[Eyewear Industry Analysis ②] The Light and Shadow of the Eyewear Industry... Tears Over 'Zero Won' Tech Fees, Foreign Capital Reaping the Profits, and the Hope of K-Eyewear

"Are eye exams free?" Tears over 'zero won' tech fees... The light and shadow of the eyewear industry

"Even when bringing in equipment at the price of a car, the value of the technology is not recognized"

Domestic leading lens brands Chemi and Daemyung turn out to be owned by France and Japan

'Blue Elephant' boasts an operating profit margin of 42%... A 'monster rookie' that surpasses the profit margins of Gentle Monster and Louis Vuitton

"Optical shops have a 90% margin, so they will never go out of business." There is a widespread perception in the market that the eyewear industry is a 'goose that lays golden eggs.' However, the reality on the ground, hidden beneath the glamorous spotlight, is exactly the opposite. Industry insiders say, "It is not that they do not go out of business; rather, because they have to repay massive loans in a lump sum the moment they close, they 'cannot' go out of business and hold out even by taking on more debt."

In the second part of our eyewear industry series, we took an in-depth look at the reality of optical shops groaning under a high-cost structure and a trend of disregarding technology, as well as the structure of massive foreign capital that practically dominates the domestic eyewear market under the guise of being 'domestic.' In addition, we highlight the outstanding performance of domestic companies that are creating a sensation with profit margins overwhelming global luxury brands, even in this barren environment.

Bringing in optometry equipment worth 'the price of a car'... But the tech fee is 'zero won'

The biggest barrier to entry in the eyewear industry is the enormous initial investment cost. To open an optical shop in downtown Seoul, it takes about 700 million to 800 million won just for the key money, interior, and securing the initial inventory.

In particular, an expense not well known to consumers is the highly priced 'optometry equipment.' Opticians in the field explain, "The price of just one optometry machine brought in for accurate eye exams reaches the 'price of a car'." The reason for bringing in expensive equipment is solely to make more comfortable and accurate glasses for the customers, but in the Korean market, this investment does not directly lead to profit.

In advanced countries, eye exam fees (optometry fees), dispensing and processing fees, and fitting fees are priced separately, recognizing the value of the expert's technology. In contrast, Korea has a structure where all service costs must be melted into the product margin. Consumers often simply compare the lowest online price of eyeglass frames with the selling price of the optical shop and misunderstand that they are "profiteering."

Profitability indicators starkly show this reality. The average monthly revenue per store for domestic optical franchises is around 32 million won, but the average operating profit is merely 3.66 million won. The operating profit margin is about 11.4%, making it a situation of 'all flash and no substance' compared to the apparent revenue scale. The replacement cycle for glasses is about 2 years and 7 months, which is significantly longer compared to cosmetics (3 to 6 months) or sneakers (4 to 6 times a year), serving as another cause for structural sluggish sales.

Thought they were domestic lenses... Foreign capital sweeps the market

While retail shops cannibalize each other through excessive competition, the ones actually making money are the manufacturing and wholesale distribution companies that supply lenses and frames (eyeglass frames). The surprising fact is that the majority of 'domestic brands' commonly encountered by consumers have actually fallen into the hands of foreign capital.

The domestic eyewear lens market has practically been taken over by foreign companies. The top 6 companies by revenue (Chemiglas, Daemyung Optical, Essilor Korea, Korea HOYA Lens, Carl Zeiss Vision Korea, Decovision) are all foreign-owned or foreign companies.

The most shocking thing is the current state of the 'top domestic' companies. 'Chemiglas' and 'Decovision', which compete for the number one market share in the domestic lens market, have already been acquired by 'EssilorLuxottica', the world's largest eyewear company and a French-Italian joint venture. EssilorLuxottica, including its directly entered subsidiary Essilor Korea, serves as a massive pillar of the Korean market. Chemiglas is a lucrative company that records an operating profit margin of over 20%, but its fruits flow entirely to the European headquarters.

Another leading domestic company, 'Daemyung Optical', is also owned by the Japanese lens giant 'HOYA'. Even if Korean consumers say, "Give me a domestic lens," and choose Chemi or Daemyung products, the profit ultimately goes into the pockets of global dinosaur companies like EssilorLuxottica and HOYA.

The situation in the frame (eyeglass frame) market is not much different. Foreign direct-entry companies such as 'Luxottica Korea', with revenues in the 100 billion won range, and 'Kering Eyewear', which distributes Gucci and others, lead the market. 'OGK Korea', a domestic manufacturer with a large revenue scale, is also owned by a private equity (PE) firm, making it difficult to find a large manufacturer driven purely by domestic capital.

'Blue Elephant', a monster rookie surpassing 'Gentle Monster'... The hope of K-Eyewear

Despite the offensive of foreign capital, the rapid progress of domestic companies achieving remarkable results with differentiated branding is hopeful. In particular, the industry's attention has recently been drawn to 'Blue Elephant (BLUE ELEPHANT)', which has emerged like a comet.

Blue Elephant achieved 30-fold growth in just two years, going from a revenue of about 1 billion won in 2022 to 30 billion won in 2024. What is even more surprising is its profitability. The company's operating profit in 2024 was 12.8 billion won, reaching an operating profit margin of a whopping 42.7%.

This is a figure that surpasses the 36.8% operating profit margin of Gentle Monster (IICOMBINED), known as the myth of 'K-Eyewear'. It is even overwhelming when compared to the 23.1% operating profit margin of the world's top luxury empire LVMH (Moët Hennessy Louis Vuitton). Blue Elephant is gaining explosive support from the 2030 generation by reinterpreting classic designs in a modern way and offering a reasonable price range.

Gentle Monster also remains going strong. The operating company IICOMBINED achieved an unrivaled economy of scale, recording a revenue of about 623.4 billion won and an operating profit of 229.2 billion won in 2024. It drastically shortened its Cash Conversion Cycle (CCC) from 169 days in 2022 to 75 days in 2024, proving its strong brand power that sells products as soon as they are made.

In the eyewear retail distribution market that directly meets consumers, the valiant efforts of domestic companies also stand out. 'StarVision', which operates the contact lens specialty chain 'O-Lens', posted a phenomenal performance of 140 billion won in revenue and a 34.0% operating profit margin in 2023. The traditional powerhouse 'Davich Optical Chain' also maintains its presence in the domestic franchise market with a revenue of 145.9 billion won and an operating profit margin of 10.8%.

The Korean eyewear industry currently stands at a critical crossroads. Retail shops are groaning under cutthroat competition, and the manufacturing market has been subordinated to foreign capital, but 'super rookies' like Blue Elephant are proving that brand is competitiveness itself. An industry expert suggested, "Ultimately, only companies that have secured overwhelming brand value and expertise, rather than price competition, will survive in the war against global dinosaurs."