As many struggle in this economy, the French fashion house Hermes flourishes. The company turned in a 24% gain in U.S. sales for the first half of the fiscal year. While other luxury companies are struggling, the exclusive Hermes continues to churn out sales. Now, I must admit, my luscious Hermes Kelly Long Wallet in alligator goes to show that we, the people, are still shopping and buying ridiculously expensive bags from the luxury house. There are plenty of Crocodile Birkins, Kellys, scarves, and chinaware being bought along with all other exclusive Hermes goods to keep the brand bringing in a profit. Also, the price hikes are not hurting.

The article in Forbes is really interesting to hear that the old luxury model Hermes uses is so different from other brands, and continues to prove profitable. What else do you think makes Hermes stand apart from the rest?

Read the full article via Forbes

In the first half of the fiscal year, the company saw a 24% gain in U.S. sales. Worldwide, sales increased 12.8% to 813.2 million euros ($1.3 billion) from 721.1 million euros ($1.1 billion) in the same period the year previous. Second quarter sales were just-as-impressive worldwide, up 12.1% to 398.1 million euros ($631 million) from 355.5 million euros ($564 million) in 2007.

Unlike many of its competitors, including major French conglomerates Louis Vuitton Moët Hennessy and PPR, owned by billionaires Bernard Arnault and Francois Pinault, respectively, the brand has been able to increase sales by continuing to please its core customer, rather than aiming to attract a broader audience. At Hermès, you won’t find a $500 dollar handbag like you will at PPR-owned Gucci, or $300 plastic costume earrings, which are on sale at privately-owned Chanel. Instead, the 170-year-old company focuses on producing limited editions of their handbags, which begin at $5,000.

“What’s really interesting about Hermès is that they have not followed the typical luxury model,” says Lucian James , president of Agenda Inc, a brand strategy firm in Paris and San Francisco. “When other luxury brands were reaching to a slightly bigger mass market, Hermès made a very specific decision not to do that.”

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  • http://anilumagloire.blogspot.com Anilu Magloire

    Interesting. The wealthy are still wealthy and Hermes knows they are the ones to target.
    I would in fact be disappointed if they ever came up with a more accessible line of products. That’s the allure of Hermes. The fact that they offer something most us can only dream about.

    • http://www.purseblog.com/ Megs

      Precisely. And they stay true to this. Some would love if they had more affordable products, but that would go against their brand, and what they have maintained for years.

    • JUJU

      All of it is one hundred times over priced to begin with.

  • Kaytey

    How funny. These other companies work hard to maintain their image, being very careful to ensure that only the chicest celebs wear their bags, and yet they still produce cheap products (that are ridiculously marked up). Hermes, on the other hand, creates bag that are still ridiculously marked up (you will never convince me that any bag is actually worth (in terms of labour and materials) the price charged for a croc birkin), but keeps them exclusive. By not trying to breed an image, they have maintained a very good one. It’s actually a great strategy.
    But I still wouldn’t buy from them. :/

    • lauren

      I agree!! I could never buy from them b/c I’m not uber rich. I would be putting an hermes anything on a credit card and that’s not WHO I am. The only people that are entitled to wear the birkins and what not are the super wealthy in my opinion. It’s like driving a corolla and living in a trailer but having an expensive bag…it just doesn’t go together and money in the bank is always sexier than whatever designer you decided to brand yourself with.

      • raspberry

        I think if you live in a trailer and owned a birkin, it would get stolen anyway :lol:

      • pursefan

        I understand where you´re coming from, but I don´t agree. I don´t think there is anything wrong with a hard working (upper) middle class woman, who chooses to save up for a few special item like a birkin or a kelly for example. Even though they are easy to be recognized, they are still very classy bags which can be worn for years. Real style and class can´t be bought anyway. No bag on earth can change that.:smile:

  • dimon

    Hermes does have beautiful things available at a lesser price range, namely their silk scarves and enamel bracelets. They have been popular for decades. I must point out that those items as well as the handbags are very recognisable. Hermes makes many bags that are more practical than a Birkin or Kelly.I may piss people off but too bad I’m going to spit it out. Hermes has been very successful in the USA recently because Americans are more desirous of showing-off, impressing the Jones’ than people of other nations. The label really counts for us. We have this in common with Arabs. It sounds bad but everybody knows it, Arabs love luxe and so do Asians. Is it just a question of being from a Nouveau Riche nation or continent? While in Paris last week and cruising around the Triangle d’Or (Champs Elysee, Avenue Montaigne, Francois I) the only ladies my daughter and I spotted carrying a Birkin were usually wearing a head scarf, Asian or speaking in American English and dressed head to toe in recognisable European designers. Hey, I don’t care what people do with their money, but I just hope they really have that money. Sorry if I’m offending anybody, but I’ve lived in Europe off and on for 25 years, in London and Paris, and more recently 4 years in Plano, Texas. I’ve observed a lot.

    • http://www.purseblog.com/ Megs

      I agree with most of what you said.

      Hermes is bought by many for brand recognition. They bags, to me, are stunning, but they are a statement piece.

      I am never dressed head to toe in designer wear. It kind of reminds me of Heidi Montag, from the Hills (yes, lame!). But she is always dressed head to toe in all things designer, high end designer. It looks as if she is trying way too hard. But she wants people to see what it is that she can buy and wear, which is her own prerogative.

      • Kaytey

        Sounds like the Bag Snob ladies to me. I mean, they are quite wealthy, but I’m pretty sure they also want you to know it. Heck, they even have “snob” in their titles!

    • Marissa Cooper

      I totally agree. There are some people all over the world buying expensive bags and high end designer brands but live on very little income and rely on credit cards and eat low standard meals…all just to impress others. Sad.

      • Sheree

        I do not think it’s all about ‘impressing people’-Marissa Cooper. There is nothing wrong with buying something just because A. you love it, B. you can, C. if it makes you happy, :)

  • Graciella

    I love a great handbag, but I’ve recently been very shocked by all the horror stories of Prada/Chloe/Gucci etc. bags falling apart. I only own 7 designer bags, including Prada and Fendi, and I must say I’m a bit dissapointed by their overall quality. That’s why I’ve recently sort of switched to mulberry for everyday use and am now looking for my first Hermes piece, because, as one of Hermes’ CEO’s stated in a YouTube video, luxury really is about making a product that can be repared if necessary. I grow very fond of my bags and they become a part of me, I want them to be with me for a long time, and I think Hermes is one of those rare brands that gives you just that. Yes they cost a lot, but are they expensive? I don’t think so. Paying $8,000 for a bag that will stay pristine for decades makes more sense than doshing out $2,500 for one that won’t survive 5 years.

  • Lori

    Dimon, I was just curious what handbags were the French ladies carrying?

  • dimon

    Lori,
    A great deal of the French are on vacation right now, so those shopping in Paris are for the most part tourists. However, for the last year that I’ve been back living here I’ve seen lots of Gerard Darel on ladies in the 25-35 age range. I haven’t seen the exotic range on anybody though, just the 24hr or 48hr. There’s always a great deal of Lancel, a very old French staple in handbags and luggage in the $300 to $750 range. Gazillions of ladies use Longchamp bags of all styles and then there are the very trendy ones like Zadig et Voltaire. Of course all the beautiful high end brands are available.

    What I said earlier about people from different ethnic origin sounds bad and now I kind of regret it but I’m afraid for my fellow Americans too. I wish people would save their money and quit buying material items they don’t need. I absolutely love chic accessories, handbags, shoes and jewelry galore but I also love the satisfaction of money saved in the bank in case of a rainy day.

    • http://www.purseblog.com/ Megs

      I don’t think it sounded bad at all…

      Thanks for the insight!

    • roe

      very well put dimon :wink:

    • brimarie

      I think the frustration from the fact that we are all paying the price for some people living beyond their means is boiling over here. But, I think it’s important to remember that there are some of us who own these bags who paid CASH, have investments and savings, have not defaulted on our mortgages, and who can afford to feed ourselves. And, I think we have earned the right to decide whether or not we “need” these bags or not. Having said that, I totally agree about people who buy these bags when they can’t do it with cash.

      When I purchased my Birkin and Kelly a few years back, I did it for a few reasons. One, of course, was the label. I’m not going to lie and say that it wasn’t. However, a greater consideration was quality. These bags will last a lifetime, and I hope to have a daughter one day so that I can pass them down to her. For people like me, that is just as important than the label when spending this kind of money. I think it’s unfair to say that American women only buy these bags because they’re label whores.

      And a side note: when I go to Paris (I’ve been about seven times), I always see a pretty decent number of Parisian women carrying Birkins and Kellys, especially in the George V area.

  • http://www.ragnewyork.com tony andrews

    That’s amazing! Hermes is a 170 year old company, fancy that. Great strategy on targeting the extremely wealthy that aren’t suffering a setback from the economy.

  • michelle

    I have a question. I see MANY women carrying around Birkins or Kelly bags in Los Angeles. I don’t want to look like everyone else. What do you think of the Massai???

    • http://www.purseblog.com/ Megs

      I ADORE this bag! But my SA from Hermes said to make sure to try it on first. There are two sizes and apparently it is not for everyone. I am hoping it will work for me as a good everyday bag :mrgreen:

      So yes, go try it out!

  • michelle

    Why is it not for everyone?? I was in Hermes in Costa Mesa over the weekend and tried on the smaller one. I am only 5 feet tall and the SA said that the larger one would be too big. What do you think about the Lindy 30??

    • http://www.purseblog.com/ Megs

      My SA just said for me not to order by phone and to make sure to try the Massai on.

      I adore the Lindy. But I do think that the Birkin and Kelly have more stay power. It just depends what you want and are looking for. The Lindy is more casual in my opinion.

  • Lori

    Hi Dimon,

    Thanks for the information. I don’t think what you said was bad at all. I like the Gerard Darel handbags, they are very hard to find in US there is not alot of styles available. Are you originally from France or America? Just wondering.

  • Trixy

    Hermes is so smart (:

  • dela

    I like the fact LV, Chanel et. al. are filling a void in the market. As much as I would like to fill my closet with all the Hermes bags in diff colors, skins, sizes I simply can’t afford it. And I consider myself quite fortunate when it comes to money matters. Investing in a couple of Chanel flap bags, MJs etc. per year not only allows me to fulfill my handbag needs but I also have few bucks left in the bank. Also, if other luxury brands tried to cater to the uber-rich they would never have the same profit margins that Hermes has because most people (myself included) would rather spend $5000+ on a Hermes bag than some limited editon fugly LV seen on some celebrity’s arm.

  • dimon

    Lori – I was born in Oakland, California and met my French husband while attending UC Berkeley. That’s the French connection for me. Charlotte (18 year old daughter) and I are about to head in to Paris because it’s the last few days of the annual sales. I want a discreet little Marni fix and well she wants anything her saved-up 200 euros can get her. We’ll be out to Brittany for our August vacation at the end of the week and out of the Paris dust and pollution. Lovely summer to all!

    • Kaytey

      Ooh, what part of Brittany? I lived in Ile et Vilaine for a bit.

  • Lori

    Dimon- I hope you have a fabulous time in Paris and find some wonderful things. Keep us posted if you pick up a special handbag! Sounds like you have gotten to live in some of the best place in the world.

  • mia

    Hermes is truly amazing and I can’t wait to get my own someday. I too want to get the hermes kelly long wallet! =)

    I think the increase in their profits for the fiscal year is due to the fact the economy, although conceived to be poor at this point, is actually not. The buying power is merely re-disbursing itself to the point in which the middle class is shrinking. The wealthy are getting wealthier and the poor are getting poorer! Hense, hermes, being one of the most expensive luxury brands has welcomed new consumers who are now wealthier than before. This is merely a hypothesis and the affects that it has had on product and consumer relations. =D

  • melissa

    I would first like to say congratulations on all the research “Purse Ladies” do. About 98% of it is accurate and the passion that all of you have is amazing. I would like to back Hermes, the family has no intentions of making products that are to be seen as ONLY for the rich…the goal is to make and sell products that are of the highest quality and to sell with the best cusomer service anywhere. There are many products in all price ranges, from a Twilly and Pocket square at $125 USD and handbags starting for a Garden Party at about $1,500. I will agree that not all items are accessible but in all honesty the styles are not going out “STYLE” so if you have to save up for one it’s not like you are going to miss out! Before making any big jump when buying a bag, is to do so for yourself, learn about the product, meet a sales associate that you feel comfortable with and ask them to educate you. The sales associates are very nice in Bev. Hills and are always willing to help you. I know that the Kelly and Birkin are not easy to come buy, but I have seen first hand that when it is ment to be you will walk in and your dream bag will be on the shelf ( it happend to my friend). I personally don’t own a Kelly or Birkin but have treated myself to items that are in my price range scarves, sterling silver jewelry, watches and have been treated the same as someone who is buying a $8,000+ handbag. So to end my rant if you want the best, the classic, the chicest and most desirable you go to Hermes and treat yourself! Enjoy shopping

  • raspberry

    That is exactly how I feel as well. Weel put Graciella! :grin:

    I like to think that I am paying for quality. I don’t mind forking out the cash for Loewe or LV. But, when I heard about designer bags “bleeding”, I started to re-think my budget for designer accessories.

  • Debbie

    I am going to have 2 Hermes Birkin bags tomorrow, brand new. One white and one dark blue. Anyone interested?

  • die Kontessa

    Does anybody know if let-trade (on ebay) has authentic birkin bags?

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