Trends I’m watching for 2020

The quickest changes in our market today seem to be driven internationally by acquisitions of brands by luxury umbrellas like LVMH and Kering. On a local level we see changes continually driven by private equity firms in the retail space. Then lastly, we see third party alliances and purchases in the retail space as disrupters as well.

Some changes are set to happen in the Luxury eyewear space due to the expanding footprint of LVMH. It was just announced that LVMH is very near to a deal with Tiffany. LVMH as we know is part owner of Marcolin and has invested in ramping up production as of late. It appears however that Luxottica has Tiffany under contract until 2027. This year, as predicted, Safilo announced the end of its partnership with Dior following its purchase by LMVH. This contract is set to end in December of 2020. I expect a similar situation with Fendi in 2022 when the contract ends between the brand and Safilo as this is also a current LVMH holding.

In the local private equity space, it will be interesting to see how deep these partnerships reach for returns due to increased pressure from investors. With Wallstreet posting record gains, the “safe haven” of private equity investments will be pressured to post similar ROI. Many resent acquisitions are still in a transition phase, which means they are still purchasing from the same vendors and operating under old agreements. Nearly every group has formed a laboratory alliance, but it will be interesting to see if other supplier agreements and purchasing decisions become more centralized with the equity firm. I envision a day when a number of sales reps leave the road and are working directly with a smaller group of equity decision makers. Will this be the fate of road warriors, or will these equity groups divest at the market peak in search quicker gains in another sector like what may have happened with HVHC recently?

On the third party front, we have seen a transition from the sale of Visionworks and Davis vision from their parent company HVHC who seemingly left the eye care sector when everyone else appears to be jumping in (could this mark the peak of investment profits? They must think so). Visionworks was sold to VSP who now markets this chain as a Premier Provider with their private practice ODs. Davis Vision was merged with Superior and has reportedly been making changes to its laboratory program. While many thought that HVHC’s sale of Viva several years ago was to avoid a antitrust ruling similar to that of Bausch and Lomb and American optical in the 50’s, it actually marked the beginning of the total exit plan of HVHC from eye care. It leaves you wondering why they had built a potential empire of retail, frame, laboratory, and insurance ownership similar to Luxottica and VSP and then systematically dismantled it? It makes one wonder if they saw some potential “writing on the wall” that is not as clearly perceived outside the investor boardroom. Had their own third party plans slashed their own revenue as they reached the bottom of the reimbursement barrel? Could this repeat itself with other companies? Will hind site truly be 2020 this year?