Luxottica – Essilor Merger

This is my opinion, and “not necessarily the opinion of our sponsors.”

What will the merger of Luxottica and Essilor mean for the eye care industry?

1. Increased pace of consolidation for ECP’s.

There has already been a lot of activity in this sphere, with companies such as MyEyeDr and Clarkson Eyecare buying many independent ECP’s as well as smaller regional chains.

If and when “EssiLux” merge, count on this entity also to dramatically increase its’ footprint in the “retail” landscape.

Why?

Because ultimately they want to buy and control the patient’s eyewear choices. If they own the retail location then they can dictate which frames, lenses, contacts, etc. will be made available to the patient.

Needless to say, the vast majority of products offered would be their proprietary products, much like a current LensCrafters.

2. Increased pace of consolidation for vendors.

The consolidation of vendors has been taking place for years, with Essilor, Zeiss, Hoya, and VSP buying independent optical labs.

The large frame companies and especially Luxottica have been buying the rights for designer brand names, and consolidating the brands under their portfolios.

This consolidation will increase, with some vendors selling to larger companies, and some unfortunately not able to compete and closing down.

The reduction of independent ECP’s will have a dramatic effect on the abilities of independent vendors to remain viable.

3. A reduction in Managed Vision Care (MVC) providers.

As ECP’s consolidate, they large players will exert more control over MVC’s.

If EssiLux and the other large players (such as Walmart, National Vision, Costco, etc.) continue to grow and independent ECP’s shrink, they will have an increasing amount of leverage over reimbursement levels and which plans are able to empanel a significant enough number of ECP’s to support any business that may be acquired by the MVC.

4. “Offshoring” of lab work and frame production will continue.

The large labs (including Essilor) already do much of their laboratory work internationally (mainly in China and Mexico).

There has been a small rebound in frame manufacturing in the USA, but so far to an insignificant level.

As ECP consolidators get larger, they will send more of their lab work overseas to reduce their costs.

5. Decreased levels of customer service to the patients.

As offshoring grows, turnaround time will suffer. Especially for jobs that have a “spoilage”, as now it will have to travel to different countries multiple times.

These are just a few of the foreseeable trends.

What do you think?

What other effects would this merger have on the eyecare industry?

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