Vision and Strategies
Strengths Strong Brand Recognition Global Presence High Quality in Small Batches
Weaknesses Substantial Wait List for Customized Products Extremely High Price Point Limited Customer Base
Skilled Artisans Continues to have strong growth Rich Heritage
Threats
Opportunities Expanding Further Into E Commerce
Competition Amongst Fellow Luxury Brands
Capturing the market between Mid levels and Super Premium
Imitation
Brand Extensions to create an all Encompassing Experience
Poor Economy Animal Rights Activists
Solutions to Our Threats
Threat: A Poor Economy
A poor economy does not hit us as hard as other luxury brands, however in this case we add more entry level products such as fragrance and scarves to appeal to a customer in our consumer base who wants an more affordable luxury.
Threat: Animal Rights Activist We will never stop using leather and animal skins , as this is what our brand is built on. However we did partner with the Panthera Organization to save 8 of the world’s most endangered large cats with the creation of our Jungle Love Scarf collection.
Threat: Competitive Market Hermès is not a conglomerate in the real sense of the word and does not own a portfolio of brands like its key competitors, which include LVMH, Richemont and Kering. The leather goods and saddlery category is the biggest contributor to annual revenues Ranked #32 most innovative brand by Forbes
Podium: Twice a year, 1000 store representatives from its global stores come to Paris . Each flagship is instructed to pick at least one item from each of the 11 product categories, which is an attempt by the company to push every flagship store to showcase and sell products that are beyond the common categories
Threat: Imitation Bags There are a number of ways we distinguish ourselves from imitators that are difficult to replicate. These include: Stitching Price Dust Bag Hardware Zipper Authenticity Card Handle/ Bag Shape
6 Month Buying Plan
n
6 Month Buying Plan Planned Sales For Period
$116,726,549
% Planned Increase
6.8%
Sales (LY)
$109,294,521
Average Inventory Initial Markup % Planned Reduction % Turn
$29,765,270 90% 3% 6.01
Planned Monthly Sales Vs. BOM Stock
The Assortment Plans
Small Store Plan
Seattle, Washington
Percent of Sales: We chose to include 1.03% worth of our total sales receipts in our assortment plan for this particular store as it is one of our smallest stores in the United States. Seattle although a big city is not well known for its fashion or upper class society
Price Tier: We chose these particular bags as the Kelly, Berkin, Verrou and Constance are all some of Hermés’s most popular products that would be sold in every single Hermés store. However, they are some of the more pricey items at Hermes and thus we chose to include the Garden party and Jypsiere bags as they are still highly popular items but are at a lower price range and therefore are more accessible to the average Hermés consumer.
Color Assortment: In terms of color we chose to focus on standard colors and did not include custom bags or bags that are not standard leather as there are too many variations and unknowns to include in an assortment plan as they are custom made when purchased and therefore not in stock.
Large Store
New York , New York
Percent of Sales:
Price Tier: Being that this is a larger store in New York, we have chosen to carry more mid tier bags such as the Constance and Verrou, as these are popular. Although the Berkin and kelly bags have a place in the New York City store, this does not include the custom order bags. We carry less of these because they do not require large on hand stock.
Although this is a large store in a shopping capital, we did allocate 4.62% of total sales to it, as America is not where we do most of our sales. The total sales for leather goods and saddlery worldwide is $578,277,892.40, which only 18% of this comes from American sales.
Color Assortment: Basic colors are carried in higher quantities in the more expensive bags. Seasonal colors such as orange and burgundy are carried in larger amounts in the mid range bags. This is based on past sales and customer behavior. If someone wants a custome bag, that is a special order and we do not carry that in our inventory.
Broad Strategies to Ensure Profitability
Buy into Basics to Achieve Higher Turn
Introducing the tech side of the Apple watch and the perfumery introduces a lower price point the the consumer. It builds brand familiarity and brand loyalty to the younger age group
In our buying plan we are looking at the more “affordable� price points for our brand. Looking at only buying the classic leather in the bags and only looking into buying the medium size. This does not include the exotics and custom bags. The basics of these bags also have the higher turn then the exotics and customs.
Garden Party AUR: 2,500 USD
Verrou AUR: 8,000 USD
Jypsiere AUR: 8,000 USD
Constance AUR: 10,000 USD
High Turn and Low Inventory As we are a brand that surrounds tradition we don’t introduce new products very often. However, we do release new colors, fabrics and details to our designs.
For example the Verrou bag was released again in 2017 in a yellow suede colour as part of our Spring/Summer collection. Therefore by creating these limited versions of our bags we create a buzz and excitement as only few are made and then they are unavailable. This creates excitement about the brand and encourages growth.
It is the aura of exclusivity that drives a significant portion of our growth.
At HermĂŠs, our vision of the future allows us to grow while staying true to our traditions and values of the past. As buyers, we hope to contribute to steady growth , as well as create interest around the brand that ensures loyalty and profitability in the future.
Vision
Sources: https://www.cbsnews.com/news/what-would-a-luxury-handbag-cost-without-the-markup/ https://martinroll.com/resources/articles/strategy/hermes-the-strategy-behind-the-global-luxury-success/) https://www.youtube.com/watch?v=jriPHW3Fpw8 https://www.youtube.com/watch?v=BX6mhgYODNo https://www.businessoffashion.com/articles/opinion/the-secret-to-hermes-success https://www.spottedfashion.com/2016/10/18/preview-of-hermes-springsummer-2017-collection/#prettyPhoto[gallery] /7/ https://baghunter.com/blogs/insights/how-to-spot-a-fake-hermes-bag)
Image Sources
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