How Hermes stays ahead of the pack in China
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How Hermes stays ahead of the pack in China

Luxury leather goods specialist Hermes is best-known as the creator of the incredibly exclusive Birkin bag, second-hand examples of which often retail for hundreds of thousands of dollars (you can get one first-hand for 20%-or-so of the price – but the waiting list is measured in years). If that sounds like the high-end of high-end luxury to you, you’d be right. And, like other exclusive fashion retailers in Dominion’s Global Trends Luxury Fund, there’s something particularly interesting about Hermes: while lesser brands are floundering in China, Hermes is going strong. Here’s how it sets itself apart from the pack.

Hermes share price has appreciated by 19% so far this year

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Source: Yahoo Finance

A recent article on luxury branding in respected Chinese publication Jing Daily bemoans the “cookie cutter” business plan that many companies in the sector, which “involves key opinion leader (KOL) celebrity marketing, splashy events, digital gimmicks, a huge China “footprint” with as many new mall stores as possible, predictable executive profiles, and millennials millennials millennials!”

However, author Herve Rogazy singles out Hermes as rare bright spot in the Chinese luxury market: “The French Maison has stuck to their long-standing company philosophy of eschewing celebrity promotions, avoiding large gauche events, funny digital games, and not specifically marketing to youth culture — all of which flies in the face of the brand’s aristocratic DNA.”

This traditional approach to luxury remains timeless, and is as appealing to young consumers as it is older ones. Companies like Hermes, LVMH, and Kering, are succeeding where so many others fail because they have maintained a level of exclusivity and prestige that lesser rivals can’t match. In tough times, when it’s the wealthier consumers that continue to spend lavishly, that’s an incredible advantage.

Disclosure
Dominion holds Hermes, as well as LVMH, Kering, and other high-end luxury brands, in its Global Trends Luxury Fund.


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The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.