Will Hermes Be "Low-Key And Reserved" And Join In The Pursuit Of Young People In 182 Years?

In China, many luxury brands are spared no effort to shout to young people, and even fly themselves to play with young people.

Louis Vuitton released "Endless Runner" (endless runners) Parkour game, also invited the Chinese fashion blogger gogoboi guest string operation brand official WeChat; Prada joined hands with artist Cao Fei to create a special project called "human almost" (Code Human) produced by idol star Cai Xukun, and Chanel played the quiver earlier.

In such a lively environment, Herm s (Hermes)'s "low profile" is extraordinarily unexpected. Now, does Hermes need to join in the pursuit of young people to get a grip on a wider range of new and new consumer groups?

　 Unwanted!

At 4 p.m. on Sunday afternoon, he entered the store in China World Trade Center mall, Beijing, where there were about 25-30 guests in the two storey shop with an area of 346.5 square meters.

"In the first two quarters of fiscal year 2019, the sales performance of all regions and all business lines of Hermes has been excellent." Axel Dumas, chief executive of Hermes and the sixth generation of the family, said. In the first half of fiscal year 2019, Hermes group's net sales increased 15% to 3 billion 284 million euros, up 12% from the same year.

For the public, the reason for choosing Hermes is simple and crude. This is the world's top luxury brand without proof and beyond doubt.

For the industry, this is an evergreen tree that still maintains the highest operating profit rate in the industry. In the past 2018 fiscal year, this data has reached an alarming 34.3%. This not only means that Hermes products enjoy a high brand premium, but also implies that the management cost and marketing cost of the company remain at a relatively low level.

Hermes, founded in 1837, has maintained a global handbag auction market record. It has proved its own authority in the luxury goods industry with a handbag Himalaya Niloticus Crocodile Diamond Birkin (size 30) at a price of nearly $380 thousand.

The heat of Hermes handbag has also led to the unprecedented investment enthusiasm of the two tier market for luxury handbags.

Data from investment bank Jefferies showed that in 2010 ~2016, hermes handbags increased by 432% in the second hand luxury market. In the survey of consumers in the Christmas season of second hand luxury consignment platform The Real Real in 2018, Hermes has become the most popular luxury brand among female consumers, especially the three packages of Birkin, Kelly and Constance. The selling price increased by 7% over the same period last year.

Whether in the auction record or in the two tier market, it is constantly strengthening the unique brand value of Hermes and its irreplaceable position in the hearts of luxury consumers.

　 Need?

Business follows the set rule. As a long-term large scale multinational enterprise, which is dominated by the founder family and employs more than 14 thousand people worldwide, despite the steady growth in sales and high profit margins, there are still two swords on its head: growth and innovation.

In the field of fashion luxury, brand always needs more base users and market, adapt to change and self innovation.

In China today, it is a challenging subject for Hermes.

On the one hand, Chinese consumers have not yet formed a strong brand awareness and loyalty to luxury brands; on the one hand, they are bombed by countless new and old brands every day, robbing them of their attention and even overspending their desire for consumption and purchasing power.

Insiders pointed out that the problem facing Hermes today is how to maintain scarcity in the digital age. In fact, for a new luxury brand entering the market, we should really cultivate and enhance the public's thirst for brands and market pursuit by controlling scarcity, but this is a false proposition for Hermes.

I believe we often see such propaganda: "Hermes" in the automotive industry and "Hermes" in restaurants. Hermes is often used by other industries to describe its highest standards, so the recognition of across the industry is highly difficult for other brands to match. In the medium and short term, Hermes need not worry that brand tonal is diluted by selling more products. In other words, brands only need to control the relative scarcity between their demand and market demand.

Therefore, in this market, if Hermes exposures are too low, or conveys a "rejection of thousands of miles away" temperament, and even people do not know or feel difficult to personally feel the noble spirit of Hermes, they are faced with a huge risk of weakening and breaking up in young minds.

　 Looking back at history, Hermes is actually an expert in innovation.

"Expand the category, create a lifestyle brand", "younger" and "cross border" are all hot topics in the global fashion and luxury industry today. If tracing the development history of Hermes for 182 years, it is easy to see that she has been actively embracing change, and even at some major historical turning points, Hermes has played the most innovative role in the industry.

For example, in the 20s of last century, the emergence of modern vehicles, such as automobiles, completely changed people's travel and consumption habits. This is a challenge for Hermes, who originally started with professional harnesses.

The increase in people's travel frequency brings great potential in the travel goods market. Hermes has extended the saddle stitch to other leather products, and has launched a series of handbags, briefcases, travel articles, and leather stationery. You may not know that the first leather jacket in the world to use zippers comes from Hermes.

During the Great Depression of the 30s of last century, Hermes had launched the Kelly Kylie bag, which was named after the name of Princess Grace of Monaco in 1956. The scarf, inspired by the silk fabric of the knight's top, was also born at this stage.

The first Hermes perfume Eau D Herm s 1951 launched in 1951 laid a solid foundation for the brand's subsequent exploration in the perfume product line. In 2015, the first Hermes perfume shop, Herm s Parfumerie, was launched in 2017 to cater for the Millennium generation of young consumers to launch the new fragrance Twilly D Herm Herm s.

In 70s of last century, the fifth president, Jean-Louis Dumas, took the lead in reforming the brand image, and tried to apply some new materials on the basis of silk and leather. In addition, under his guidance, in order to boost brand sales and global distribution, the authorized stores were widely established in the United States, Japan and the Asia Pacific region, laying an important foundation for its rapidly becoming a luxury brand with international influence (from the beginning of twenty-first Century, the authorized store was gradually converted to direct operation).

It seems that the "high cold" Hermes is an expert in insight into the needs of users, such as its iconic classic Birkin platinum bag, because Dumas discovered that British female singer and actress Jane Birkin complained that she could not find a workable and practical handbag, and designed it for her.

Today, the products of Hermes are covered by a wide range of products, extending to the lifestyle area more deeply: silk, men and women, jewelry, watches and clocks, belts, neckties, gloves, shoes and hats, Enamel accessories, perfume, porcelain, living art and furniture, decorative fabrics and wallpaper, car interior.

Today's Hermes: change is happening quietly.

For nearly two hundred years of twists and turns, so far the brand that is located on the top of the luxury industry, though challenged and challenged, is not the most difficult issue. In the long run, how to stick to brand tonality and inherit brand spirit is the biggest challenge. From all sides, we can clearly see that Hermes is quietly seeking change along its carefully chosen path.

In order to buy a Birkin handbag, customers had to wait for years. As early as 2008, Hermes had cancelled the waiting list system in response to the growing market demand. In order to improve the situation of supply shortage, we must increase production capacity, but at the same time, we must maintain strict standards for technology.

In order to solve this problem, the brand has steadily planned to build leather workshop in France since 2012. This measure received notable results in the first quarter of 2014, and leather products recovered two digit growth.

Hermes is still expanding its capacity in an orderly way. Last April, the new leather workshop Manufacture de l 'Allan and workshop in Seloncourt and H e ricourt greatly increased productivity. In May this year, Hermes was formally put into use in seventeenth handmade leather shops in Fitilieu Town, Is re, France. Meanwhile, the leather workshop in Gironde and Seine-et-Marne is also in preparation. Each workshop will create 250 new jobs and help Hermes meet the needs of the market. (see "ornate ambition" related report: Hermes has officially launched seventeenth handmade leather workshop with training courses).

Product side: enriching entry categories and highlighting the lifestyle of Pyramid

In March 2019, Hermes announced that it would launch its first beauty series in 2020 and then launch personal care products. Chief executive Axel Dumas has expressed the hope that Hermes will become a global company in the beauty field. As an entry level product, beauty makeup is usually regarded as the gateway to a new world of luxury. It is conceived that a young girl who buys a lipstick today will probably be a loyal customer of Birkin in the future.

In the future, from the beginning of beauty makeup, Hermes will gradually expand to the protection products and consolidate the existing perfume line. Beauty, skin care and perfume will be targeted at the US, Asian and European markets. The Hermes group perfume Department currently contributes about 5% of sales, and perfume is also an introduction to many young consumers. In 2014, its perfume Department has cautiously launched diversification strategy, and launched Le Bain Hermes on the basis of perfume, which laid the foundation for the introduction of beauty makeup today. Cosmetics and personal care products will complement each other with perfume in the future, so as to achieve the goal of "go hand in hand" in Axel Dumas.

Another easily overlooked category is the watch business which contributes about 3% of sales to Hermes. In the first quarter of fiscal year 2019, the watch Department achieved an increase of 22.3% over the same period. The more than 40 year old Hermes production department is relatively young, but is constantly breaking through in its attempt to innovate.

For example, in 2015, Apple launched the exclusive watchband of Apple smart watches. In 2018, the global horological website Hodinkee was invited to redesign the Slim D "Hermes" style of the Hermes classic watch. In early 2018, the women's wrist watch Galop D "Herm L s" and "rceau L" heure de L were launched at the Geneva watch and clock show.

Above: Galop d 'Herm s watch.

In addition to the fierce competition of luxury brand bags, Hermes has built a lifestyle "Pyramid" that other brands can hardly emulate, from the introduction of beauty, watches, niche design to furniture.

As the next direction of brand development, household product business has achieved outstanding growth in the near future. In the second quarter earnings report just released, Art of Living life art and Herm s Tableware table show the sales of Hermes "other businesses" rose by 20.8% over the same period last year.

The Hermes sofa sells well on the US official website. The Hermes surfboards, dual-use skates and even tarot cards, which are both interesting and interesting, are also giving consumers the best light.

Store side: overweight Chinese market, story telling and heavy experience

In April of this year, the Hermes, who had been very careful in the site selection, opened an "alternative" boutique in the meat processing area Gansevoot 46, New York, and opened the first cafe bar to embrace young consumers with a sense of experience. It is worth mentioning that, as early as 1924, the brand opened its first store in New York, the United States.

Since 2018, Hermes has opened a silk scarf flash shop in Madrid, New York, Seoul and Beijing. The pattern on the scarf has become the cover of the vinyl album, giving young consumers the attention of the scarf and the fusion of music and art.

Last week, the new Hermes store, which combines hakka earth building style, was officially opened in Xiamen, China, and invited craftsmen to display the production process of brand leather products, watches, clocks, porcelain and saddles. How can consumers better understand these Hermes level processes? Close contact with artisans is the most direct way.

It is known as the twenty-sixth direct outlets of Hermes in China, which is known for its prudent development channels. The opening of this store echoes the important strategic plan made by Axel Dumas in June this year for China's market: "strive to develop a new city every year".

Looking back at Hermes's recent financial results, "China" has been the focus of brand development in the international market. Even in the context of the slowdown in the global luxury industry in 2012, Hermes opened two new stores worldwide in China (Wuhan and Taiwan). Prudent offline channel expansion strategy has continued so far. Hermes is still adhering to the principle of "quality is more important than quantity". However, for the Chinese market, Hermes is most popular. In the 2018 fiscal year, three new stores in Hongkong, Changsha, Xi'an and new IFC stores in Shanghai were renovated and expanded. In 2019, twenty-sixth stores in China were greeted in Xiamen.

Axel Dumas revealed that Chinese consumers of brands are getting younger and younger, and they have become the youngest customers of Hermes.

Marketing side: exploring online communication and interpreting sustainable concepts

One of the biggest challenges facing Hermes is to use new media and ways to tell the younger generation of brand stories. Open micro-blog, Hermes official account number of comments and interaction rate is lower than other luxury brands, and even can see some users of micro-blog content Tucao. Intentionally or unintentionally, Hermes has maintained a subtle sense of distance from social media users.

In the world, the brand has recently launched a series of "Hermes global footprint" films that promote the sustainable technological concept. The documentary tells the story of "human" related to Hermes, a total of 10 sections. Among them, four videos with French background revolve around craftsman spirit and humanistic care. The two videos in London are about the design of printing and the support for young apprentices. The two videos taken in Japan are stories about a consumer and a lost skill. There is also a work scenario of repairing handbags in the background of Hongkong maintenance workshop.

In addition, in China, Hermes has been trying online marketing, such as the 2014 interactive frog video, the scarf online store, the 2015 wrist wrestling (show bracelet) contest, the advertising campaign in the WeChat friends circle in the past two years, and so on. See Hua Lizhi's related articles:

In terms of social responsibility, sustainable topics also mean great challenges for Hermes. From the concerns of animal welfare to strengthen the requirements and specifications of crocodile skin suppliers, the sustainable utilization of natural raw materials such as horse hair and hair to the community power established by 52 French workshops has never stopped the practice of Hermes in the field of sustainable development. This concept has made consumers more specific in recent years through the form of Festival des m e tiers.

It is worth mentioning that in 2010, Petit h, founded by the Pascale Mussard, the sixth generation of the Hermes family, was also one of the brand's sustainable innovation initiatives. It used the Hermes package to make creative products from the remaining crocodile skin and other leftover materials, each of which was a solitary product.

Perhaps many people have forgotten that in 2001, Hermes became the first luxury brand to launch e-commerce websites in the industry.

Last year, the "aging" Hermes official website was upgraded under the initiative of the current CEO Axel Dumas, which led to a qualitative leap in the e-commerce business which has long lagged behind its peers. In the same year, it ushered in the official e-commerce website of the Chinese market.

As of the first half of June 30th this year, Axel Dumas highlighted that China's online channel has brought far more than expected volume and sales to Hermes. In addition, in view of the local characteristics of China's luxury digitization, Axel Dumas also said it was considering establishing cooperation with Chinese local suppliers.

The speed of Hermes may not be the fastest, but from the past and present actions of the brand, we can see that Hermes is trying to maintain the relative scarcity while keeping the market heat while using subtle heat. At the same time, it is also looking for the appropriate role and caliber of online marketing, and establishing stronger emotional connection with more new generation of consumers.