Annual Review 2012 - Luxottica

18 ANNUAL REVIEW 2012
but not standardized, being specially tailored to specific local needs and fashion tastes.
The Company’s long-term strategy is to continue to expand in the eyewear and eyecare
sector by growing its various businesses, whether through acquisitions or organically,
primarily by focusing on the drivers discussed below.
Vertical
integration
One of the competitive advantages underpinning the Group’s past and future successes
is the
vertically integrated structure
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 current Chairman, Leonardo Del Vecchio,
who understood the potential of the “vertical” strategy ever since deciding 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.
In manufacturing, the Company has, over decades, vertically integrated all the phases of
the production process to attain a level of efficiency in line with the quality of products and
services it offers.
Direct control of the entire production platform makes it possible to verify the quality of
the products and processes, introduce innovations, discover synergies and new operating
methods, and optimize time and costs.
Direct distribution enables Luxottica to offer its products in the major developed and
emerging markets and achieve a unique understanding of end users’ needs and tastes.
Control over product distribution is viewed as a strength by stylists and fashion houses who
come to Luxottica to produce their eyewear collections and access the Group’s global and
widespread distribution network.
Development of a vertically integrated business model
> Incorporation: Luxottica was founded by Leonardo Del Vecchio in 1961. The
Company started out as a small workshop and operated until the end of the 1960s as a
contract producer of dyes, metal components and semi-finished goods for the optical
industry. It gradually widened the range of processes offered until it had an integrated
manufacturing structure capable of producing a finished pair of glasses. In 1971, Luxottica’s
first collection of prescription eyewear was presented at Milan’s MIDO (an international
optics trade fair), marking Luxottica’s definitive transition from contract manufacturer to
independent producer.
> Expansion in wholesale distribution: in the early 1970s, the Company sold its
frames exclusively through independent distributors. In 1974, after five years of sustained