“The luxury industry is built on a paradox: the more desirable the brand becomes, the more it sells but the more it sells, the less desirable it becomes! I believe Hermès’ vision provides a solution to the dilemma: we will remain committed to the best quality materials, the best craftsmanship, sustained creativity, and style.”
You are a top-of-the-range luxury brand that successfully beat recession and in 2010 went on to record its best ever figures ($ EU 2.4 billion in sales). To whom or what does the brand owe this performance?
Unequivocally, Hermès’ performance has been driven by strategic consistency since 1837, combining excellent creativity and craftsmanship, as well as a determination to never risk compromising the long term for a short term benefit.
Hermès has already made its mark in new markets through market specific launches. Could you elaborate on how this links in with a larger brand strategy in emerging markets?
Hermès has been expanding continuously since the beginning of the 20th century, but even more so in the last 20 years. When the house enters a new market, it does so with the very same approach that has proven to be successful in the past – being itself and offering the same products to every store. The only variation from country to country, in fact from store to store, is that store directors have the freedom to tailor their store offer to the expectations of their customers. We never create products that are country specific. The biggest challenge of expanding on an international scale is the need to increase our production capacity while maintaining the standards of excellence that are vital to our strategy.
From scarves to chinaware and now furniture, how does the brand construct and manage such a diverse product portfolio while still delivering a coherent brand story and experience?
Hermès has always ensured that when increasing our diversity, we constantly monitor the relevance and consistency of these developments. This relevance comes through Hermès’ ability to acquire a new and excellent craftsmanship that will complement the know-how it already possesses. The consistency is then ensured by the creativity of the Hermès teams and a respect for the unique, and recognizable Hermès style.
Hermès recently announced two partnerships: one with Italian furniture manufacturer B&B Italia and another with textile manufacturer Dedar. How will the brand work and co-create with its new partners?
The creation of these two partnerships, although differing in nature, serves as a good illustration of how we diversify when we do not have the know-how internally. With B&B we have signed an agreement whereby they provide product development and manufacturing support while working hand in hand with the Hermès craftsmen’s teams; with Dedar we have created a joint-venture to distribute our range of wall paper and home textiles. But in both cases, Hermès retains full responsibility for the products’ creation, as this is something that the house would never relinquish.
Hermès has been one of the first brands to embrace e-commerce. How do online stores and physical retail complement each other?
Something crucial that we learned during the early stages of implementing our e-commerce site was the fact that they work in complete harmony. Psychological barriers existed several years ago when store managers were once afraid of e-commerce; however, these have now been fully overcome. Customers now have the option to seek information on the internet, go to the shop to see and touch the actual product, and then buy it, or, go back home to think about it and eventually purchase it online a few days after.
The brand already uses iPads as a sales support in its stores. How else is the brand integrating technology (and development of content for mobiles) into the customer experience for the future?
At Hermès we keep a close eye on the development of new technologies, but that is not to say that we are interested in integrating every new gadget that is launched. The iPad provides a perfect answer to our need to present beautifully our furniture collection in-store, where we did not originally have the space for a show room. We, as a company, are purely service driven and are always looking at technology that can ease and enrich the shopping experience. This, however, is nothing new. In the 19th century Hermès was already closely following the lifestyle of its customers and was constantly adjusting to it. That is why, for example, Hermès created stores in resort towns such as Deauville, Biarritz, or Nice, in order to cater to the needs of its travelling customers.
What are the brand’s most important corporate citizenship initiatives?
Hermès has always been engaged in supporting initiatives in France and abroad. In 2008, the House decided to create a foundation (Foundation d’Entreprise Hermès) to represent all of its citizenship projects. The foundation supports initiatives in four separate domains: art, education/craftsmanship, charity, and bio-diversity. Recently, the Hermès Foundation made a substantial donation to the Japanese Red Cross and, on a completely different level four artists were invited onto a four-month placement, each in a different workshop, where they were given the opportunity to create their own product.
What are the challenges and opportunities on the horizon for the luxury industry at large?
The luxury industry is built on a paradox: the more desirable the brand becomes, the more it sells. But the more it sells, the less desirable it becomes!
I believe Hermès’ vision provides a solution to the dilemma: we will remain committed to the best quality materials, the best craftsmanship, sustained creativity, and style. Hermès’ most dangerous challenge is not coming from any other brand; it is about its ability to continue to stretch its quest for excellence in its own products.
ABOUT PATRICK THOMAS
CEO of Hermès since 2008, Patrick Thomas first joined Hermès as Managing Director in 1989. After eight years in the position, he moved on to head Group Lancaster and Group William Grant & Sons Ltd before returning to Hermès International in 2003.
A graduate of ESCP, a prestigious business school in France, Patrick joined the finance department of Group Pernod Ricard early in his career and moved on to head Pernod Ricard UK.