With less than 300 stores worldwide and its own website as the only e-commerce platform selling its products, Hermès relies on a “very limited distribution strategy” to keep its products hot according to Hermes’ president and CEO for the Americas interviewed at the Skift Global Forum in New York City.
“People want things that not a lot of people can get,” Hermès’ Robert Chavez told Skift President Carolyn Kremins. “That’s what it is like in the luxury world. Once something becomes very saturated, that luxury customer doesn’t want it anymore.”
Hermes has chosen a careful brick and mortar strategy including boutiques in department stores and a strict focus on its core competencies instead of diversifying, for instance, into hotels such as Bvlgari Hotels & Resorts.
Hermes has been approached about similar partnerships, he said. But while the hotel deals can be profitable for the brands, the strategy can be risky. “No, you won’t be sleeping in a Hermes hotel soon,” Chavez said. “Once you start to stray from your core business, we think you take the focus away from what you do best. We don’t think it’s the right place for us.”
He said the company prefers to work with hotels, which can send their best customers into Hermes boutiques. The stores, he said, can offer private experience to a hotel’s elite guests before the shops open or after they close.
“We love nothing more than to give your top customers a private appointment,” Chavez said, speaking to hotel operators in the audience. “We view it as opportunity.”
At its core, Hermès is still mostly an old-style retail operation that focuses on the human element. It still does much of its business in-person and each store has slightly different inventory, chosen by the store’s director, who flies to Paris a couple of times per year to choose it. Face-to-face communication with customers is so important Hermes won’t hire an applicant who doesn’t smile through the interview process, Chavez said.
Still, the online business is improving fast, he said. Last year, the company redesigned its digital experience to focus on mobile, and after that “business just skyrocketed,” he said. Internet sales are Hermes’ fastest growing business segment, he said.
Hermes sells everything online customers can find in stores — with one exception. The most sought after Birkin bag is only sold in stores. “You have to give people reason to keep coming into the store,” Chavez said.
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