{"id":4835,"date":"2016-06-18T14:49:36","date_gmt":"2016-06-18T08:49:36","guid":{"rendered":"https:\/\/bbf.digital\/new\/?p=4835"},"modified":"2018-06-23T00:04:21","modified_gmt":"2018-06-22T18:04:21","slug":"hermes-the-strategy-insights-behind-the-iconic-luxury-brand","status":"publish","type":"post","link":"https:\/\/bbf.digital\/new\/hermes-the-strategy-insights-behind-the-iconic-luxury-brand","title":{"rendered":"Herm\u00e8s \u2013 The Strategy Insights Behind the Iconic Luxury Brand"},"content":{"rendered":"

By Martin Roll<\/a><\/span><\/em><\/strong><\/span><\/p>\n

Herm\u00e8s International, sometimes also referred to as Herm\u00e8s of Paris or Hermes, is a French luxury goods manufacturer. It has been consistently ranked as the world’s most valuable luxury brand in different valuation and ranking studies published by leading consultancies. Herm\u00e8s as a brand enjoys an iconic status in the world of luxury. In an era where pheromones (to know what are pheromones<\/a>, click here) play an important role in the art of seduction, Herm\u00e8s does play an important role in appealing to its audience. A combination of rich heritage, exquisite craftsmanship, eye for detail and high levels of quality and professionalism through the entire manufacturing process gives Herm\u00e8s a position of superiority in the very competitive and ruthless world of luxury. Due to it’s luxurious status, many can’t afford the brands products, but those who can flaunt it undoubtedly receive a lot of recognition. Many that can’t afford the luxury brand flock to fake designer websites<\/a> to find a Herm\u00e8s replica, showing the adoration many have for the designer brand.<\/span><\/p>\n

\"hermes-inspiration-board-orange-camille-styles-events\"<\/a>According to the 2015 BrandZ rankings (conducted by Millward Brown), Herm\u00e8s was the second most valuable luxury brand with a valuation of USD 19 billion, trailing behind Louis Vuitton with a valuation of USD 24.7 billion.<\/span><\/p>\n

Herm\u00e8s is not a conglomerate in the real sense of the word and does not own a portfolio of brands like its key competitors, which include LVMH, Richemont and Kering. Currently, the range of products under the Herm\u00e8s brand name includes leather goods, lifestyle accessories, perfumes and ready-to-wear.<\/span><\/p>\n

The leather goods and saddlery category is the biggest contributor to the company’s revenues, followed by ready-to-wear and accessories, silk, textiles and fragrances.<\/span><\/p>\n

Background of Herm\u00e8s<\/span><\/h3>\n

Thierry Herm\u00e8s founded the company in 1837 as a harness workshop in Paris. Originally, his intent was to serve the needs of European noblemen. Thierry’s son Charles-\u00c9mile Herm\u00e8s moved the company’s shop to 24 Rue Du Faubourg Saint-Honore in Paris, where it remains to this very day and is the company’s global headquarters.<\/span><\/p>\n

Gradually, the company’s product offerings expanded through generations. Between 1880 and 1900, it started selling saddlery and introduced its product in retail stores. In 1900, the company started selling the “Haut \u00e0 Courroies” bag, which was meant for riders to carry their saddles in it. In 1918, Herm\u00e8s introduced the first leather golf jacket with zipper, made for the then Prince of Wales. In the 1920s, accessories and clothing were introduced into the portfolio. In 1922, the first leather handbags entered the product line. In the 1930s, Herm\u00e8s introduced products that have now entered the annals of fashion as icons \u2013 the leather Sac \u00e0 d\u00e9p\u00eaches (renamed as the “Kelly bag” after Grace Kelly) in 1935 and the Herm\u00e8s carr\u00e9s (scarves) in 1937. In 1949, the first Herm\u00e8s silk tie and the first perfume \u2018Eau d’ Herm\u00e8s’ were introduced.<\/span><\/p>\n

In the 1930s, the company entered the United States with an initial tie-up with the Neiman Marcus department store in New York.<\/span><\/p>\n

The company’s iconic duc-carriage-with-horse logo and signature orange boxes were introduced in the 1950s. In the 1970s, the company established a watch subsidiary La Montre Herm\u00e8s in Bienne, Switzerland. The company acquired tableware manufacturers like Puiforcat, Saint Louis and Perigord in the 1980s and consolidated its position in these segments of the luxury market.<\/span><\/p>\n

The eye of the ultra-premium luxury segment, the “Birkin bag” was introduced in 1982, after a chance conversation between the then CEO Jean-Louis Dumas and actress and singer Jane Birkin on a flight from Paris to London.<\/span><\/p>\n

In 1993, the company went public on the Paris Bourse, which for various reasons was considered a strategic move with its own set of weaknesses. Throughout the late 1990s, Herm\u00e8s extensively followed a strategy of reducing franchise stores, by buying them up, closing quite a significant many and by opening more company-operated stores. As of 2014, Herm\u00e8s operated 311 stores globally, out of which 207 were directly owned and operated by the company.<\/span><\/p>\n

In 1976, Herm\u00e8s entered into an arrangement with British luxury shoemaker John Lobb, wherein it was allowed to use its name in return for extending the distribution reach of the brand. In 1999, in one of its first non-brand moves, Herm\u00e8s bought a 35 percent stake in the Jean-Paul Gaultier fashion house.<\/span><\/p>\n

Over a period of time, the company has extended its reputation by entering into strategic collaborations with specific players and also its suppliers in the ultra-luxury segment. These include:<\/span><\/p>\n