In an era where you can find a Dunkin’ Donuts and a Starbucks on every street corner, it’s refreshing to see a company like Hermes actually going in the other direction.
The scoop, if you haven’t heard, involves the exclusive luxury franchise actually maintaining that exclusive, luxury image by opening not more, but fewer stores into the future. The common wisdom in the 21st Century is bigger, stronger, more. Even luxury brands have forgotten that the Wal Mart approach to business only serves to cheapen a brand: nobody ever got robbed for a pair of Payless Shoes.
Hermes has learned a lesson that other luxury retailers could stand to: less is more when you’re trying to sell to an exclusive, elite market. The idea of saturating the market with locations and products is one based in economy where the idea of luxury goods is actually based in higher prices for premium goods. Once Hermes makes their locations common, they become normal, commonplace, and rather than “premium” or “rare” they become merely overpriced. By pulling back when they could have pushed forward, Hermes has managed to work around a problem facing many luxury goods retailers and preserve the integrity of their product.
The whole idea behind luxury goods is to create scarcity, and that’s exactly what Hermes has done. They do plan on opening more locations in the future totaling an estimated 360 worldwide over the next few years, but the plan to control their growth has led to a roughly 25% growth in sales and a growth in operational income of just over 30%.
If you have a pair of Hermes shoes in your closet, don’t worry: it’s still going to be rare, exclusive and valuable well into the next year. If you hope to visit any of the retailer’s new locations, you’re going to have to book a flight to China, Latin America or the Middle East, where Hermes is opening new locations to avoid thinning out their efforts throughout Europe.
Gilbert S for Raymond Lee Jewelers, South Florida’s premiere source for buying and selling luxury watches and designer jewelry.
