Luxury Marketing Strategies for Hermès

PROJECT COVER SHEET
Postgraduate Diploma in Digital and Social Media Marketing
Postgraduate Diploma in Luxury Services and Brand Management
Postgraduate Diploma in Fashion Marketing and Management
Name of Module : Luxury Marketing Strategies (Jul
y - October 2020 Term)
Project Title: Group C report
1)
2)
3)
Student’s Signature:
(Group Leader)
Student’s Declaration
The attached project is my own work, and has never been submitted for assessment on any ot
her course before. Proper reference has been made to all sources published or unpublished w
orks and the ideas of other persons.

Brand background
Founded by Thierry Hermès in 1837, Hermès is a French luxury brand which has bee
n specializing in artisanal leather goods, perfume, home furnishings, jewellery, accessories a
nd watches to serve the royal family and European noblemen since the 19th century. It origin
ally provided saddles, bridles and other leather riding gear to the noble before establishing i
ts first store in Paris. It also launched the beauty products which are lipsticks, lip balm, lip lin
er, brush and makeup accessories in 2020 with 3 colors of lipsticks as limited edition during
each season respectively in March and September. Its first shop is located in 24 Rue du Faub
ourg Saint-Honoré – 75008 Paris, France so its first regular lipstick collection consists of 24 c
olors.
As a long-lasting, family-run and independent brand, it has created many popular an
d classic items that keeps its customers waiting and extends the waitlist longer and longer to
wait for purchasing the leather goods such as ‘Kelly’ bag, a Sac à dépêches and ‘Birkin’. It is b
ecause it commits to maintaining the majority of limited hand-made production in France.
Today, it operates over 300 stores worldwide in 45 countries and an official online st
ore with 43 production sites and approximately 15,000 employees.
SWOT Analysis:
Strength

Hermes has a strong French brand legacy and markets its product globally with a net
work of 300+ exclusive stores, which 180+ are directly owned by the company (Gürel and Ta
t, 2017). Hermes features a wide range of products, i.e. men’s and women’s ready-to-wear,
furniture, jewelry, leather goods and saddlery, wallpaper, tableware, watches, petit and frag
rances.
The company also houses well-known designers throughout its history, including Lola
Prusac, Jacques Delahaye, Catherine de Karolyi, Monsieur Levaillant, Nicole de Vesian, Eric B
ergère, Claude Brouet, Tan Giudicelli, Marc Audibet, Mariot Chane, Bernard Sanz, Martin Ma
rgiela, Jean-Paul Gaultier etc and many more, all at the same time maintaining a consistent
brand image (Abdel-Basset, Mohamed and Smarandache, 2018). All Hermes products are st
andardized globally and neither launch region specific products nor on sale and discount, an
d Hermes does not encourage celebrity endorsement. Only very rich and A-listed celebrities
will get their most exclusive product.
The brand continues with strong social marketing activities like global donations, maintainin
g jobs and not needing government subsidies - Hermes has been consistently profitable eve
n in the context of covid-19. It has strong net income attributable to owners of the parent ,3
35 million Euro in the first half year of 2020 which is 56% dropped against the first half year
of 2019.
Weakness
A main complaint from consumers of Hermes is that the CRM program is not well-de
veloped. Sales people of the Hermes store are reported to make customers feel disrespecte
d with their attitude. i.e. Customers are kept waiting during payment progress although ther
e isn’t a line; and personal information recorded from the salespeople of customer’s purcha
ses are not ultised (Sarsby, 2016). More specifically, the salespeople fail to contact consume
rs immediately after the replenishment of their beloved items (i.e. lipsticks) even though the
y know and keep their preferences/ purchase history in the digital ‘black book’ for reference.
Not only so, Hermes’ exposure in e-commerce is relatively low compared to other luxury bra
nds (Binotto and et.al., 2016). The brand has made efforts by launching an online store and i
nstagram page, but it's still lacking in e-promotion as there is not an official Facebook, Twitte

r and Weibo page, which most luxury brands focus on now with Covid lockdowns.
Covid pandemic further brings out Hermes' issue of being over reliant on leather goo
ds. Owing to the concerns over public hygiene and safety, Hermes closed all production sites
and production lines in France under COVID-19 pandemic in March 2020. Since its leather go
ods are artisanal, customers are even required to wait for longer to purchase their beloved l
eather items. This implies that the revenue they could gain from the leather goods may not
rise and it would be even harder for them to survive under the outbreak of COVID-19.
Opportunities
In the context of pandemic, it causes the rent to have a significant decline in residen
tial and commercial properties in most counties. Hermès can consider enlarging, or opening
new shops in areas expensive in rent. Its shop in GuangZhou is currently renovated and enla
rged. Hermès also opened a new flagship shop in Sydney in June this year. Opening the new
stores in HaiNan Province is a wise decision in order to benefit from the new Free Tax Zone
policy in China.
Product wise, Hermes can tap into China and emerging Asian marketing i.e. Malaysia
Singapore with golf-related items, baby Hermes lines and high-end cosmetics products to in
crease the source of business. At the same time, Hermes can increase the investment on pe
tit-Hermès to expand their leather goods business.
To increase a short term turnover in securing new cash flow of the company in the gl
obal pandemic , Hermes can expand its choices on Secoo for a limited time as well, which als
o helps lead nurturing (Wongsunnopparat, 2018).
Threats
As a result of the LVMH hostile takeover, the said company owns nearly 22.3% of Her
mes. In an attempt to prevent the share percentage from rising, Hermes has created a separ
ate family holding that controls 50% of shares to ensure protection. However LVMH is still o
ne of their biggest competitors in the extremely saturated luxury fashion market, not to me
ntion Chanel, Gucci, Prada, Dior are also competing.