How you pronounce it determines your worth. It is ‘air-mez’, and if you call it anything else, well, please just leave. Even if you own a Birkin or a Kelly or a much more accessible Evelyne, it’s still ‘air-mez’ to you.
Hermès is not the world’s biggest fashion label. Would you believe that is actually Nike? Then Louis Vuitton, Gucci, Chanel, Adidas and finally Hermès. But Hermès is certainly the most desirable brand. Last month saw the stock price of the French leather goods company—founded by harness-maker Thierry Hermès in 1837—soar to more than €2,000 per share. It raised Hermès’s market cap to €210 billion, even surpassing that of Nike. Hermès’s soaring stock, as well as its absolute snob value in luxury fashion, has made Businessoffashion.com (BoF) analyse the company in a case study. It found that the French house earned its stripes by selling good, old-fashioned tricks of the trade, like discretion and luxury, instead of new-age quick-fixes, like digital marketing and influencers.
For example, Hermès has a humble 12 million followers on Instagram, while Gucci has 51 million, Louis Vuitton has 53 million and Chanel has 56 million. Hermès’s socials and advertising are driven by its more commercial categories—its iconic printed scarves and fabulous perfumes. Its leather-ware is meant for reverence, not for mere ‘likes’. Hermès practically invented ‘luxury’ by those magic words that really turn us on: “limited edition”.
Much of Hermès’s magnetism comes from positioning itself as an exclusive brand by creating scarcity over its two priciest best-sellers—the Birkin and the Kelly bags (these two alone account for €2 billion in annual sales). “While Hermès has surfed the same waves of luxury growth as competitors like Louis Vuitton, Chanel, Gucci and Dior, the company sets itself apart with a highly differentiated leather goods strategy,” the BoF writes. This means it continues to enhance its rarity strategy and non-negotiable quality for its expensive leather purses instead of creating a more mass canvas line. Hermès focuses on traditional manufacturing techniques, training its artisans for up to 10 years, instead of offering assembly-line products.
Hermès has been building and training highly skilled artisans across its 21 ateliers in France. It says it is determined not to outsource its manufacturing to other countries as it wants to maintain its quality and cachet. Leather artisans at Hermès spend 15 to 25 hours making one handbag. Their pay, a well-guarded secret, is said to be well above the French minimum wage, and sometimes includes shares of the company, too. Top-shelf luxury leather companies are known to treat their artisans like royalty.
Hermès, unlike the other mega luxury behemoths, is still largely family-owned. Now in its sixth generation (Hermès has long fought takeover attempts by the Louis Vuitton-Moet Hennessy group), it manages its iconic status rather diligently. It is now the most profitable luxury label listed, operating above a 40 per cent margin. It weathered the Lehman crash of 2008 as well as the Covid pandemic better than the other brands. Meanwhile, its secondary or resale market offers three times the price for its popular purses.
I met Patrick Thomas—its most successful CEO and an Indophile—over dinner one evening in Mumbai over a decade ago. I asked him what gave Hermès its edge and its mystique. Quality, he replied, and a commitment to tradition. For example, he was mildly furious that I had not yet visited the Taj Mahal in Agra, and made me promise that I would visit one Indian monument each year.