By Marge Axelrad: Senior VP. Editorial Director
NEW YORK–In Part 1 of Vision Monday’s far-ranging discussion with Luxottica’s CEO, Andrea Guerra moves beyond the changes in the world market, the emergence of ‘emerging’ country economies and the opportunity of technology and internet.
In the second part of the discussion, posted exclusively here online, Guerra talks about the ways the Luxottica organization has had to adjust to its global platform, how brand and marketing communication is adapting and how the speed of change requires more planning.
He also discusses the impact of going more deeply into local markets on Luxottica’s total production. Guerra feels the whole industry can leverage today’s media and existing technologies to talk to consumers and patients about the value of quality eyecare.
Finally, Guerra explains what he thinks has not changed at Luxottica in 50 years of growth and expansion. And, learn how company founder Leonardo Del Vecchio is still influencing the company’s culture today.
Vision Monday: As an organization, Luxottica operates in so many business segments in many markets. What are the components of the organization that need to be addressed?
Andrea Guerra: One of the great challenges we’ve worked so much on has been to be able to connect the inner organization, to make sure that we’re able to serve all our 150,000 customers across the world properly, wherever they are. This has been and is a continuous challenge. When we serve a customer in Paris, we know it’s a 36-hour service level. But when we serve a customer in Guandhou China, we say 5 days is a good term. The three-year plan in Luxottica says that we have to serve those customers in China as if they are in Paris, so this is a huge challenge we have. Different cultures mean different infrastructures. This is the supply chain part.
But to be in those markets telling the same stories and interacting with consumers in the proper manner, this is a 360-degree job, and it’s turning the company upside down and inside out.
VM: How can we demonstrate an example of that? Fifty years ago, Mr. Del Vecchio was involved in tools and ties and parts, making things to supply to other companies. He was then making his own frames, then changing the distribution model. You are now a global enterprise, you manufacture in many parts of the world, your skill set as an organization is different, but you want a strategy to look ahead, not just execute—so how does that work?
Guerra: On one side, the world is becoming bigger. On the other side, every time you’re in a region, your work has to be much deeper. The way you’re telling your stories, interacting with consumers in a proper manner, servicing your customers and consumers, your products, marketing, stories in the stores, your digital technology, the people, supply chain—how all of that is connected in a 360-degree package. That demands a radical change in how you’re organized, connected and making all the stories alive.
In general, if you go in many different stores across the country, probably they were keeping the same window for a couple of months five years ago. Then they changed it to every one month two or three years ago and it needs to change every 15 days today. So the renovation of the storytelling is completely different every week.
One of the big changes of the [economic] crisis now is premium and luxury. You know, until 2007, we thought we were world champions in premium and luxury. We had good brands, building products around it and putting in the market plus 20 percent. Today you’re sitting in a completely different world, a completely different setting. You need to be credible in what you’re doing, need to work with materials that reflect hand craftsmanship, innovation, tradition, industrial. You need to be able to connect textures and textiles in the frames. You need to work on details that make, most of the time, frames which are similar to jewelry. So we’re working on probably 5 percent to 6 percent less models every year and probably 10 percent fewer SKUs every year in the last three years but, we go deep into the roots for every story we tell.
VM: Do you see that the internet is hammering home the idea that things can be so micro, one-to-one, the influence of friends on consumers? So when you go deeper with your stories, what does that mean as this niche-ing trend continues?
Guerra: You have to plan better, you need to understand who are your consumers? What’s fantastic today is you have a one-to-one relationship with the consumers who have chosen. If you do choose to go on the internet and be broad or random, it looks very efficient at first glance, but…..really, no effect. So you need to do your homework first.
I have my store or I have my brand. Who am I talking to? Who are the segments of consumers I’m talking to? How do I personalize my language when I talk to them? In this world, which is going so much faster, the planning has become much more important than ever before. Actually, it can be counterintuitive. We are going much faster than before, but we spend much more time on planning than before.
VM: Do you feel, through the stores, that anything in particular has to change because of the internet or technology?
Guerra: What you need to know is that your customers know much more than they did in the past. So you have to have a different level of [interaction] with them. When you know the Oakley story well, products fly out of the stores. When you don’t, many times, consumers can know better than you. So we all need to do better homework; not just brands, but talking about lenses, measurements, service, the long-term relationship, the communication with your consumer. I mean, we can help so much in the clinical life of our consumers that sometimes we don’t understand it. The eyes bring people so much.
VM: How do you see that changing? Increasing understanding about vision is part of the challenge the industry is facing. How do you sense that’s changing and what is the role you can play as a leader in that regard?
Guerra: The investments that we need to make in the next 3 to 5 years in the eye examination part is huge. In the relationship with consumers and the feedback we have from our consumers, it’s huge. A different eye exam allows all the steps that come after that. But we all need to invest a little more in consumer relationships and technology. All companies, small, big, mid-sized. It’s the digital technology, not so much the—it’s a gift we have in our hands today that we need to use better.
VM: In the expansion of Luxottica Group and on the occasion of the company’s 50th anniversary, what would you say are three ways that Luxottica has not changed?
Guerra: I think when a company has been led for such a long time by an entrepreneur, in many different aspects of our business life, the entrepreneurship remains there. There are a few of Mr. Del Vecchio’s characteristics that apply.
He’s a very passionate man. And we are 62,000 [employees] across the world. Maybe not all of us, but a big portion of us, are ready to give that hour more, that meter more, to make our customers and consumers satisfied. Being a man that has managed, sometimes by himself, a large organization, he had to be able to simplify things…and to be very fast. And again, when Luxottica works, and when Luxottica works well, you can find these characteristics that never changed.