Hermes does watches – but not the same way as everyone else
Few names in the luxury sector command the kind of respect Hermes does. The French company is famous for its high-end Birkin handbags, which come with a years-long waiting line and frequently sell at auction for hundreds of thousands of dollars. However, if the French fashion giant is a big name in luxury, it’s still managing to branch out into new areas, where it looks like an upstart. One of those areas is Swiss watches.
Hermes’ share price has appreciated by 4% so far this year
Source: Yahoo Finance
So, first things first: Hermes is French, not Swiss. But it gets a pass in the Swiss watch industry because it manufacturers its watches in Switzerland – which is how it gained entry to the Salon International de la Haute Horlogerie watch fair in Geneva last week. The group’s head of watches, Laurent Dordet, understands how hard it will be to “become legitimate and accepted” in a 300 year old-industry where “we are one of the challengers.”
In the last couple of years, Hermes has accelerated its watch business, investing heavily and buying Swiss component makers. It’s still a relative outsider though, and in an industry dominated by male watches, Hermes has chosen to focus on female time pieces, which it started making 40 years ago (for comparison’s sake, the company only began making men’s watches in 2012).
Under Dordet, the company’s watch business has upped its price point. Acquiring component makers and taking production in-house gives the brand an ability to create more complex, artisanal, pieces – and they have to have a matching price point. As a result, Hermes’ watches cost around 30,000 euros each – make that 100,000 euros if you want a “special” piece with jewels included.
In the past, watch companies that focussed on female time pieces have been taken far less seriously than their male-orientated competitors. That’s probably because male luxury tends to be rarer – and a Swiss watch features as a status purchase. Whereas female fashions tend to be more proliferated, and less focussed on status. In any case, Dordet hopes to change that perception. Describing a new model, the Galop d’Hermes woman’s watch, he says: “It’s not a classic female watch. It’s a futuristic object for today’s femininity… a woman of movement, a working person, full of projects.” In other words, it’s the type of watch a woman of agency might buy – the type of watch that appeals to a woman who breaks traditional gender stereotypes and wants more than “something pretty”.
There’s a good argument that, in a post-me too world, where we are seeing increasing parity between the sexes, and women are more and more empowered to voice their opinions and change the world, that Mr. Dordet is on to a winner.
He says: “Fine watches are an experience, a jewel, a luxury, an emotion. One thing we are all sure of is that people don't buy watches any more to see what time it is.” There is no reason to exclude women from that market and, as female compensation approaches a similar level to male compensation, the status watch may cease to be an exclusively male phenomenon.
Dominion holds Hermes International in its Global Trends Luxury Fund.
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