, combining the tradition of Italian craftsmanship with the speed and efficiency of modern automation. These factories represent 41% of global production output. Over the years, the Group has consolidated its manufacturing processes and allocated specific production roles and technologies to each plant. This has enabled Luxottica to improve both the productivity and quality of its manufacturing operations. Since 1997 Luxottica has had a presence in China through the Dongguan plant in Guangdong province. In 2006, Luxottica increased local manufacturing capacity through the construction of an entirely new facility; in 2010, it began producing plastic sun lenses to be paired with frames that are manufactured in the same location. Soon after, the Company integrated a new state-of-the-art plant, primarily dedicated to frame details and decorations. The Foothill Ranch facility in California manufactures high-performance sunglasses, prescription frames and lenses and assembles most of Oakley’s eyewear products. Oakley apparel, footwear and certain goggles are produced by third-party manufacturers. Luxottica’s Campinas plant in Brazil and a small plant in India serve the local markets. Luxottica is constantly investing in R&D to improve quality, efficiency and productivity. Over the years Luxottica has progressively diversified its technology mix from traditional metal, plastic injection and acetate slabs to include aluminum, wood, die casting, fabrics and the innovative LiteForce material coming from the aerospace industry.
GLOBAL QUALITY To assure the same “Made in Luxottica” quality standards worldwide and continually improving every phase of the production and distribution cycles, Luxottica applies a single quality system across the Group, based on four main labs, one in Italy, one in China, one in the United States and one in Brazil. Each lab is responsible for establishing and maintaining the quality standards in the region where it is located and supports activities in engineering, production and market feedback management. All of these labs conduct the same tests using the same equipment and procedures which are developed and approved in the central Italian lab. Quality and process control teams regularly inspect semi-finished products, verifying the feasibility of prototypes in the design phase, controlling standards in both the product development and production phases, subsequently checking for resistance to wear and tear and reviewing optical properties in relation to type of use. Throughout the development process, eyewear products undergo extensive testing against standards established specifically for eyewear. These standards relate to product safety and performance and provide quantitative measures of optical quality, UV protection, light transmission and impact resistance. The manufacturing processes and materials used by primary suppliers are also controlled and certified.
LOGISTICS The Group’s distribution system, comprised of 18 distribution centers with eleven in the Americas, five in Asia-Pacific and two in Europe, is one of the most advanced and efficient in the industry. It serves both the retail and wholesale businesses, is globally integrated and fed by a centralized manufacturing platform. The network linking the logistics and sales centers to the production facilities in Italy, China, the United States and Brazil provides daily monitoring of global sales performance and inventory levels to meet local market demand. There are four main distribution centers (hubs) in strategic locations serving the Group’s major markets: Sedico (Italy) for Europe, the Middle East, Africa, select US markets and to the Group’s distribution centers in the rest of the world; Atlanta (US) for the North American market; Dongguan (China) for the Asia Pacific region and Jundiai (Brazil) for the local market. They operate as centralized facilities thanks to a highly automated order management system, servicing other Group distribution centers or, in some markets, shipping products directly to customers, thereby further reducing delivery times and keeping stock levels low.
WHOLESALE DISTRIBUTION The wholesale distribution structure covers more than 150 countries, with approximately 50 commercial subsidiaries in major markets and approximately 100 independent distributors in other markets. Wholesale customers are mostly retailers of mid to premium-priced eyewear, such as independent opticians, optical retail chains, specialty sun retailers, department stores, duty-free shops and online players. In addition to giving wholesale customers access to some of the most popular brands and models, Luxottica provides them with pre- and post-sale services to enhance their business and maintains close contact with distributors in order to monitor sales and the quality of the points of sale. RETAIL DISTRIBUTION With a strong portfolio of retail brands, Luxottica is well positioned to serve every segment of the market with a variety of differentiation points, including the latest designer and high-performance frames, advanced lens options, advanced eye care, everyday value and high-quality vision care health benefits. As of December 31, 2015, Luxottica’s retail business consisted of 6,589 stores and 676 franchised locations. Luxottica’s retail stores sell not only prescription frames and sunglasses that the Group manufactures but also a wide range of frames, lenses and ophthalmic products manufactured by other companies. In 2015, net sales comprising Luxottica’s proprietary and licensed brands represented approximately 90% of the total net sales of frames by the Retail division. E-COMMERCE Oakley, Ray-Ban and Sunglass Hut e-commerce websites serve as important sales channels that complement Luxottica’s retail operations and wholesale distribution. The websites drive brand awareness and allow consumers to purchase products efficiently, extending superior customer service into the digital space. Ray-Ban.com is the place to go for a premium Ray-Ban assortment, exclusive services and a consumer experience that is unique to the brand. The path of international e-commerce expansion for the Ray-Ban brand is closely tied to Ray-Ban Remix, the online customization service launched in 2013. Oakley.com provides an e-commerce channel across multiple markets. Its online custom eyewear experience gives Oakley fans the ability to customize their favorite models selecting frame color, lens tint, personalized etching and other features. SunglassHut.com has become the digital destination for consumers looking to find the latest trends and hottest premium sunglasses. Luxottica plans to bring its e-commerce strategy to additional markets as the business matures. For example, the Group formed strategic partnerships in China to open both Ray-Ban and “O” stores within Tmall, the world’s largest local online mall. Acquired in 2014, Glasses.com continues to serve as an innovation lab focused on improving the eyewear e-commerce experience for consumers and patients and lending its capabilities to Luxottica’s other retail brands.

our business model

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 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 wholesale and, from 1995, retail and by the creation of a key presence in the high value-added business of lens finishing.

Direct control of the entire production platform makes it possible to ensure the highest 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 markets and achieve a unique understanding of consumer tastes and trends. This capability is viewed as a strength by fashion houses that come to Luxottica to produce and distribute globally their eyewear collections.

Last updated: Apr 28 2016