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Hèrmes Delivered Record Breaking Profits: What’s Its Secret?

Hèrmes Delivered Record Breaking Profits: What’s Its Secret?


In 2016, Hèrmes report its record-breaking profit of 1.1 billion euros. What is the secret to its success?

 Imagine yourself at a store and paying $1875 for a simple box without knowing what’s inside. Would you?

The general public is reluctant to spend their hard earned money on a “mysterious” box, yet Hermès defines true luxury by testing its market and thereby proving that people will pay simply because it’s Hermès. Their luxurious boxes marketing campaign has worked so well for this brand, while other luxury brands are more risk prone.

 Strong customer devotion at Hermès is undeniable. This is because Hermès is so special in its own way; the brand is reputable for selling the most expensive handbag in the whole world and because each product is 100% hand-made. Artisans spend over 18 hours to make one single handbag using materials such as crocodile leather, diamond studs but more importantly, having taken previous training which lasts more than a year.

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Hermès also has a smart supply/demand ratio; in other words, it stays true to the idea of luxury by producing a very limited amount of products at a time. This increases demand as some of their products have waiting lists for several years thus generating extremely high exclusivity and simply more want. 

 This also has to do with their production chain being slower compared to other luxury houses because of the limited access to the materials and the time spent to perfect the leather (ex. dying Crocodile leather which originally had a scar). Although some people may find their prices excessive, the brand does extremely well in Hollywood. This was portrayed as the Birkin bag and the Kelly bag were named after iconic women (Jane Birkin and Grace Kelly respectively), creating more of a want and buzz from the general public.

So far, Hermès as a brand has done everything right to be reputed as true luxury as it’s constantly listed to be one the most luxury houses in the world. It also defines true luxury by staying true to its family heritage as family businesses in today’s day and age, are almost extinct.  Keep doing what you’re doing Hermès as some of your competitors may eventually be considered more mass market. 

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