In October 2010, the fashion world was hit by some shocking news. The then CEO of Hermès, Patrick Thomas learned just two hours before the rest of the world about the shocking development which brought a storm to his industry. He got the news while traveling by bicycle in the French Alps. It was a phone call from Bernard Arnault, chairman of LVMH, who gave him a brief announcement that he had acquired a stake in the company. According to various sources at the time, Thomas's answer to Arnold was simply this: "If you want to seduce a beautiful woman, do not start raping her from behind."
The next decade was filled with formal investigations by French authorities and the legal battle between rivals LVMH and Hermès.
Many companies, especially those with a family history, resist the temptation to deal with bigger rivals. Often the decisions they make are driven by pride rather than financial sense. For all companies, Hermès provides a roadmap on how to stay independent and at the same time be highly paid.
The first step is to "keep the wolf away". Most of Hermès shares, listed since 1993, belonged to 60 descendants. Hermes used all means of defense. Arnault was publicly accused of being a corporate attacker. LVMH was fined € 8 million by the market regulator after lawyers attacked the covert way Arnault shares were being built. Hermes members, eager to stay on top, created a structure which merged more than 50% of the shares, owning them by 2031.
The second step is to use independence wisely. Hermès has played with strengths. As rivals were flocking to a sharp, visible, impressive fashion, Hermès stood under the fruit of eternity and tradition. Birkin and Kelly handbags that often sell for $ 10,000 or more are refreshed versions of those he has sold for decades. While a Dior dress will last a season, a Hermès product is timeless. And as stylists move from one brand to another, at Hermès the same stylist has overseen men’s clothing since 1988. The firm claims it lacks a marketing department and spends only 5% of its revenue on ads and promotions.
U parashikua që shitjet do të binin këtë vit, pas mbylljes së dyqaneve dhe fabrikave në pranverë. Mirëpo, Hermès duket në formë më të mirë se konkurrentët. Sidoqoftë, që suksesi të vazhdojë, trashëgimtarët e Hermès mund të kërkojnë vetëm një gjë: dalje nga 'ngecja dixhitale'. Vetëm 2-3% e shitjeve të markës së famshme vitin e kaluar erdhën nga faqja e internetit. Llogaria e saj në Instagram ka vetëm 10 milionë ndjekës, krahasuar me 41 milionë të Channel dhe Gucci-t.
Hermès has started branching out into cosmetics, thus offering aspiring buyers a cheaper entry point than Birkin bags. Such movements are not so different from those of Arnault. LVMH executives still talk about the brand that left with honor. One fact is that the Hermès clan has generated profits of over 400% since 2010, a greater fruit than it could have been if the shares had been shared with LVMH.
Adapted from The Economist
