Our Business Model
Luxottica operates in a continually evolving and highly competitive global market
Quality of products, plants on the cutting edge, unique retail and wholesale distribution. This is Luxottica Group, a worldwide integrated leader.
Luxottica's products are distinguished by the excellent design and the high quality and they are known all over the world thanks to a strong and well balanced brand portfolio.
Among the house brands are listed Ray-Ban, the most known sunglasses brand at worldwide level, Oakley, Vogue, Persol, Oliver Peoples, Arnette and Alain Mikli while the licensed brands include Armani, Bvlgari, Burberry, Chanel, Dolce & Gabbana, Donna Karan, Polo Ralph Lauren, Prada, Tiffany and Versace.
The wholesale distribution touches 130 Countries in all the 5 continents and makes use of 20 logistic centers and more than 40 commercial subsidiaries , that allows a direct presence in the most important markets.
Particularly revealing is the penetration in the emerging markets, as well as in the new channels represented by the large department stores, travel retail and e-commerce.
Together with the direct control on wholesale, Luxottica has the most extended worldwide retail network, comprising over 7,000 stores worldwide as of December 31, 2013.
Luxottica is a leader in the prescription business in North America with its LensCrafters and Pearle Vision retail brands, in Asia-Pacific with the OPSM and Laubman & Pank brands, in China with the LensCrafters brand and in South America with the GMO brand. In North America, Luxottica operates points of sale for its retail licensed brands under the Sears Optical and Target Optical brands. In recent years, Luxottica has developed a global sun and luxury retail organization to support and reinforce its global retail brands dedicated to sun and luxury eyewear: the Sunglass Hut, ILORI, The Optical Shop of Aspen and Bright Eyes brands. The Sunglass Hut brand, in particular, has a global presence, namely in North America, Asia-Pacific, South Africa, Europe, Latin America and the Middle East. The Oakley brand provides a powerful wholesale and retail (“O stores”) presence in both the performance optics and the sports channels. In its O store locations, the Group offers a variety of Oakley-branded products in addition to Oakley eyewear styles. Oakley-branded products include apparel, footwear, backpacks and accessories designed for surf, snow, golf, outdoor, motor sport, mountain bike and other athletic lifestyles. Luxottica’s distribution channels are complemented by an e-commerce component, including the Oakley, Ray-Ban and Sunglass Hut websites. The e-commerce strategy is to enter additional markets as the business matures.
The idea for a model comes spontaneously and its realization is the fruit of consolidated experience
Design is at the focal point where vision, technology and creativity converge. Design looks at both past and future experience and must trigger a continuous process of innovation, making it a uniquely creative activity. Ever in search of innovation and originality, the designers “see” eyewear as real works of art to put on display. Driven by this “vision”, they survey the market and its famous names but draw above all on their own imagination and inexhaustible capacity to astonish every time, in every model.
Design and creation
Each model is created following three steps:
1. the Design realized thanks to designers' intuition;
2. the creation of the Prototype, in the laboratory, where the design takes shape thanks to the use of advanced techniques such as laser incision and synthesising, accompanied by artisan skill guaranteeing meticulous precision;
3. once developed, the prototype is then passed on to the product office. This is the start of the industrial development cycle of a new model, giving rise to a sequence of activities leading to series production.
Speed and determination in coordinating the various phases enhance overall efficiency. Communication and interaction between people and departments is key to achieving a constant stream of new solutions and a creative process that generates unique products.
The importance assigned to the design and continuous development of new models is what lies at the base of the Group's success. In 2010 alone, Luxottica added 1,800 new models to its eyewear collections.
Speed and determination in coordinating the various phases enhance overall efficiency. Communication and interaction between people and departments is key to achieving a constant stream of new solutions and a creative process that generates unique products.
The importance assigned to the design and continuous development of new models is what lies at the base of the Group's success. During 2012, Luxottica added approximately 1,700 new styles to its eyewear collections.
Idea and Design
The idea for a model comes spontaneously, like a stroke of lightening. The fruit of a sudden intuition followed by long reflection, it is always grounded in meticulous study of markets and fashion.
The staff in this office record all the relevant data (colors, settings, cycles, photos and other information) so that all the manufacturing , commercial and marketing people can work on the products to be presented. Communication and interaction between people and departments is key to achieving a constant stream of new solutions and a creative process that generates unique products.
Speed and determination in coordinating the various phases enhance overall efficiency. And sometimes schedules are extremely tight, for example when models are needed by stylists for fashion shows. All these aspects are fundamental and indispensable for those working on the product everyday and need to show the utmost professionalism towards licensors. The track record of success over the years gives deep satisfaction to the people who contribute to it everyday and is a strong stimulus to carry forward the whole adventure to new levels of excellence.
Model development cycle
The last two phases lead to the production of an initial significant batch, with definitive tooling certified by an external standards organization, in a pilot facility accurately representing the Luxottica plant chosen to manufacture the new model in series (serial manufacture) to meet the needs of production planning.
Luxottica started out in 1961 as a contract manufacturer of eyewear components, with 14 employees
It now has six facilities in Italy, two in China, one in Brazil, one in India and one in US. In 2012, the Group’s manufacturing facilities produced a combined total of approximately 75 million prescription frames and sunglasses.
Luxottica’s operations structure is centered on Agordo (the heart of the Group) and covers the following activities:
Product development: the Prototype and Sample Design function does research & development for new prescription models (frames only) and sunglasses (frames and lenses), from the design phase to production of prototypes and samples.
Quality: the Product and Design area also includes management, organization and development of the Quality Management System, which conforms to precise standards and current legislation.
Production engineering: this unit makes samples and distributes them to agents.
IT systems: the IT function ensures the operation and development of central and distributed information systems and the coordination and professional development of its own employees.
Planning - this function:
- ensures the development and construction of models for forecasting demand for products (retail and wholesale);
- ensures planning and programming of manufacturing in all the Group’s production sites and those of external semi-finished product suppliers;
- supervises and coordinates the planning of retail business (Europe, USA, Asia-Pacific and China).
Procurement: the procurement function’s task is to guarantee optimum organization and management of purchasing of raw materials, components, semi-finished goods and services, also in terms of competitive cost-quality ratios.
Logistics: this function ensures efficient management and organization of logistics centers to the levels of service agreed and guarantees effective and efficient flows of all materials.
Maintenance and General Service: this unit:
- guarantees the efficient running of plant and machinery (routine and extraordinary maintenance);
- ensures proper application of workplace health and safety, environmental and labor regulations;
- guarantees the operation of security services and site access control;
- manages layout activities (modification and reallocation of space).
Each of the manufacturing facilities specializes in a type of production:
Agordo works prevalently on metal and plastic (injection molded) frames.
Sedico 2 concentrates on production based on milled acetate slabs.
Cencenighe makes components and small metallic parts for all the Group’s facilities.
Pederobba concentrates on injection molding of nylon and proprionate, while Rovereto makes metal frames.
Lauriano produces glass and plastic (polycarbonate and nylon) lenses, as well as making Persol products from slabs.
The growth of manufacturing
Luxottica S.a.s. was set up in 1961. Leonardo Del Vecchio thus embarked on a career characterized by commitment, sacrifice, creativity, enthusiasm, determination, ingeniousness and continual success. Out of nothing he created what is now a unique enterprise.
Early on, Luxottica S.a.s made eyewear components on contract (for Metaflex), concentrating on workshop production of stamps, molds and tools. With just a few employees, it made small accessories, by hand, acetate frames and semi-finished metallic products. Del Vecchio’s family provided crucial support for the firm during those years of sacrifice, coloring frames one by one and sellotaping the parts of glasses that had to retain a natural color.
The experience and extraordinary capacities of Del Vecchio, who worked alongside his employees, created know-how and improved quality in the production process. The key to success in these early years was the special relationship between him and his employees, who were ready to sacrifice themselves for the job, working up to 15 hours a day even.
The business gradually grew and it was soon evident that Del Vecchio was looking farther ahead than his partners and could anticipate the market’s needs. With his marked entrepreneurial flair he decided it was time to start making his own frames under the Luxottica label.
In 1967 came the great stroke of intuition: whilst continuing to produce semi-finished items for clients, the company started assembling single parts to make complete pairs of glasses and selling them under the Luxottica brand. This was a brave decision but Del Vecchio was able to count on sound professionalism acquired over years of work, which enabled the firm to compete in the finished product market with great success. After this turning point the company began to expand exponentially.
In 1968, Del Vecchio contacted Luigi Francavilla in Switzerland and persuaded him to move to Agordo to work with him in a factory employing 50 people, with a workshop of just seven employees
1971 was the next milestone: Luxottica went to its first MIDO, a trade fair, and presented its first collection, comprising ten or so models all made by hand. The stand was small and spartan (just two meters by three) but the success was enormous, going far beyond the most optimistic expectations.
Back in Agordo, great enthusiasm and effort were needed to make all the products they had already sold at MIDO, but there was disappointment too: Del Vecchio’s two Metaflex partners decided to pull out. Buying their stakes required what was an enormous sum in those days but Del Vecchio managed to find a new partner, from Mantova, and buy out the other two. Eight months later he decided to buy out Luxottica’s new partner as well.
With Del Vecchio now the sole owner, Luxottica launched itself on foreign markets, first through local distributors and then directly. In this period, the firm clearly needed more modern machinery and more space: extensions were added onto the original plant and then a new block was built across the road. With demand for Luxottica frames growing at 20% a year, the company had to keep enlarging its premises.
This was when Del Vecchio became convinced he should base his strategy not only on manufacturing know-how but also on an adequate distribution capability. In 1974 he acquired the Turin-based Scarone, a distributor already marketing well known brands, and started to expand Luxottica’s business throughout the country.
Thanks to its manufacturing specialization and its vertical integration, Luxottica found itself, in the early ‘80s, in a good position to target international markets. Its management understood how vital it was to build a good commercial structure abroad as well. 1981 saw the set up of the first foreign subsidiary, in Germany, thus marking the start of international expansion by opening branches and in some cases forming joint ventures.
Also in 1981, Luxottica acquired Meccanoptica Leonardo, a company known internationally for the high quality and reliability of its Sferoflex brand.In the ‘80s, it also substantially extended its manufacturing structure, including the Agordo plant, and added new facilities to the Group at Rovereto, Sedico and Cencenighe.
In 1988, Luxottica started working with the fashion industry. The company’s license brand lines enabled it expand into the top end of the market and raise the Group’s profile.
In the ’90s, it launched a campaign of acquisitions targeting prestige brands, the start of an incredible series of commercial successes, especially in the USA, where Luxottica listed on the New York stock exchange in 1990. Once again, driven by the need to further consolidate its international standing, the Agordo enterprise embarked on an ambitious new course: that of becoming a truly multinational organization.
The acquisitions in the ’90s played a vital role in Luxottica’s growth strategy, which was to exploit its own resources and know-how to the full whilst integrating and optimizing those acquired from other companies.
The acquisition of Vogue in 1990 and Persol in 1995 marked the beginning of diversification into the sun segment. But the real quantum leap came in 1999, when Luxottica bought Ray-Ban from Bausch & Lomb. The new brand significantly strengthened Luxottica’s positioning in the sun market.
Buoyed up by the relaunching of newly acquired brands and the resulting creation of value, Del Vecchio planted yet another milestone by listing Luxottica on the Milan stock exchange at the end of 2000.
2004 saw the start of a radical process of management restructuring at Group level to meet the growing dimension and complexity of its operations. Del Vecchio was convinced of the need to “change without sacrificing continuity” - of the company and its business model - and therefore brought in a young executive, Andrea Guerra, to lead Luxottica into the future. The new management started out under the banner of continuity by reasserting the central importance of the product and entering new licensing agreements with prestige fashion houses.
Having enriched its portfolio with the Versace and Prada brands in 2003, Luxottica added Donna Karan and Dolce&Gabbana the following year, whilst also extending existing agreements with Bulgari and Chanel. In 2006 another two highly important partnerships were sealed: Polo Ralph Lauren granted Luxottica a license to design and manufacture their prescription and sun collections and distribute them on an exclusive basis worldwide, a move immediately imitated by the American jewelry maker Tiffany & Co., who chose our Group for their debut in eyewear.
None of this meant relaxation of development for house brands: Ray-Ban continues to be the main force and Agordo decided to launch the first Ray-Ban optical collection: a courageous choice rewarded by enormous success. Major investment is also going into Persol, a brand rich in history and emotional appeal, Vogue, Arnette and REVO. The definitive rebalancing of the brand portfolio in favor of house brands came with the great Oakley operation. In June 2007, Luxottica announced its acquisition of the world’s leading sports optical brand, whose production ranges from sunglasses to ski goggles and prescription frames.
Integration with Oakley started up immediately and immediately began to bear fruit.
The last few years have also seen rapid growth in manufacturing facilities: the surface area at Agordo was substantially increased by the newly built two-floor extension to the main building; the Sedico site has a new block; at Pederobba, a new block, connected by a tunnel to the original one, has almost doubled the area of the site; Lauriano’s plastic lens production unit has been considerably enlarged and at Rovereto new space has been created by covering an internal courtyard.
Vertical production system
Technical know-how and manufacturing skills: an intangible heritage in continuous evolution
Tradition and Innovation
The pursuit of production efficiency has always driven Luxottica, since the very beginning, towards the complete centralisation of the entire production process. The aim is to guarantee high quality standards and experiment new organisational systems that are able to improve production.
In 1967, Leonardo Del Vecchio in fact made the strategic decision to extend activities to encompass the full production of eyewear, in all its parts (even if still carried out on behalf of third parties). His belief is twofold: on the one hand, he thinks that buying from third parties does not encourage the experimentation of new production methods and techniques, and on the other, he believes that only by controlling the whole of production will it be possible to keep the high quality in the development of the end product.
With the of the production system, a virtuous circle is created: the complete control of production allows for research into new technologies, which in turn results in improved efficiency and an increase in revenues; the company grows and this stimulates investment and research.
This vertical integration strategy decided by Del Vecchio is a key element for Luxottica, as it has allowed the Agordo-based company to maintain a cost leadership position in the sector, associating it with a high quality product. The vertical integration process has entailed major investments, on the one hand in order to extend production capacity and, on the other, to renew production technology, but always in the fundamental, total respect of high product quality.
The industrial system and the Agordo Valley
One of the reasons for Luxottica’s uniqueness is its special relationship with the local territory, based on the fullest respect for the environment.
The Agordo Valley
It’s a fine example of how industry and nature can coexist, and to their mutual benefit. The Agordo facility is the heart of the Group, it’s where our living legend started, in 1961. It was not a random choice location: after the ‘50s, as the metal bearing vein in Val Imperina was nearing exhaustion, work in Agordo (originally the mining of pyrite) was drastically cut back and the whole area was faced with emigration.
To deal with rising unemployment and the resulting emigration, Agordo’s town council decided to pay subsidies to anyone setting up an industrial enterprise in the area. Luxottica was one of the companies that used such subsidies.
Leonardo Del Vecchio has often said that his biggest piece of luck was being able to invest in the Agordo area and count on local skilled labor.
This valley, whose famously beautiful landscape somehow adds to Luxottica’s uniqueness, has seen the unfolding of an extraordinary story in which a pair of glasses became an icon of “made in Italy” excellence.
Luxottica started out making eyewear components under contract and had 14 employees. Everything was done by hand and with meticulous care. There were only a few operatives and production concentrated on small hand-made accessories, acetate frames and semi-finished metal products.
Agordo now has around 3,500 employees and its manufacturing activities integrate the entire process of metal and plastic (injection molded) eyewear production.
The recent construction of a two-floor block increased the building’s surface area by some 1,433 square meters to the current total of around 82,000 square meters. This extension rationalized the flow of surface treatment and rhinestone application operations and made room for a new automatic plastic painting plant and a new and luminous canteen (on the second floor of the new block).
Luxottica Global Quality
The "Made in Italy" feature of Luxottica products represents the "culture of quality" that has been central to the whole organization.
Only recently has quality taken on a wider meaning, becoming global quality and assuming a highly strategic role. It is the underlying principle applied in every process involved in creating eyewear and is the drive behind the continual improvement of products and processes. The objective is to develop the people, from product experts to system experts.
The focus on quality has thus become a system in itself, and the system covers the entire organization: quality is applied to product development, procurement, distribution network, analysis of processes and uniform and measurable performance management in the plants.
In a market as competitive and global as eyewear, the satisfaction of wholesale clients and retail consumers is without doubt a primary, indeed indispensable, objective.
At Luxottica, achieving it means continually improving quality in every phase of the production process (and also distribution) and has been the reason for undertaking the full vertical integration of every phase of production.
Most of the manufacturing equipment used is specially designed and adapted for the manufacturing processes. This helps respond more quickly to customer demand and adhere to strict quality-control standards.
Quality and process control teams regularly inspect semi-finished products during the various phases of production, verifying the feasibility of prototypes in the design phase, controlling standards across the spectrum of products in the production phase, and subsequently checking for resistance to wear and tear and reviewing optical properties in relation to type of use.
The manufacturing processes and materials used by primary suppliers are also controlled and certified.
Through ongoing verification of precision and expertise in all phases of production, Luxottica seeks to manufacture a product of the highest level of quality.
Even during the winter it is important to protect your eyes. In fact cold, dust, sun and snow glare may endanger the health of your eyes. Wearing quality sunglasses is one of the best protections against potential disorders.
Luxottica Group's optical retail operations are through leading brands such as LensCrafters and Pearle Vision, leaders in North America, OPSM, Laubman & Pank, which are active throughout Australia and New Zealand, and GMO in Latin America.
The Group also has a major retail presence in China, where it is a top operator in the premium eyewear market with LensCrafters.
Since the acquisition of Sunglass Hut in 2001, Luxottica has become the world leader in the sun retail business.
Luxottica’s retail business consisted of over 7,000 optical and sun retail stores.
|1961||Cole Licensed Brands adds Sears Optical to its portfolio, acquiring valuable lab and manufacturing facilities|
|1961||Dr. Stanley Pearle opens the first Pearle Optical in Savannah, Georgia|
|1976||Cole National begins actively developing third party vision care plans|
|1979||The concept of a niche market for premium sunglasses catches on quickly and SGH expands across North America|
|1983||LensCrafters opens its first store in Florence, Kentucky|
|1983||Cole Vision opens the Salt Lake City Manufacturing facility, processing plastic and glass prescription lenses in one shift|
|1983||Cole Licensed Brands opens its 500th location with annual sales exceeding $100 million|
|1988||Gift Of Sight begins as a used glasses collection drive in conjunction with a voucher program allowing stores to donate new glasses in their community|
|1988||Sunglass Hut launches international stores in Europe, entering the market as the first sunglass-only retailer|
|1991||The first GIFT OF SIGHT international mission is launched|
|1993||The number of Sunglass Hut stores triples to 1,724 stores|
|1994||GIFT OF SIGHT wins the prestigious President’s Volunteer Action Award sponsored by the Points of Light Foundation and presented by President Clinton|
|1995||Luxottica purchases the LensCrafters organizationAmerica|
|1995||Cole National sales exceed $300 million and the number of departments topped 1,000|
|1996||Sunglass Hut opens first sunglasses only retail store in Europe in U.K.|
|1998||FORTUNE magazine names LensCrafters on its list of the “Best 100 Companies to Work for in America”--beginning five consecutive years ('98, '99, '00, '01, '02) of placement on the list|
|1999||A used eyeglass-recycling center opens in the Cincinnati Service Center|
|1999||One millionth GIFT OF SIGHT recipient is helped in Seattle|
|2001||Sunglass Hut enters the Luxottica Group|
|2002||Luxottica Retail opens its new corporate headquarters in Mason, Ohio|
|2004||Luxottica acquires Cole National, enhancing it leadership position in the North American optical market|
|2007||Luxottica opens state-of-the-art manufacturing facility opens in Columbus, Ohio; facility becomes IARC certified to process Hydrophobic AR Coating (EZ-AR)|
|2008||Luxottica launches OneSight, combining Give the Gift of Sight, Pearle Vision Foundation and Community I Care into one, new, global organization|
|2009||The seventh millionth OneSight recipient helped in Australia|
|2009||Prada and Sunglass Hut open the first temporary eyewear concept store in Rockefeller Center|
|2009||Luxottica to enter retail in South America through 40 percent participation in Multiopticas Internacional|
|2009||Macy’s and Luxottica: exclusive agreement to open additional Sunglass Hut points of sale in about 430 Macy’s department stores in the U.S.|
|2010||Sunglass Hut unveils flagship locations in New York and London|
|2011||Luxottica to enter Mexican retail market, acquiring Stanza and High Tech, two sunglass specialty retail chains totaling more than 70 stores in Mexico|
|2011||Sunglass Hut Opens a Flagship Macy’s store in the department store’s legendary Herald Square location in New York City|
|2011||First Canadian Pearle Franchise Opens|
|2011||Sunglass Hut opens its first store in Brazil|
|2011||Luxottica becomes owner of 97% of Multiopticas Internacional’s share capital, of which the Company owned already the 40%|
|2011||Sunglass Hut Launches Shop at Beauty.com|
Facts & Figures
A strong Brand Retail portfolio to reach several target segments
Luxottica was the world's first eyewear manufacturer to enter the retail market, and it did so through the 1995 acquisition of The United States Shoe Corporation, owner of LensCrafters, the largest optical retail chain in North America. As a consequence, in just a few years, the company reached a leadership position in the Retail market thanks to a series of acquisitions, including:
- in 2001 Sunglass Hut, a leading global retailer of premium sunglasses;
- in 2003 OPSM Group, a leading optical player in Australia and New Zealand;
- in 2006 the expansion of the LensCrafters brand in China;
- In 2011, in line with the expansion strategy in emerging markets, the acquisition of Multiopticas S.L., a company owning more than 470 stores in South America with Opticas GMO, Econopticas and Sun Planet brands, and the acquisition of two sunglass specialty retail chains in Mexico, then rebranded under the Sunglass Hut brand.
Market and strategy
With a strong portfolio of retail brands, Luxottica is well positioned to reach different segments of the market. The retail portfolio offers a variety of differentiation points for consumers, including the latest in designer and high-performance sun frames, advanced lens options, advanced eye care, everyday value and high-quality vision care health benefits.
As of December 31, 2013, Luxottica’s retail network consisted of over 7,000 optical and sun retail stores.
Luxottica’s optical retail operations are anchored by leading brands such as LensCrafters and Pearle Vision in North America, and OPSM, Laubman & Pank, which are active throughout Australia and New Zealand. The Group also has a major retail presence in China, where it operates in the premium eyewear market with LensCrafters. Due to the fragmented nature of the European retail market, the Company does not operate optical retail stores in Europe outside of the United Kingdom, where in 2008 it increased its stake in the David Clulow chain, which sells both prescription and sun products.
As of December 31, 2012, Luxottica’s optical retail business consisted of approximately 3,864 retail locations globally.
Sun and luxury retail
In 2009, Luxottica created a new global sun and luxury retail management group to support the Sunglass Hut, ILORI, The Optical Shop of Aspen and Bright Eyes brands. Since the acquisition of Sunglass Hut in 2001, Luxottica has become a world leader in the specialty sunglass retail business. As of December 31, 2012, Sunglass Hut operated a retail network of 2,713 stores worldwide, of which 2,610 corporate stores and 103 are franchise locations. The former are in North America, Asia-Pacific, Europe, South Africa and Latin America, whereas the latter are in Middle East, India, the Philippines and Thailand.
In 2011, the expansion strategy into emerging countries has driven Luxottica to an agreement pursuant to which more than 70 sun stores in Mexico have been acquired. This will enable the Group to enter the Mexican retail market, a market with great opportunities.
The distribution structure covers more than 130 countries, with over 40 direct operations in the major markets and approximately 100 independent distributors in other markets
Each wholesale subsidiary operates its own network of sales representatives who are normally retained on a commission basis.
Relationships with large international, national and regional accounts are generally managed by employees.
Customers of the wholesale business are mostly retailers of mid- to premium-priced eyewear, such as independent opticians, optical retail chains, specialty sun retailers and duty-free shops.
In North America and some other areas, the main customers also include independent optometrists, ophthalmologists and premium department stores.
Certain brands including Oakley are distributed also to sporting goods stores and specialty sports stores, including bike, surf, snow, skate, golf and motor sports stores.
In addition to making some of the best brands, with a broad array of models tailored to the needs of each market, Luxottica also seeks to provide its wholesale customers with pre- and post-sale services to enhance their business.
These services are designed to provide customers with the best product and in a time frame and manner that best serve the Group's customers’ needs.
Luxottica Group’s distribution structure is one of its key competitive advantages and without paragon in the industry. In fact, it’s one of the most extensive and effective in the optical sector, embracing retail stores and serving 3rd party independent stores and chains through a wholesale distribution network.
Luxottica Group is thus able to provide its clients with a highly automated order management system that reduces delivery times and minimizes inventory.
Facts and figures
The wholesale structure covers more than 130 countries, with directly controlled operations in over 40 major markets. It has 20 logistics centers and 40 commercial branches providing direct presence in the most important markets.
In 2012, the Wholesale division posted full-year sales of Euro 2,773 million, up from Euro 2,456 million in 2011.
Operating income of the Wholesale Division in 2012 amounted to Euro 604 million (+14.3% over 2011), with an operating margin of 21.8% (+30 bps as compared with the previous year).
Strategies for the wholesale distribution
Direct distribution in the key markets brings considerable competitive edge, making it possible to maintain close contact with clients and maximize the image and visibility of Luxottica brands.
In the emerging world, Luxottica puts it leadership potential at the service of local markets. We are convinced that through its knowledge of these markets Luxottica can further improve its distribution platform. This is why we have made substantial investments in the last few years and intend to expand and strengthen our operations in these countries.
A main planning network, a global distribution presence
The Group’s distribution system is globally integrated and supplied by a centralized manufacturing programming platform.
The network linking the logistics and sales centers to the production facilities in Italy, China, the United States and Brazil also provides daily monitoring of global sales performance and inventory levels so that manufacturing resources can be programmed and warehouse stocks re-allocated to meet local market demand.
This integrated system serves both the retail and wholesale businesses and is one of the most efficient and advanced logistics system in the industry with 20 distribution centers worldwide, of which 12 are in the Americas, six are in the Asia-Pacific region and two are in the rest of the world. There are four main distribution centers (hubs) in strategic locations serving the major markets: Sedico (Italy), Atlanta (US), Ontario (US) and Dongguan (China). They operate as centralized facilities, offering customers a highly automated order management system that reduces delivery times and keeps stock levels low.
- The Sedico hub, updated with a highly automated system, currently manages over 13,500 orders per day, including eyeglasses and spare parts. Sedico ships over 187,000 units daily, coming from manufacturing plants, to customers in Europe, the Middle East and Africa and to the Group’s distribution centres in the rest of the world, from which they are then shipped to local customers. The centralisation of the service has brought a major benefit in terms of improving the speed and efficiency of Luxottica distribution, and the implementation of the SAP system has improved process controls and order allocation.
- The Atlanta facility, located in one of the major airport hubs of the United States, is a highly advanced distribution centre whose cross-belt sorting system can move up to 150,000 frames per day for wholesale and retail networks in North America. And the logistics network of Oakley is also headed by the Atlanta hub.
- The Dongguan hub handles the transport of around 170,000 pairs of glasses a day. The continuous investment in services and the implementation of the SAP system has determined the growth of this centre, year after year, as it took on a strategic role in distribution for the Asia-Pacific area.
The SAP global implementation continued and was implemented throughout 2012 in the Chinese operations at the Tristar facility and at the Atlanta and Ontario distribution centers, thus providing further support to manufacturing management, enhanced inventory control, network optimization and order management process.