Hermes: The Price of Exclusivity

What company jets store managers off to Paris twice a year to hand pick their store’s products?!

Who destroys valuable merchandise in order to protect the positioning of their brand image?!

Hermès-This French high fashion house was established in 1837 by Thierry Hermès, specializing in leather, ready-to-wear, lifestyle accessories, perfumery and luxury goods.

Luxury (Luxis)-The term “luxury” itself comes from the Latin “luxus” which means soft or extravagant living, sumptuousness, opulence. Hermès maker of the infamous and highly sought Birkin bag ($9,000 starting price) have taken this concept to the next level. Under the LVMH umbrella but still 71% family owned, Hermès has reinvented the concept exclusive luxury.

When it comes to luxury goods, success hinges of the following:

  1. Excellence: the strongest association with luxury in the consumer’s mind is with excellent quality, both in product and service.
  2. Brand Aura: by achieving excellence, companies gain through the years a strong reputation and can therefore position their brands at the top level in consumers’ mind. (What’s the first 1st you think of when you hear: Louis Vuitton or Gucci)
  3. Desirability: a common element in luxury-goods companies is the capacity to create and maintain desirability. (You see it, you want it, YOU HAVE TO HAVE IT!)

In the new economy competitive advantage is the key to success, and in the luxury goods industry Hermès has made “Exclusivity” the name of the game. Exclusivity could be considered the 4th success factor in the luxury goods industry. I’ll let Hermès USA CEO Robert Chavez explain…

CEO Robert Chavez outlines the strategy that allows this luxury powerhouse to stay on top!


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