When stereotypes help to survive

Hermès, a company founded in the mid 1850’s, is one of the icon of French Luxury. Like every other firm, it has been affected by the crisis; unlike some of you who seem to worry about the future of the luxury industry, in the short run as well as in the long run, I have no doubts that this industry will survive the crisis : on Feb, 6th 2009, the firm published sale figures of last semester : in spite of the gloomy economical environment, sales have been growing in Europe and in North America. Why such results? Which marketing strategy does Hermès follow in order to remain profitable? Hermès has focused on its reputation of excellence and kept is strategy of “no marketing”!

Hermès is an old traditional family-owned business, whose core product was first leather industry for horse riding and then it diversified so that the brand now provides perfumes, hats, home furniture, clothes, and silk products ( like the famous “carré Hermès”, in The Devil wears Prada…).It is known for the very high quality of its products; the firm has progressively integrated the craftsmen that work for it, in order to ensure this reputation of excellence: the Kelly bag, named after Princess Grace Kelly, is completely hand-made. The silk available in every single Hermès ‘s store all over the world comes from a single manufactory near Lyon, which is a town historically known for its fine silk products. This feature enables the brand to avoid aggressive advertising, unlike PPR (another French brand that owns Gucci, Yves Saint Laurent, etc) who highly count on marketing.

Hermès has always implemented a paradoxical strategy which could be summarize as follows: the less visible, the more valuable

[i]…Marketing in luxury is full of paradoxes: the product is not elaborated in response of a demand but the customer, on the contrary, expect the designer to surprise him or her; the price of the product is not related to costs or comparative advantage but it is justified by the part of dream that it offers you; the distribution network is valuable when it is not widespread… Unlike PPR ‘s brands that tend to move from this matrix and that are loudly visible in the advertising landscape, Hermès remains traditional and focuses on its silence as a proof of elegance and smartness.

As far as Retail value Proposition is concerned, I would say that Hermès ‘s strength consists in Selection and Experience; last year, the firm abandoned a product named “fourre-tout” –a sort of hold all- because it did not match the standards Hermes wants to embodies. As Experience is concerned, just enter a store and you will feel like entering an old aristocratic house, with wooden floor, fine porcelain on the wall, beautiful furniture… Coming into such a store makes you feel like being part of Hermès history : the firm sells you a part of the myth that helps it to stay alive: its French being!

This is is the last but not least strength of the brand :” France” has a very special sound abroad; it seems that France means Paris, which means elegance, love and luxury. This deeply entrenched cliché is one of the strongest comparative advantage of Hermès that enables the brand to stand when many firms stumble. The dream you can see in people’s eyes when they think about France is enshrined in a brand such as Hermès and ensures it most of its succes.

[i] http://www.lesechos.fr/formations/marketing/articles/article_10_7.htm