LensCrafters 2003 Annual Report Download - page 12

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Watch Station stores. Outside North America, Sunglass Hut International operated 99 stores in Europe and 173 in
Australia, New Zealand and Southeast Asia.
Customer Service - In 2003, Sunglass Hut International launched the Mystery Shopper program in its North
American stores. This was the first time Sunglass Hut International’s customer service was tabulated by a formal
tracking system. The program scores stores based on customers’ shopping experience in eight categories. At the end
of 2003, 231 stores earned a perfect 100 percent score.
Customers also benefited from the new Breakage Protection Guarantee (BPG program) launched in the first half of
2003. Sunglass Hut International’s BPG is unique among sunglass retailers because it is a no-cost, no-risk benefit to
the customer. The Guarantee allows customers who have damaged or broken their sunglasses within six months of
purchase to return them and purchase an identical pair at 50 percent of the original retail price. The strategy behind
the Guarantee is to offer a unique no-cost, no-risk competitive advantage exclusive to Sunglass Hut International’s
customers.
Product - Along with experiencing strong sales in non-Luxottica Group products, Sunglass Hut International
continued to leverage the strength of the Group’s portfolio of house and designer brands such as Arnette, Prada, Ray-
Ban, Revo, and Versace. For the first time, products from Luxottica Group’s portfolio accounted for more than half of
Sunglass Hut International’s sun sales in U.S. Dollars in North America.
Sunglass Hut International also benefited from the new collections launched in the first quarter of 2003. Ray-Ban
Junior and Versace/Versus performed in line with company expectations. The company also saw a sharp increase in
Revo sales, up 168 percent in the fourth quarter, primarily due to the introduction of polycarbonate lenses and
stainless steel frames.
Furthermore, the watch business has become an important part of Luxottica Retail’s sun and watch strategy as
Luxottica Group believes that sunglasses and watches are often used as complimentary fashion accessories. In
addition, due to different selling seasons, the sun and watch businesses peak at different times of the year, allowing
for steady revenue generation.
Building upon the strength of Luxottica Group’s house brand names, in 2003 the watch business launched two
new exclusive watch lines under the popular Revo and Arnette banners. These new lines, along with Code, have
quickly grown to become a significant part of Luxottica Group’s overall watch business.
Marketing - In 2003, the Sunglass Hut International team began the process of identifying and developing a new
brand identity. Specifically, Sunglass Hut International began to narrow its target market and build the business based
on the image-driven consumer. As a result, Sunglass Hut International made a strategic decision to create new store
New in LensCrafters stores was the Ray-Ban Ophthalmic collection, which was launched in June 2003. This was
the result of a Group-wide strategy to expand Ray-Ban’s appeal into the fashion category. The addition of Ray-Ban
Ophthalmic helped increase Ray-Ban’s sales by 40 percent year-over-year. Rimless frames, super-lightweight frames
with a minimalist look included in collections such as Ray-Ban and Versace, also proved to be popular among
consumers. At year-end, rimless frames accounted for seven percent of total LensCrafters unit sales, up from less
than one percent for 2002.
Marketing - At LensCrafters, marketing strategies during the course of 2003 focused on promoting a distinctly
different customer experience. Target market research indicated that customers overwhelmingly wanted a more
meaningful shopping experience. To address these issues, LensCrafters repositioned its brand image to give
customers a reason to shop LensCrafters over the competition.
In 2003, LensCrafters ran a series of television ads targeting four key focus areas: Respect, Guidance, Knowledge
and Honesty. The ads appeared on network television as well as select cable stations such as E!, Bravo, Lifetime, VH1
and The Travel Channel, providing high viewership among the target audience.
To support the Group’s strategy that positions eyeglasses as a fashion accessory, LensCrafters benefited from the
reality-TV makeover craze that swept the U.S. in 2003. Partnering with high-profile U.S. networks such as MTV (Music
Television), TLC (The Learning Channel) and TBS (Turner Broadcast Station), LensCrafters product was strategically
placed on makeover programs, reinforcing the concept that eyewear is a fashion accessory.
The branding strategy also focused on providing customers what they want and how they want it. A cross-
functional team of associates analyzed all aspects of customers’experience from frame and lens selection to the point
of sale. As a result, customers began to recognize a friendlier selling process and upgraded store environments.
SUNGLASS HUT INTERNATIONAL HIGHLIGHTS
Beginning with a small kiosk store in Miami, Florida, in 1971, Sunglass Hut International has grown to become the
largest sunglass specialty retailer in the world. Over the years, the chain has expanded into the watch business by
acquiring Watch Station in 1996 and Watch World in 2000. In 2001, Sunglass Hut International joined the Luxottica
Retail family.
Stores - During 2003, Sunglass Hut International opened 65 new stores, remodeled 97 stores, relocated 28
stores and closed 74 under-performing stores. At year-end, in North America Sunglass Hut International operated
1,446 Sunglass Hut International stores, of which 322 were sun and watch combo stores, and 187 Watch World and