Hermès.

You’ve probably heard the name somewhere, whether it’s that silk scarf your mother wears on special occasions, or your horse-crazy friend who keeps going on about their equestrian selection.

One of those quintessential French luxury brands, the group recently released what The Conversation calls “outstanding figures” for their 2016 financial year, recording sales of more than 5 billion euros (up 7.5%).

But what are the cornerstones of its rise to the top? The Conversation takes a look, and divides their brand success into four parts:

A real identity

Founded in 1837 by Thierry Hermès in Paris, the company “established its identity through its products”:

After starting out with horse-riding and carriage accessories, today the group operates in a wide range of sectors (detailed in its 2016 reference document, including clothes and accessories (21% of sales), silk and textiles (10%), perfumes (5%), watches (3%) and other products (4%), including jewelry, lifestyle products and home wares.

Accounting for 50% of sales, leather goods and saddlery still make up the backbone of the company.

And its identity is deeply French – the majority of its products still manufactured in France, with “4 300 craftspeople and 61.4% of its workforce located within the country”.

Creativity and skills of its artisans

The group’s iconic chairman from 1978 to 2006, Jean Louis Dumas, told Vanity Fair in 2007 that:

We don’t have a policy of image; we have a policy of product.

Without the timeless models such as “The Kelly bag” (created in 1930, renamed in 1956) and the much larger “The Birkin Bag” (1984), Hermès would not be Hermès:

It takes two years for an artisan to learn how to work leather and six years when it comes to precious leathers. One of Hermès’ core principles is that each bag be made by the same artisan, from start to finish. As Axel Dumas always says, “The rule of one bag, one artisan is part of our DNA”.

At Hermès, the idea of responsibility is very important – the artisan must master all of the different stages of fabrication. Quality begins with the choice of materials. To secure its supply of the highest-quality raw materials, Hermès purchased three Australian crocodile farms at the end of 2012.

Sense of innovation

To give just a few examples, Hermès launched ‘Petit h’ in 2010, under the direction of Pascale Mussard, whose motto is “Don’t throw anything away, we will always find a use for it”:

Petit h shows another side of Hermès luxury, demonstrating how much the group strives to make high-quality products available while meeting clients’ expectations in terms of environmental responsibility and sustainable development.

More recently, Hermès worked with Apple to create handcrafted leather bands for the Hermès Apple Watch, released October 2015. While this might seem a minor sales’ contributor (unfortunately, sales figures aren’t available), it created extensive media buzz.

An independent family company

Since its creation back in 1837, the company has almost exclusively been run by famdamily. Currently, Axel Dumas (the sixth generation) is the sole manager:

By keeping control and capital within the family, Hermès has been able to maintain its independence and its unique long-term model.

A perfect combination of tradition and modernity, Hermès has been able to evolve while keeping an eye on the upcoming challenges. It has also taken measures towards the vertical integration of its supply chain, controlling its retail network, continuing a policy of no licensing and creating greater geographical and product diversification, to avoid overdependence on saddlery and leather goods.

Now, 180 years after its birth, Hermès still generates profits and cash flow, amounting to 2,3 billion euros at the end of 2016, with hardly any debt.

Does it have to do with one of these four cornerstones, or perhaps the fact that French products are automatically seen as more romantic, more luxurious, than other products?

Either way it’s working, and if you are starting a brand along similar lines of luxury you should probably take their success into account.

[source:theconversation]