Oakley Finds Success with Unorthodox Sunglasses

If the warning, “pride goes before the fall” applies to companies as well as people, then sunglasses dynamo Oakley Sunglasses is long overdue for a face-plant.
It’s a firm, after all, that charges as much as $400 for shades that look like alien body parts, a consumer-products maker so confident of its cache that even during an economic downturn it refuses to discount its pricey products.
It’s an ambitious, cocksure enterprise whose execs speak openly about “gutting” rivals and which, as part of a 1997 diversification plan, elected to go after a little company called Nike for a share of the sports shoe market.
Yet Judgment Day hasn’t arrived for Oakley. Instead, the enfant terrible of the designer sunglasses field is not only surviving, but kicking some fairly serious butt.
Slideshow: Famous Shades
Aiming for Billion-Dollar Business
The U.S. eyewear industry has seen just single digit growth for the last several years. By contrast, Oakley Outlet has just finished its 12th consecutive quarter of double-digit revenue growth, and now owns nearly a fifth of the $1.7 billion U.S. sunglasses market.
And despite predictions that its eyewear success wouldn’t translate to other markets, more than half of the company’s growth last year came from new categories-shoes, of course, but also watches, sports apparel, and prescription lenses.
From Head to Foot
All told, Oakley posted sales in 2000 of $384 million. That, says CEO Jim Jannard, puts the company on target to being a billion-dollar enterprise.
“Of course, there are still skeptics,” says Jannard, whose 2,000 plus employees work in a castle-like headquarters building in the Orange County, Calif., town of Foothill Ranch, and in eight other offices around the world. “But that just makes us work harder.”
Attitude + Brand + R&D = Success
How does Oakley do it? How can a company hawking what are essentially luxury consumer baubles thrive during an economic downturn?
To hear rivals talk, Oakley has successfully snowed consumers with a glitzy marketing campaign that features lots of tech talk, endorsements from superstars like Michael Jordan, and giant doses of attitude.
But the real answer is a bit more complex. Yes, Oakley is a master at marketing a sneering, cooler-than-thou image. But industry observers-and even some competitors-also say the company is winning because it has followed two very shrewd strategies.
First, Oakley has been ruthless in protecting its brand, prosecuting rivals who copy its patented technologies and limiting distribution to only a few cachet outlets, like Sunglass Hut. “They’ve been extremely careful to keep their product special,” says Jennifer Black, an analyst with Wells Fargo Van Kasper who follows the eyewear industry. “You’re never going to see an Oakley in a discount store.”
Second, and perhaps even more important, Oakley is as much a technology company as a consumer products maker.
Oakley's Optics Extraordinaire
From its inception in 1985, Oakley has plowed profits straight back into its research and development, resulting in more than 400 technology patents and a product line that, for all its famous flash, is just as well-known for its high-tech quality.
Getting that ‘Hard to Get’ Image
Oakley’s pioneering work in metallic frame materials, for example, led to an eye-catching array of unusual-and some would say bizarre-styles that helped redefine the outer limit in eyewear design. But Oakley is also exceedingly proud of its optical technology, which, according to the company, lets it create the best lenses on the market.
This isn’t to call the Oakley crew a bunch of engineer geeks. The company clearly grasps the business side of the industry, and has mastered everything from price points (most sunglasses models range from $90 to $120) to a hyper-exclusive distribution network that gives Oakley the “hard-to-get” image.
And, clearly, this is a company that understands the mechanics of the fashion world. Oakley’s new product lines always cover the entire spectrum of taste-from the merely cool to positively outlandish-letting the company go after both the timid mainstream as well as the early-adopter fashion slaves.