Dynamic Evolution of a Leading Eyewear Player

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  Marchon CEO Claudio Gottardi, seated, and SVP, Americas Steve Wright.
NEW YORK—A more balanced international platform of brands, an evolving portfolio of product, design and marketing resources, further investment in global senior management and renewed support of technology, supply chain and service infrastructure—all of these are elements that characterize Marchon Eyewear today, just over five years since the August 2008 acquisition of the company by VSP.

In the transition from Marchon’s founding, entrepreneurial leadership to the strategic vision of its executive leaders today, and as a major division of one of the largest, integrated products, insurance and vision care delivery companies in the optical industry, today known as VSP Global (see sidebar page 16), Marchon Eyewear has added ballast to its international presence, moved into new product directions, not just licensing brands but acquiring companies to add to its range, and is continuing to fuel its growth with new or direct distribution approaches in both established and emerging markets around the world.

 
Marchon SVP Mark Ginsberg  
Claudio Gottardi, president and CEO of Marchon for the past several years, views Marchon’s accomplishments as a “360-degree” approach to serving all aspects of its customers’ needs. And he talks about many of the changes implemented over the past several years as one of “internationalization” and diversity which has been a dramatic influence on the company its spirit and market strengths.

In terms of new talent, Gottardi noted, “Probably more than 50 percent of the management of the company today reflects an international sensibility and experience. We were also looking to bring in new skills and talent to complement who was here and add to what we know.”

Gottardi joined the company, initially in an international role, in February 2009. The first efforts were to strengthen and grow the company “fast” internationally. “In Europe, we in fact have more than doubled our sales in the past several years. We of course continued to grow in the U.S. but in this initial period, almost all the brands we added were brands determined to be important in certain markets like Asia, or Northern European markets. He cited brands as diverse as Ferragamo, Chloe, Lacoste, Valentino and Skaga among these, as would be G-Star, Liu Jo and others. He noted acquisitions like Dragon and the expansion of Marchon NYC and Flexon “house” brands as other “balancing” moves.

 
 
  Marchon’s redesigned and sleek new HQ on Long Island which houses corporate offices, distribution, and product/sales teams. Its NYC showroom and NY-based design studio are in Manhattan. Other facilities and design offices are in Europe and Asia.
Added Mark Ginsberg, Marchon’s SVP global marketing, “These strategic moves about brands have minimized our risk around the world, too, so that we are not as U.S.-centric as we may have been in the past. As a result, we are reaching out to critical sectors of the market.”

Said Gottardi, “Perhaps, five years ago, the proportion of Marchon’s total business then was 60/40, skewing toward U.S.-based, while today, that proportion is now reversed and international is higher.”

The company has opened a subsidiary in Brazil, is making new investments in China, developed a new joint venture partnership in India, created new subsidiaries in Portugal, the Middle East, and Greece, is focusing on Russia and Turkey, making new investments in Korea and eyeing more resources for Mexico, even as it is deepening its market ties and presence in other, more established European markets.

Gottardi emphasized that Marchon’s moves in the recent few years have been financed by the company, citing Marchon’s profitability and strong cash flow. “We have financed our own development. Everything we’ve done where we opened, what we’ve done is designed to grow us intelligently, strategically worldwide.”

 
 
Marchon’s portfolio of brands span international and U.S. licensed brands as well as house collections.  
This expansion is also serving as new platform for VSP, which is looking to grow its international options. Gottardi noted, “In terms of shared services, like IT, finance, legal and so forth, this of course is something where we all benefit as being part of a larger group, even though we have dedicated resources to Marchon.”

Gottardi also cited the current momentum reporting that the company set a new worldwide record sales increase in January this year, with a significant 20+ percent increase over the prior year.

A sensitive subject is the service difficulties Marchon encountered, particularly in 2011 and 2012, due to a conversion by the company over to the SAP systems platform. “The goal was to create a uniform platform for our supply chain and customer service and product planning for the world and for VSP,” said Gottardi, “but obviously, it was a transition fraught with problems.

“We struggled, our customers struggled, but we finally saw, throughout most of last year, the light of day. We feel, sincerely, that we have turned this corner. We believe this will be the year that we regain our customer service stature, we see it already, and are proud to say we are operating at a 97 to 98 percent service and fulfillment rate. We are firing on all cylinders and the numbers are now reflecting this.”

Looking ahead, Marchon anticipates continuing to strategically add brands to its portfolio. Accounts will learn more about Marchon Direct (formerly known as Viztec), a frame-and-lens-lab solution which will be an important value and service for both patients, via their insurance benefits, and doctors/ECPs, Gottardi said. Further, several new brand announcements could be revealed in the months and year to come.

VSP Global's View: Marchon As International Asset

RANCHO CORDOVA, Calif.—In the five-plus years that have transpired since VSP, the nation’s largest vision care insurance company, made its acquisition of Marchon Eyewear, VSP itself has evolved into the “VSP Global” family of businesses—consisting of four main lines of business: its benefits business, VSP Vision Care; its eyewear businesss, Marchon Eyewear (including Altair and Allure); its optics and lab group, VSP Optics; and its practice solutions group, Eyefinity (incorporating its OfficeMate/ExamWriter and other services).

Marchon, according to VSP Global’s senior executive, Rob Lynch, CEO, has been a major and “transforming” asset to its group. Asked about the impact of Marchon to the company, Lynch told VM, “We bought Marchon for the market potential and growth that it brought to our organization. Marchon was a company aligned with independents across the U.S. but it also brought us capabilities, retail relationships and an international footprint that can’t be underestimated for us.

 
“Remember,” he continued, “that VSP was primarily an insurance company in 2006. We had our Altair division and two of our own labs at that time. But we had long had multinational corporations who were big clients of ours in the insurance space and those clients had concentrations of employees in other parts of the world. We were looking for ways to better serve those clients. And Marchon gave us that capability in spades.

“They’ve been doing business in every major geography. Through Marchon’s platforms and experience, we were able to become educated and look at models that could work to provide vision care and eyewear benefits to those global companies’ employees. Today, we are doing that in Australia, Canada and the U.K. and we are actively looking at solutions in France, Germany, India as well as China, Mexico and Brazil and other countries.”

In addition, Lynch commented, “Marchon has had a tremendous impact for us on the supply chain side of things, it has enabled us to further our decisions to build out our lens and lab business and we have seen significant growth rates overall on our product side as a result of Marchon being a part of our group. Our employer groups want to be sure vision care has high value to their employees and we want our ECPs on the provider side to have access to a significant array of suppliers.”

Lynch also pointed out that, being a part of VSP Global, Marchon has been able to “build out its infrastructure.” Marchon has expanded its distribution in Europe and Asia, it has been investing in support within its design and manufacturing capabilities to support brand growth. “We’ve also made some strategic acquisitions like the Dragon and Scandinavian Eyewear businesses,” he emphasized.

“Their growth has paralleled our overall growth,” stated Lynch. “We, VSP, has been growing at a rate of about eight or so percent a year, for the past six or seven years. As a private, not-for-profit, VSP Global doesn’t have shareholders, but stakeholders. We reinvest into all of our businesses to provide value to those stakeholders.”

He added, “VSP Premier is a new, but important, example of that. Just a few months old at this point, the philosophy of VSP Premier is in response to our clients saying, in effect, you have a frame business, lenses, labs, software and insurance – how can you bring these together to benefit our employees? The goal of VSP Premier is to be a consumer-led program. And this combines our strategic assets like those within the portfolio of Marchon.”

Today, Marchon Eyewear, including the Altair and Allure businesses, is projecting worldwide eyewear and sunwear sales to be $850 million in 2014, positioning the company as the world’s third largest eyewear/sunwear company in wholesale sales, according to executives. In addition, when factoring in VSP’s lens and VSP Optics lab businesses and sales, together the group’s global, combined lens, lab and frame business is approaching nearly $1billion, according to Lynch. ■