Monday, March 21, 2011

Hermès Case Study

By: Valentina Franco

Hermès is a major fashion company that prides itself on its heritage, craftsmanship and luxury. It started in 1837 as a harness shop in Paris for horses and carriages, and later expanded onto the production of saddles. By the 1900’s, Hermès started to create travel bags, handbags, belts, gloves, and other leather goods that resemble the products that are available today. Since its establishment by Thierry Hermès, the Hermès family has been in charge of the business, so far having six generations of Hermès heirs at the forefront of the company.

The Hermès Family Directors through the Years

Two of the most recognized Hermès products are the Kelly bag and the Birkin bag. The Kelly bag was introduced in 1935 as the “sac à dépêches” but it was made famous in 1956 by American actress and then Princess of Monaco, Grace Kelly when she used it to cover her pregnancy from the paparazzi. The Birkin bag was created in 1984 for English singer and actress Jane Birkin, after she ran into Robert Dumas in a flight from London to Paris and heard her complain that she didn’t have a proper bag to carry all the things she needed to put in a handbag. Both of these handbags are a status symbol since their economic value is extremely high. These bags are unique and recognizable, carrying with them an aura of prestige and luxury unlike any other bag.

Grace Kelly covering her pregnancy with an Hermès bag

Video: The Hermès Saddle Stitch

The past year, 2010, was a very profitable year for Hermès which explains LVMH’s interest in purchasing part of Hermès’ stock. By December 2010, LVMH had purchased 20.2% of Hermès’ shares, which triggered a very negative reaction from the company’s CEO Patrick Thomas, and all the Hermès family heirs. Threatened by the differences between Bernard Arnault’s vision and business perspective and Hermès’ traditional and exclusive views, Hermès decided to apply to the Board of the Autorité des Marchés Financiers (AMF) in order to create a holding company with 51% of Hermès’ family shares. In January 2011, the AMF ruled in favor of Hermès’ petition, and therefore protected the legacy and tradition of the French company Hermès.

Hermès ad video "La Vie Comme une Conte" Automne/Hiver 2010

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