Analysis of the Sunglasses Market in the United States
Introduction
The United States market of sunglasses is one of the most dynamically developing offshoot of fashion industry. The research shows that the sunglass sales percentage fluctuates between 4-5% of the industry total in Europe and between 6-9% in the United States of America. In accordance with the recent market evaluation, the analysts predict that the market will be growing at 6.3% annual rate between 2014 and 2019 (Reuters, 2015).
The market of sunglasses is a very saturated and diversified one, with lenses types varying from those made of polycarbonate to the more sophisticated models composed of nylon, ADC or glass (Sunglass Warehouse, 2015). The products also have one of the most various designs and styles in the category of fashion products. The most popular types of sunglasses include mirrors, tea shades, aviators and wayfarers (Research and Markets, 2015).
At the same time, the practice demonstrates that the United States market of sunglasses is especially vulnerable to the state of economy (IBIS World, 2015). In particular, the consumers usually buy sunglasses, when their corresponding levels of disposable income are high enough. Thus, during the times of economic depression the sales of sunglasses proportionally decline both domestically and internationally (Research and Markets, 2015).
The purpose of this research is multifold. In general, it seeks to provide a comprehensive evaluation of the sunglasses market in the United States of America. In particular, it explains what categories of the products are currently available on the market and how do they differ, as well as it discusses the main vendors, evaluating their competitive advantages. Moreover, this paper also discusses the market and corresponding marketing related issues. Finally, it provides a concise PESTL analysis to discuss the influence of the external factors on the market.
Product and producers
As discussed before, there are different types of sunglasses available on the market. They can be categorized by two main criteria: design and physical characteristics of the lenses. The most common design types of the sunglasses include aviator, brow line, retro square, round ,sport and cat eyes.
A good product, which can protect eyes of the barrier from harmful effects of the sun radiation, should have the following physical characteristics:
It should provide adequate protection against ultraviolet rays. Though most plastic and glass lenses have enough capacity to absorb some portion of ultraviolet light, adding chemical materials is sometimes necessary.
Sometimes, grounding and polishing the lenses is recommended to have positive effects.
The product should be impact resistance
The product should be polarized and photochromic (American Academy of Ophthalmology, 2015).
In general, these features are commonly considered sufficient for a high quality product, although some additional features are present in the premium segment of these products (IBIS World, 2015). The product is also merchandised in several pricing categories. The following pricing groups exist:
Low-priced segment – sunglasses valued between >$1 - $50. This category constitutes 64% of the entire market.
Medium segment – the products priced >$50-$250. The sales of these products amount to 23% of the market.
Premium (Luxury) segment - >US$250. This pricing segment generates 13% of sales in the United States (Sunglass Warehouse, 2015).
The major producers of the United States sunglasses market are the following:
Luxottica Group
The company specializes in producing luxury and medium-segment sunglasses. Up to date the company has 26% market share in the United States of America (Research and Markets, 2015). The firm bases its strategy on the principles of market leadership strategy, and in many cases it shapes market trends in this segment. It cooperates with the world-famous fashion brands like Versace, Dolce & Gabana, Gucci, etc.
Charmant
The company is one of the leading national manufacturers of premium glasses, owning about 16% of the market. The company is a typical ‘nicher’, focusing exclusively on the development of upscale products. The company targeted customers group include skilled white-collar professional with US$ 200,000 disposable annual income, positioning its sunglasses as symbols of elite social class (Reseach and Markets, 2015).
Marchon Eyewear
This company is the largest United States producer of sunglasses in the low-price segment. The main targeted groups of the firm are students and blue collar workers with less than US$ of annual disposable income. Nowadays, the company is reported to have approximately 12% of the market (ibid.).
Safilo Group
In contrast to its competitors, which tend to operate in a specific market share, Safilo Group has high brand portfolio, offering sunglasses in the different pricing categories. The firm has 9% of the market share in the United States. The analysts emphasize that the company has the best marketing campaign among the manufacturers of sunglasses (Rumelt, 2011).
Market and Marketing
Though it is rarely attracts academic and business attention, the eyewear market in the United States has comparatively impressive financial statistics. The entire sunglasses market in the United States generated US$ 8,687 million in 2015. The average price per item was US$125. The statistics also indicates that 17% of the sunglasses are sold online. Moreover, the analysts predict that by 2025 half of the all sunglasses in the country will be sold online (Research and Markets, 2015). Therefore, the companies are nowadays heavily investing into the development of effective methods of internet advertising.
In general, the analysts agree on the idea that the sunglasses market of the United States is highly sensitive to the fluctuations of economy. Although sunglasses may be low-priced, the product in general belongs to the luxury segment, which the most affected during the recession. For instance, during the recent 2008-2010 global financial downturn, cumulative sales of sunglasses dropped on 27% nationwide (IRIS World, 2015).
In the meantime, the findings show that with the development of new sales channels, in particular due to the intensifying growth of the e-commerce segment, the total amount of sunglasses is expected to grow at 6.4% per year between 2016 and 2019. However, the competition between the key market players has substantially intensified. As a result, the research says that upgrading and innovating their product portfolios has become an indispensable condition for retaining the existing core customers (Research and Markets, 2015).
PESTL Analysis
As any other industry, the market of sunglasses is highly vulnerable to the different political, economic, social, technological, legal and environmental factors.
Political factors
Politically, the industry is highly dependent on the policies of the United States government. In general, the political landscape of the United States is favorable to the sunglasses manufacturers. As a long as the Department of Health and Human Services do not identify any harmful effects, the merchandise of sunglasses will not be subject to scrutiny of the government. However, the situation may significantly worsen if the government removes or trade import quotas and tariff payments for China. In that case, cheap Chinese manufacturers can infest the local market, beating the national producers with prices (Kotler & Keller, 2006).
Economic factors
The industry is highly dependent on the state of domestic economy. The research demonstrates that decline in disposable income fundamentally curtails the sales in this segment (Rumelt, 2011). Premium sunglasses segment is the least sensitive to the negative changes in the economy, while low and median categories are those, which are affected first (Reuters, 2015).
The largest portion of sunglasses is produced on the territory of the United States. Therefore, the manufacturers do not depend on the economic health in other countries, though exporting area of their operations may suffer in such scenarios (Kotler & Keller, 2006).
Social factors
In general, social factors is not listed among the determinants of sunglasses market. The practice, however, shows that in some cases the sales may decline when a company is criticized of using environmentally harmful means of production, its image, and correspondingly the sales tend to deteriorate (Rumelt, 2011).
Technological factors
The growth of technology affects the industry in two primary dimensions. Firstly, the enhancements in industrial chemistry and design modify the way the goods are produced and their visual appearance. Secondly, sophistication of the global web incessantly creates the new methods of product marketing and distribution. The clients no longer need to visit the ‘brick-and-mortar’ shops. Instead, the can request a home delivery, which substantially reduced overheads in this segment.
Legal factors
The United States of America has one of the most intricate, but effective legal systems in the world, providing comprehensive regulatory mechanisms for all segments of commerce. Sunglasses are exempt from submitting the Premarket Notification to the FDA, though the producers should register with FDA, list their products, as well as the output has to conform to the Quality System standards developed by the FDA ( 21 CFR 820).
As any business industry, the producers and retailers of sunglasses are seriously influenced by the dynamically evolving consumer law of the United States. In particular, the producers should specifically accentuate the Federal Trade Commission regulations, as well as it their legal departments should customize its legal compliance to each state individually, because the trade law is distinct in each state.
Conclusion
The market is highly sensitive to economic recessions. Categorized as a ‘luxury’ commodity, the sunglasses sales rapidly decline when the amount of disposable income of targeted customers shrinks.
Finally, the PESTL analysis demonstrated that the conditions for market growth in the United States of America are favorable, which is confirmed by the 6.4% annual growth rate. On condition that there is no unforeseen major global economic downturns, the market will be growing and developing, become more technologically mature and less dependent on the legal and political processes of the country.
References
American Academy of Ophthalmology. (2015). Recommended Types of Sunglasses. Web. Available at: http://www.aao.org/eye-health/glasses-contacts/sunglasses-recommended-types
IBIS World. (2014). IBIS World Industry Report: Eye Glasses & Contact Lens Stores in the US. Web. Available at: https://sbmarketingstrategy.files.wordpress.com/2014/11/44613-eye-glasses-contact-lens-stores-in-the-us-industry-report.pdf
Kotler, P. & Keller, K. (2006). Marketing management. Upper Saddle River, NJ: Pearson Prentice Hall.
Research and Markets. (2015). “Sunglasses Market in the US 2015-2019”. Web. Available at: http://www.researchandmarkets.com/research/g9zthl/sunglasses_market
Reuters. (2015). “Research and Markets: United States Sunglasses Market 2015-2019 with Charmant, Luxottica Group, Marchon Eyewear & Safilo Group Dominating”. Web. Available at: http://www.reuters.com/article/research-and-markets-idUSnBw095502a+100+BSW20150109
Rumelt, R. (2011). Good strategy, bad strategy : the difference and why it matters. New York: Crown Business.
Sunglass Warehouse. (2015). “Guide to sunglasses”. Web. Available at: http://www.sunglasswarehouse.com/blog/types-of-sunglasses/
