The Luxottica of T-Shirts
When David Gilboa lost his $700 pair of sunglasses on an airplane during a backpacking trip to Asia, he started wondering why glasses were so expensive. Gilboa ended up starting Warby Parker with three other classmates from his MBA program to sell quality glasses for just $95. Their target: corporations charging high prices for products whose material and labor costs don’t justify the expense paid by consumers.
Co-founder Neil Blumenthal — who worked for an eyewear non-profit prior to founding the company — told Foundr Magazine “I had been to the factories. Here I was producing glasses for people who were making less than four dollars a day, but 10 feet away were factories that were producing… the $700 pair of glasses Dave had. So we knew something was awry.”
Goliath of the industry
The Luxottica Group is a Milan, Italy-based conglomerate offering full-service solutions for eyes; they own retailers like Sunglass Hut and LensCrafters, optometrists including Pearle Vision and Target Optical, famous brands like Oakley and Ray-Ban, and a huge portion of its business is manufacturing glasses on behalf of numerous well-know luxury labels.
They’ve often been criticized for their high prices and monopolistic-like command of the market. When someone buys a pair of Burberry or Dolce & Gabanna sunglasses, they’re not buying a product from that fashion house per se, they’re really purchasing sunglasses designed, manufactured, and distributed by Luxottica.
Warby Parker, who owes much of its success to a premier e-commerce experience and ability to offer good prices and still achieve margins, was just valued at $3 billion in its latest funding round of $245 million last week.
Global Brands Group
In the same way that Luxottica doesn’t own all of the brands it makes, but rather licenses and distributes the trademarks, Global Brands Group (GBG) does work manufacturing and marketing brands across many geographies and demographics. One of its signature offerings is creating apparel for entertainment franchises like Disney, Universal, and Fortnite creator Epic Games.
While Luxottica is staving off competitors through celebrity endorsements and expensive marketing campaigns, GBG is relatively safe from new entrants. Its products aren’t necessarily more expensive and more importantly, it has the fortune of being the only (or one of a few) company to sell apparel with kids’ favorite video games or movies.
One competitor, Authentic Brands Group, acquires well-known-but-distressed brands and takes control of its product development, marketing, and operations. Earlier this month, it partnered with a mall owner to acquire Lucky Brand out of bankruptcy earlier this month for $140.1 million. Authentic Brands currently counts 50 brands in its portfolio.
Global Brands Group will continue its success in apparel featuring some of your favorite TV shows and movie characters, so don’t expect another Warby Parker to come along offering Frozen t-shirts at one seventh the price.