“Some people think luxury is the opposite of poverty. It is not. It is the opposite of vulgarity.”
–Coco Chanel (fashion designer, founder Chanel)
Powerful Branding – Amazing Hermès Story
What Makes a Powerful Brand?
Branding enhances shareholder value, it can become a catalyst for better leadership, it enables a shared vision to be driven throughout the organization, and it can help to balance short- and long-term perspectives and performance. But what makes a powerful brand? A look at some of the most iconic brands in business history such as Coca-Cola, Harley Davidson, Dior, IBM, Giorgio Armani, L’Oreal, Louis Vuitton, Apple, Aman and Singapore Airlines reveals some very common characteristics.
First, they have all been running profitable and very well-driven operations. Second, they use differentiation to build and defend solid market positions. Constant innovation is part of this and an integral component of their company culture. The third dimension – a strong emotional connection – is the game changer. They have all been able to build and sustain very strong emotional bonds with their customers and stakeholders. A combination of these aspects will enable a brand to become iconic, like Hermès.
Hermès: Iconic Brand for 180 Years
Hermès is a brand that always makes me smile (tweet this) . It enjoys an iconic status and superiority in the ruthless world of luxury through a combination of rich heritage, exquisite craftsmanship, eye for detail and high levels of quality and professionalism maintained across its entire business process. According to the 2015 BrandZ rankings conducted by Millward Brown, Hermès is the second most valuable luxury brand with a valuation of USD $19 billion USD.
Began as a Saddlemaker
Thierry Hermès founded Hermès in 1837 as a harness workshop in Paris. Gradually, the company’s product offerings expanded through generations. Between 1880 and 1900, it started selling saddles and introduced its product in retail stores. In 1900, the company started selling the “Haut à Courroies” bag, which was meant for riders to carry their saddles. In 1918, Hermès introduced the first leather golf jacket with a zipper, made for the then Prince of Wales. In the 1930s, it entered the US with an exclusive distribution with Neiman Marcus in NYC. The brand’s iconic duc-carriage-with-horse logo and signature orange boxes were introduced in the 1950s. The famous “Birkin bag” was introduced in 1982, after a chance conversation between the then CEO Jean-Louis Dumas and actress and singer Jane Birkin on a flight from Paris to London. Over a period of time, the company has extended its reputation and offering by entering into strategic collaborations with specific players and also its suppliers in the ultra-luxury segment.
Ultra Luxury Brand – Heritage, Craftsmanship, and Exclusivity
The Hermès brand is deeply entrenched in the platforms of “quality” and “refinement”. According to Hermès, each and every product bearing the brand’s name reflects the hard work put into it by an artisan, and the strength of the Hermès brand is its love for craftsmanship. Creative Director Pierre-Alexis Dumas, once said “I think Hermès objects are desirable because they reconnect people to their humanity… Our customer feels the presence of the person who crafted the object, while at the same time the object brings him back to his own sensitivity, because it gives him pleasure through his senses”.
All Hermès products are made almost entirely in France in workshops (Ateliers Hermès). Hermès claims each product is entirely manufactured by hand by only one craftsman, signifying the quality of craftsmanship and uniqueness of its products. There is an intense desire by the company to remain exclusive. The aura of exclusivity is important as Hermès does not intend to portray the brand as the mass-market luxury or even premium luxury. The philosophy has always been to remain “ultra-premium luxury”, which can only be afforded by the very few and is not easily available. Hermès regularly goes back to its roots when it needs to find inspiration for creating and launching new products. “Heritage” is one of the strongest differentiators of the core brand identity.
The overall structure and positioning of the product portfolio under the Hermès brand name is a classical umbrella branding strategy. Even though every one of the products in all the categories has distinctive names, the overall Hermès name forms the core of all marketing and communication strategies. The only product that can arguably stand on its own without the Hermès name is the Birkin bag.
Always Creatively Innovating
An intense focus on innovation has pushed Hermès to discover new avenues for brand growth and for widening the brand’s influence in the ultra-luxury segment. It is considered one of the world’s most innovative luxury fashion brands. For example, with “Petit H” the company undertook the “luxurious recycling” of raw materials leftover from Hermès manufacturing. In 2015, Hermès announced it would focus on exploring and wandering, and reflect these experiences in its brand. It opened the Wanderland exhibition in London, with the exhibition moving on to Paris, Turin and China. The theme of these exhibitions was flânerie, which is defined as wandering the city streets and absorbing the details of everyday life. The Wanderland exhibitions had multiple floors with bizarre themed rooms that contained exhibits from the Hermès archive. Hermès operates a huge, expanding and profitable service business of meeting bespoke requests of ultra-rich individuals done through the Hermès Horizons brand name. Another very strong and distinctive element of Hermès innovation is artistic collaboration. Adopted by the first generation of the founding family, Hermès regularly invites artists (carefully selected by senior Hermès artistic directors) to design iconic products in the company’s portfolio.
Clever and Pervasive Brand Marketing
Two core drivers of the Hermès business engine are intuition and creativity, and the marketing is distinctive and eclectic (tweet this). The company claims that everyone in Hermès is responsible for marketing. Marketing campaigns celebrate the Hermès life and do not directly sell products. Hermès sponsors events that have a direct fit with the image and the legacy of the company. Hermès uses its strategic collaborations with independent artists and designers to raise product visibility. Hermès developed two apps– one is called Silk Knots, which essentially is a how-to-guide that teaches how to tie the brand’s scarves in 24 different ways. The second one is called Tie Break, is aimed at men, and contains a variety of GIFs, games, comics and interesting nuggets of information on Hermès collections. The legendary “Hermès windows” have always been a larger-than-life platform for showcasing the brand’s exquisite styling and craftsmanship. The windows pop up at periodic intervals at different Hermès stores globally, and are considered to be the company’s homage to its craftsmen.
Hermès Keeps Growing
With limited distribution, exclusivity and controlled marketing, the overall company and many of its product categories have regularly registered double-digit growth rates year-on-year. This is a true reflection of the Hermès brand strength among the highly affluent segments of the global population. The company has successfully kept alive and strengthened a brand differentiated through strong history, exquisite craftsmanship and superior quality. The fact that it is considered to be the most innovative among all the luxury fashion houses is a testament to the company’s commitment to constantly manufacture and launch ultra-luxury products that are unique, have a strong sense of allure and have a distinct mark of superior craftsmanship.
Fact for Thought
Average luxury goods annual sales for a top 100 luxury goods company