FMP_Hermes_BusinessPlan

Brand expansion plan

Hermes Created By

Equestrian Centre

&Resort Shu Zhao 18005314

r3 keting Yea r a M n io BA Fash r Project jo a M l a a Fin Luis Parad : r o is v r e p FMP Su Figure 1

Acknowledgements

Firstly, I would like to thank Luis Gomes Da Silva Antas Parada for being my supervisor and guiding me through the Unit.

Secondly, I would like to thank Mark Baker and Karen Harris from UAL's language support. In compiling this project, I have received valuable assistance and suggestions from them.

“I, She Zhao, certify that this is an original piece of work. I have acknowledged all sources and citaions.

No section of this essay has been plagiarised.”

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Project Summary TABLE OF CONTENTS

This market extension project aims to increase brand awareness rather than maximising profits. Extending the brand's offerings with Hermes Retreat will create a more intimate and personal point of contact for customers, reinforcing the brand's reputation of opulent luxury. Hermes has always been a family-run business to maintain its unique identity and heritage. The brand started as a workshop specialising in saddles and fine equestrian leather goods. The design elements of horse have become a signature of its products. The brand also has a product line for equestrians. The brand could be a representation of equestrianism as it has carried this heritage for over 179 years (Thomas, 2008). The company will continue to keep its offering at a relatively small scale to sustain its exceptional value and high desirability amongst its loyal followers. The brand will focus on delivering the best service standard and personalisation, which is often not found as much in most other brands competing in the industry.

Luxury is becoming more accessible and diverse in recent years, while many fashion companies reinvented

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The Chapter 01: Rationale

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The Chapter 02: Internal analysis

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The Chapter 03: External analysis

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The Chapter 04: Strategy summary

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The Chapter 05: Artefact development

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The Chapter 06: Costings

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The Chapter 07: Risk analysis

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The Chapter 08: Conclusion

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Appendices

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References

themselves to offer experiences beyond selling products (Rodrigues & Borges, 2020). This proposal outlines a marketing development plan for Hermes to expand into the hospitality industry. The retreat will provide riding experience, luxury shopping and wellness travel option, which does not exist in the current luxury sector. This project will be located in Paris, the hometown of Hermes and a favourite location amongst the majority of luxury travellers.

Primarily, the brand will develop a new concept store, including an equestrian centre, bistro, and flagship store. The business aims to bring constant innovation while maintaining a solid presence in its brand history and artisan values. Hermes will offer exclusive garments and accessories in the new store, which will enable riders to look more stylish and fashionable during exercise. The bistro provides an excellent view of the main arena. The services include afternoon tea and exquisite cuisine, providing a unique and innovative dining experience.

Besides, the spa centre offers a place to chill and rest for all the visitors. Hermes will also promote its cosmetic line (foundation and lipstick) and provide makeup services provided by specialised makeup artists.

According to the primary research, Hermes's primary mission is to deliver luxury as a lifestyle, with an extensive product range from fashion to home decor.

Moreover, the proposed hotel for Hermes includes seven suites for VIPs only to keep the service and quality of customer experience at the top level. All the furniture and decorations at the hotel will be from Hermes. The brand will promote its home wear line by enabling customers to purchase the item at the suites. Besides, there will be a three-star Michelin inside the hotel, exclusively for the guests to enjoy and relax. Hermes' new development plan will emphasise special events and exclusive experiences, which cater to the preference of the VIPs and influencers.

The wide offering of equestrian activities, relaxation and exquisite collections will bring together like-minded individuals at Hermes Retreat.

Last but not least, the new concept store, including the equestrian and wellness centre, will be available to the public via different channels. Hermes will adopt an omnichannel approach to enhance its current purchasing experience and attract a generation of wealthy young customers. This is because the spending power of Gen Z and millennials will increase to 130 per cent in the personal luxury goods sector (BOF Studio, 2021). At the same time, the marketing strategy will be more welcoming to new customers. According to Chavez (CEO and president of Hermes USA), one of the biggest challenges for Hermes is that the brand has a reputation for being standoffish, and people might be intimidated by the atmosphere when they walk into the boutique. The concept shop aspires to present Hermes in a new light to reach the next generation of clients.

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Figure 2

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Chapter 01

Rationale

Company Background The brand was founded in 1837 by Thierry Hermes. The company has been family held for six generations and has become a global emblem of

Brand Image

aristocracy and wealth (Hermes, n,d). Beginning with saddlery and exquisite equestrian leather products, they are now best known for artisan handbags and a variety

Being one of the most successful luxury brands in

of other superior items. Hermes distinguishes itself from

the world, Hermes promises its clients premium

other designer labels by refusing to engage in mass

artistry and constant innovations. The fashion

production and outsourcing. Hermes has undoubtedly

house has a long history of producing high-

evolved significantly in the previous two centuries, and

quality items with great artisanship and a unique

it has become one of the most prestigious high-end

combination of elegance, sophistication, creativity,

companies in the world (Baghunter, 2019).

and distinctiveness.

A defining element of the company is its emphasis on profound fashion rather than rapidly emerging changes in trends. Craftsmanship, inaccessibility, longevity, and top quality are all attributes that could be used to describe the brand. Hermes is

Value Proposition

a high-end luxury label with a top standard of

Every year, Hermes will introduce a different

exclusivity and distinction (Beauloye, 2021).

Financial performance Hermes does not operate as a conglomerate, as it is not formed by emerging many separate designer brands like its main competitors, LVMH, Richemont, and Kering (MartinRoll, 2020). The company has been expanding and performing well for the past years. In the financial year ended 2021, the company

theme at the beginning of the year and utilises it

reported a revenue increase of 42%, from €6.389 billion in 2020

to inspire their whole collection and brand. These

to €8.982 billion in 2021 (Hermes International, 2022). The

concepts are not deliberately intended to create

company's net income increased by 77%, from €1.389 billion

limited editions, but rather to keep the brand

in 2020 to €2.445 billion in 2021. The company's revenue rose

youthful, innovative and unique.

from €2.4 billion in 2010 to €5.966 billion in 2018. By 2019, the

Figure 5 &6

company's revenue amounted to €6.883 (Hermes International, The Maison will continue to flourish, underlining

2022). This financial growth is a reflection of the company's

the singularity of its style, thanks to the constant

market share growth.

interaction between creativity and perfection in

In the first quarter of 2022, the group's consolidated

savoir-faire. Hermes' annual report states that

revenue reached €2,765 million, an increase of 33% at current

the creation of upcoming collections will focus

exchange rates. Sales in America and Europe were notably active,

on souring the most exquisite materials, as well as

driven by the expansion of all business lines and the continuous

plentiful and original innovation that is continually

expansion of Leather Goods (Hermes International, 2022).

renewed, which will define the year 2022. Among

The high gain in sales at the beginning of this year

the new goods, the Perfume and Beauty metier

indicates the popularity of Hermes' collections and the faith of

will introduce Plein Air, its fourth sphere for

consumers in its artisanal and responsible approach, stated Axel

foundation, Hermes Maison will unveil the Soleil

Dumas, Executive Chairman of Hermes. Despite an uncertain

d'Hermes dinnerware, and Jewellery will unveil

economic environment, the company is increasing strategic

the eighth haute joaillerie collection. Watches will

Figure 3 &4

also introduce Arceau, the time traveller, as a new

investments, talent acquisition, and training to enhance the creation of its metiers (GlobeNewswire, 2022).

watch complication.

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(Kafouros, 2022)

Market Segment The market segment is determined by the demographic factor of the potential customers. The market is categorised and identified from the number of clients within a particular region. Hermes produces luxurious products suitable for a certain group of class, especially the wealthy high-net-worth individuals that fall under the category of royal families, celebrities, and elitists (Vinyals & Koch, 2020). These individuals are high-

Brand history

income earners and have financial certainty as quality demands reward. Hermes' pricing determines the kind of audience that can afford

Timeline: "Six Generations Of Craftspeople"

the items. These individuals are mature men and women aged primary between 35 - 60 (Gen X and baby boomers). They have a high income and financial certainty with a happy family.

1837 - Thierry Hermes founded the French label Hermes as a harness business specialising

However, the target market could potentially

in horse saddles and equestrian equipment.

shift as the demand for Hermes products has increased over the years, with middle-

1990 - The creation of the ‘Haut a Courroies’ bag, which is a large bag designed to convey

class consumers purchasing more entry-level

saddles.

products.

1929 - Hermes presented the first women's couture clothes line, including swimming suits,

However, fashion is diverse, and

in Paris.

Hermes' target market also includes a new generation of digital users. The demand for Hermes products has grown dramatically as

1935 - Hermes introduced one of its most recognisable leather goods, the Sac a depeches

they became increasingly popular on social

bag, which is known as the Kelly bag later. The brand also began to gain international

media.

recognition.

For instance, the brand has opened a

younger and more fashionable store in NYC,

1937 - Hermes launched the silk scarf which instantly became popular with favour from

aiming to attract the next generation and more

celebrities, namely Jacqueline Kennedy.

first-time buyers. The boutique is designed to encourage visitors to walk around and find

1950s - Hermes established the perfume segment. The brand start to use a caleche logo with

their first item from the luxury label. One

its iconic orange boxes.

example is a public sitting room with bar stools

Figure 7

where consumers could hang out and enjoy

1967 - Catherine Karolyi presented the first women's ready-to-wear collection and

complimentary coffee, sparkling water, or wine

accessories, such as the well-known H buckle.

while charging their phones (Cheng, 2019).

1981 - The Birkin bag was inspired by an accidental meeting between Jean-Louis Dumas With the growing power of Gen Z and millennials, Hermes is transforming

and actress and singer Jane Birkin on a plane from Paris to London, ultimately contributed

to a more modern and trendy approach, with the exception of increased customer

to Dumas creating her dream bag. It is elegant and spacious, which is ideal for both evening

traffic. Since 2019, the product variety includes skateboards, bicycles, trainers, and

and daytime.

more casual wear, in addition to the company's characteristic silk scarves, ties, and women's purses (Langer, 2021).

2003 - Patrick Thomas became the new head of Hermes after Jean Louis Dumas retired , who is the great grandson of Thierry Hermes.

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Figure 8

Proposed Project: Hermes Resort & Equestrain Clueb 2007 - Hermes extends its main boutique in Paris once again with the purchase

Aim

of 28 Rue Faubourg Saint-Honore.

2008 - Hermes launched the Fondation d’entreprise. The brand has strived to

•

guarantee that the necessary resources are available for the creation of new art

This report will propose a new brand extension plan for Hermes. The project aims to provide clients with varied and immersive experiences from its resort.

works, the transmission of skills and expertise, the protection of the environment, •

and the encouragement of solidarity.

The brand will reach more new clients while remaining high exclusivity, and showcasing equestrian values and craftsmanship across the marketing mix.

•

2012 - Axel Dumas, a member of the family's sixth generation, became CEO of

The resort aims to extend customer experience beyond the traditional boutiques. It will offer equestrian training, dining, shopping services and a wellness spa to visitors around the globe.

the company and still holds that position today.

Objetives

2015 - Collaboration with Apple and launch of first Apple Watch Hermes collection 2016 - According to Baghunter (n.d.), the renowned Birkin bag has been a

•

To improve brand awareness and customer loyalty by 10 percent in the first quarter.

worthwhile investment than equities or gold in the last 35 years.

•

Metrics: Cost per customer acquisition, number of new waiting lists, Return On Investment and Loyalty scheme points.

2020 - The beauty line is launched with an election of Rouge Hermes lipsticks •

To increase off-line stores' traffic and purchase by 30 present in the first quarter.

•

Metrics: Number of new store visits, conversion rate and number of purchases.

The brand has collaborated with Steve Gueradt, a World Cup winner and double

•

To increase in-store sales for home, outdoor and equestrian products by 20 percent in the first quarter.

Olympic medalist, to provide distinct technological competence and consumer

•

Metrics: Number of new store visits, conversion rate and sales revenue.

•

To acquire more than 1,500 new customers on waiting list per day for the equestrian centre and resort

and Rose Hermes Blush.

2021 - Hermes has a total of 303 stores globally

experience. The sales for equestrian goods also increased thanks to the increased media coverage of Hermes saddles used in Tokyo Olympic.

during the first quarter.

•

(Hermes International, 2021)

Metrics: Number of email subscriptions, new app users and social media followers.

Figure 9&10 Hermes Development Project | Page 10

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Section 02

Financial performance

Internal Analysis

Hermes does not operate as a conglomerate, as it is not formed by emerging many separate designer brands like its main competitors, LVMH, Richemont, and Kering (MartinRoll, 2020). The company has been expanding and performing

Brand Identity

well for the past years. In the financial year ended 2021, the company reported a revenue increase

Hermes has a well-known and recognisable brand identity. Customers could easily recognise the luxury

of 42%, from €6.389 billion in 2020 to €8.982

house, from the most desirable Birkin bag, which comes in a variety of colours and designs, to the distinctive 'H'

billion in 2021 (Hermes International, 2022). The

that appears on numerous belts and accessories. Superior quality, handcrafted craftsmanship, and the creation of

company's net income increased by 77%, up from

timeless fashion items all contribute to Hermes' valued brand identity.

€1.389 billion in 2020 to €2.445 billion in 2021.

The company's revenue rose from €2.4 billion in 2010 to €5.966 billion in 2018. By 2019, the

Identity Prism

company's revenue amounted to €6.883 (Hermes International, 2022). This financial growth is a

Figure 11

reflection of the company's market share growth.

In the first quarter of 2022, the group's consolidated revenue reached €2,765 million, an increase of 33% at current exchange rates. Sales in America and Europe were notably active, driven by the expansion of all business lines and the continuous expansion of Leather Goods (Hermes International, 2022).

The high gain in sales at the beginning of this year indicates the popularity of Hermes' collections and the faith Horse and

Authentic, distinctive, delicate

of consumers in its artisanal and responsible approach, stated Axel Dumas, Executive Chairman of Hermes.

Contemporary design with a

and training to enhance the creation of its metiers (GlobeNewswire, 2022).

and refined

Carriage logo, Orange box

Despite an uncertain economic environment, the company is increasing strategic investments, talent acquisition,

decient French soul

Personlised service and

Hermes is devoted to use the finest

materials and crafting techniques in all

products

the products.

Long term investment

Savoir-faire, equestrian, craftsmanship

Representation of high status and taste

Smart, elegant and fabulous people who highly values uniqueness and exclusivity. They are willing to invest hundred of thousands on bags.

High symbolic value for leather goods such as the Birkin and Kelly bag

Figure 12&13 Hermes Development Project | Page 12

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Current Marketing Strategy

Product

story. Being one of the most recognised high-end

Hermes Scarves

luxury fashion brands with its renowned commodities,

In the 1930s, Hermes had established an entirely new type of luxury accessory by developing a vast

it remains a symbol of quality, style, and wealth. To

square of silk patterned with vivid figural designs, which has remained fashionable for over seventy years.

fit in this position, the company has established based

Although various kinds of patterns appeared later, the scarf's typically large size remained consistent, and

marketing viewpoint. They include digital presence,

it also inspired many young fashion designers later (Milbank, 2010).

Hermes is one of the brands that had a great success

marketing mix strategy, and campaign strategy. The use of digital sites such as Facebook and Instagram is the most common. The mix marketing strategy focuses mainly on the 4Ps, including the price, product, place, and promotion. Anido and Loussaief (2018) ascertain that the marketing strategy is critical as it helps design a comprehensive approach that establishes a foundation of competitive advantage.

Business Model

Figure 14&15

Figure 16

The Kelly Bag The Kelly bag was initially called 'Sac a main de voyage'. It means 'travel handbag' (Hermes Archives, 2019). In 1956, princess Grace of Monaco was seen on the front of Life magazine, concealing her tummy with her the Kelly bag to stave off suspicions of her first pregnancy. She represents a fascinatingly attractive fashion woman in the 1950s; she was romance personified. She symbolised two sorts of American aristocracy: upper-class families from the East Coast and Hollywood celebrities married to a European royal family.

The Kelly bag became famous overnight, and it has been used for formal events to match tailored garments (Milbank, 2010).

The Birkin Bag The Birkin bag was called Grand sac 'Haut a

with the features of the HAC in 1980s but in adjusted

courroies' (HAC), which translates to 'tall with straps'.

proportions for everyday usage (Hermes Archives, 2019).

This bag was designed originally to carry riding boots or

Therefore, the Birkin bag born later was designed to

saddles. Therefore the HAC is taller in nature.

carry all belongings from a woman's perspective, and this

It was not until Jane Birkin met Mr Dumas,

made the bag extremely popular among married ladies.

the Chief Executive of Hermes designed a tote version Hermes Development Project | Page 14

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Product Innovation Hermes has made various reinventions of those two bags. The innovation of famous classics is represented via extraordinary versions developed in the "Arts & Crafts" style.

One example is the Kelly Padded, which embossed saddle stitching mimics classic automobile seats and demonstrates the upholsterer's expertise.

Another popular reinterpretation is the In and Out bag which debuts a new intricate printing on leather, revealing playful and contemporary motifs (Hermes International, 2021).

Product Strategy Although the sales figures of segments like fragrances and jewellery are continuously increasing, they have yet to match the levels of success achieved by the leather and saddlery products divisions (Hermes International, 2021). Product diversification is a crucial strategy for a company to protect itself against cyclical downturns in specific categories, which include shifts in consumer demand, economic uncertainty, and other social or political concerns, and altering customer requirements and tastes (Ansoff, 1957). It could be a challenge for Hermes to implement a diversification tactic while maintaining a prominent level of exclusivity in the entire product line.

A reduction in demand for a certain product category could be counterpoised by increasing demand for other items. Controlling distribution and embracing a scarcity model can act against this. This is especially true for product departments, including accessories, watches, and ready-to-wear (Bell, 2022). Hermes must be selective in the marketing

Figure 17&18

approach across several product categories.

On the other hand, Hermes allows aspiring customers to join the brand by selling entry-level things such as silk products, accessories, and smaller leather goods. This allows a new sort of client into their customer base while retaining the company's core exclusivity.

Product Lines

The brand has invested in its business by growing its worldwide presence and continues to cooperate with particular craftspeople on exclusive products (D’Arienzo, 2016).

Hermes has leather goods and saddlery as their core products. The leather and saddlery products constitute 50% of the company's revenue (MartinRoll, 2021). The main leather products manufactured and distributed by Hermes include bags, riding, diaries, and small leather goods. Hermes items are dominantly manufactured in France at Ateliers Hermes, with a significant focus on quality and commitment on excellence (Chu et al., 2021). The company also has ready-to-wear and accessories as among the core products. Silk and textiles also significantly contribute to the company's revenues. Ready-to-wear and accessories make up 23% of the company's revenues, and whole silk and textiles constitute 9% of the company's revenue (Hermes International, 2021).

Figure 19

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Place

As a luxury brand, Hermes adopts premium pricing strategy. Usually, the products are tagged concerning the production cost to ensure sales and profits. It offers a gap for corporate

Price

Hermes operates in international markets, including the United States, Japan, France, Europe, and Asia.

image enhancement that facilitates advanced financial performance and customers’ loyalty.

This has led to dominance in the market due

This is an international strategy to increase customer base and sales. Hermes currently distributes its

to their unique leather products in the fashion

products to 311 store locations globally, with 78% of the turnover through in-person sales (Hermes

industry.

International, 2021).

Silk scarves

(Hermes International, 2022)

The Birkin or Kelly Bag Kelly 25cm: Average price starting from £10,600

Average price £175 - 730

Birkin 25cm: Average price starting from £9,700 Kelly 28cm: Average price starting from £10,700 Birkin 30cm: Average price starting from £11,150 (Pink, 2022) However, due to the rarity and scarcity of items such as the Birkin and Kelly bag, some consumers have turned to vintage or secondhand dealers for authentic bags. Another factor that makes Hermes unique is that they do not distribute all their products online, unlike many other fashion brands. In other words, the brand does not offer any of its most desired handbags or other pieces of its best-selling collections online. According to the interview with Hermes' sales (Appendix 3 &4), the company wants clients to embrace the brand's culture through experiencing its legacy, artisan workmanship, and different events or exhibitions, which preserve and express the company's creative culture.

Omnichannel Distribution Network

Figure 20, 21 &22

Jewelry and watches

(Author, 2022)

Equestrains

Average price £455 - 880,000

Saddle price start from £ 5,740 Jumper bridle £1,460 (Hermes International, 2022)

Rocabar blanket £400 Saddle pad £330

Nonetheless, during the pandemic, the brand's in-house distribution system, with its network of brick-and-mortar stores and e-commerce services, has proved to be effective.

In order to respond to quick changes in demand and preserve a particular connection with consumers, the company's distribution strategy was adjusted to a transformed consumer experience. The brand's every boutique worldwide offers a tailored assortment of goods to fulfil its clients' individual expectations and provide a unique purchase experience in every location. Each site allows consumers to explore and discover the most exquisite items, extending the brand's aesthetic value globally (Hermes International, 2021).

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Furnitures & Tablewear Home Deco: Average price £1,080 to 72,990 Tableware: Average price £165 to 1,150

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Ready-to-wear Riders Average price £ 340 to 2,600 Fashion Average price £ 330 to 2,800

3. Engagement Hermes engages with its audience in a variety of methods, including social media, print and digital advertising, visual merchandising, and brand-sponsored events throughout the world. For example, they have set up a virtual pop-up shop to promote their silk squares, shawls, and other items. The website was designed as a virtual mansion, with separate rooms allowing users to peruse over 600 versions of their unique, characteristic silks.

Hermes invites the public to join fashion exhibitions and exclusive events, such as the HermesFit. The brand's social media channels encouraged everyone to sign up for a waiting list online to join the event. They could participate in various sports sessions and try exercises at home using a Hermes

Figure 23 &24

product (See appendix 1).

The brand has a group of loyal customers and advocates who would exchange and share their experiences with the

Promotion

The 4 dimensions of luxury marketing (D'Arienzo, 2016)

brand with new brand visitors (WOM marketing). By hosting convivial and engaging events, Hermes reaches a broader audience to learn about the brand's DNA, values and promises.

Figure 25

1. The brand experience: Social media channels such as Instagram and YouTube were used to promote campaigns involving diverse artists and designers, as well as to highlight new and current items. The brand's Instagram page and campaigns often featureless information about products. In contrast, they have an artistic theme to set a specific vibe and create fantasies.

However, Hermes' mobile app: Silk Knots, an educational guide that teaches users all of the ways to knot a Hermes scarf, has a low rating of 2.2 on the App Store. Most of the negative feedback about the available options showing how to tie a scarf is extremely limited. Plus, the methods are not clearly explained, making the app hard to follow for the viewers. The app also has some technical issues. For example, a user clicked on "view the scarf' bottom, but the page led her to the landing page for all scarves. This unsuccessful marketing campaign has suggested that Hermes needs to put more effort into the design and development of the online experience. Rather than just showcasing insincere programs

4. Emotional Branding Long-term success for luxury brands is achieved by having a conscious and relevant application to stimulate emotions. Consumers are loyal to Hermes because they want to feel a sense of uniqueness, scarcity and refinement (D'Arienzo, 2016).

On the other hand, it is vital to create high brand awareness. Hermes had made many people worldwide dream of a Birkin or Kelly bag, although they could not afford them. However, celebrities and the press media are talking about it all the time. Rarity generates desire, and collective appetite would improve customers' willingness to pay for ultra-luxury products or services. For instance, Hermes has sponsored the Tokyo Olympic Games and presented the Saut Hermes (an equestrian show) to attract a community of like-minded people. The sales of saddlery have increased by 46 per cent due to the exposure to elite sports events (Hermes International, 2022).

and only making the customers passive receivers, the brands should create engaging and interactive online campaigns.

Figure 26 & 27

2. Exclusivity: The brand did not use celebrity endorsement or hire any influencer for marketing purposes (Martin Roll, 2020). Hermes actively avoids this tactic, while it is widely adopted by major luxury brands such as LV, Dior and Celine.

The main reason is that only celebrities and high-net-worth clients could have access to and afford its most exclusive and top handbags. The brand's customers are often passed from one generation to another, creating a more authentic endorsement than using paid media (Appendix 2).

The brand has also maintained a high exclusivity online by restricting website access from potential customers. For example, the Instagram page and campaigns of the brand often contain less information about a certain product. In contrast, they have an artistic theme to set a specific vibe and to create fantasies. Hermes needs to balance between reaching the generation of young clients while keeping its competitive position and exclusive value.

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Physical Evidence

"I think Hermès objects are desirable because they reconnect people to their humanity…"

This logo was made with direct influence from Alfred de Dreux's painting titled 'Le Duc Attele, Groom a L'Attente' (which translates 'Hitched Carriage, Waiting Groom') since the picture recalled the brand's history as a horse saddlery producer (Jane, 2018).

As the title suggests, the work of art depicts a man with a tall hat waiting in front of an empty horse carriage. The horse and carriage signify speed and efficiency. The way that the harnesses

by Pierre-Alexis Dumas, Hermes’ creative director

fit the horse so perfectly indicates Hermes' production of highquality leather goods. The gentleman waiting in front of the horse signifies readiness, whereas only the passenger is missing (Hermes' customer). The empty coach awaits the clients to take them on a metaphorical journey into the world of Hermes.

Moreover, despite the fact that the business was formed in 1837, the symbol was not copyrighted until 1945. Interestingly, the orange colour people now identify with Hermes was completely

Figure 28 &29

People

unintentional. During Second World War, the company's cardboard

Hermes empowers and supports all the staff by

had to utilise the vivid colour for all the packaging, and it has

providing a minimum of two years of training

became the brand's signature (Hermes, 2022).

supplier ran out of the regular cream colour and golden border.

They only had the bright colour paper left. Therefore, the brand

to make sure their knowledge is up to date and keeps continuous innovation. The company has a secure and pleasant working atmosphere. Hermes has a Functional Organisational Structure, which

Figure 30

allows the firm to maintain its consistency and

Set and retail design

excellent quality. All the employees and artisans are strictly selected and must follow training sessions. The goal is to familiarise new employees with the brand's culture, values and philosophy (Hermes International, 2021).

Process The principles of "quality" and "refinement" are strongly embedded in the brand philosophy. For these reasons, the brand has always avoided heavy machinery, mass production and outsourcing.

Every product bearing the brand's name should represent the artisan's work and effort (Ngiam, 2019). Until now, Creative Director PierreAlexis Dumas has signed off on every Hermes piece before it leaves the workshop, demonstrating the house's everlasting devotion to excellence.

According to Dumas (the current CEO), Hermes' core strength has been its passion and appreciation for craftsmanship (Anaya, 2014).

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Figure 31 TOWS Marrix (Author, 2022)

STRENGTHS Recognised as ‘the last true luxury goods’ in the fashion-luxury market (Thomas, 2014) Highly skilled ateliers ensure every detail of the products is perfect (Hermes, n.d.)

Longer fashion life span compare to other luxury brands Offers its clients an authentic luxury experience Made-to-measure and special orders for handbags and saddles (Thomas, 2014) Having high symbolic value. Never go out of fashion Its handbags are the representation of wealth and success A family-owned company with profound history and heritage

INTERNAL FACTORS VS EXTERNAL FACTORS

WEAKNESSES Having years-long waiting lists and very limited stocks (Thomas, 2014) could result in the loss of potential clients Lacking online presence and relatively low engagement rate on social media The product line is primarily relaid on exotic animal skins Lacking experience in the hospitality industry and wellness market Negative news and reports on the cruelty of animals such as young ostriches and crocodiles (Munro, 2021) Production lines have low capacity, although scarcity and waiting list are parts of their business model

TOWS Matrix (Weihrich, 1982) With over 300 stores in different countries, the brand is in a great position to create awareness among the target customers (Chu et al., 2021). The company can shift into customer preference, meet the demand, and expand distribution. Being well-established, innovative, and artistic are improvised into daily production, introducing creative

S-O STRATEGIES

OPPORTUNITIES E-commerce expansion and Omni-channel marketing

Hermes could reach out to more customers and keep developing new product lines.

Global growth and opening more boutiques Millennials have growing disposable income and financial confidence Attracting new clients through new product development Reaching out to new demographics using multiple channels The ever-increasing demand for experiential trips and branded hotels

Being one of the celebrities' favourite brands throughout history (Roberta, 2021), the brand would keep providing exclusive access to products and events for its VIPs Creating a new customer journey which is not currently available in the fashion, hospitality and wellness sector.

W-O STRATEGIES Hermes has introduced Sylvania: a sustainable bag made from mushroombased leather (MycoWorks, 2022).

However, the handle was made from Calfskin, and individuals on Instagram are not showing appreciation.

Hermes could let the public acknowledge its employee welfare, as part of the triple bottom line (People) Every employee require more than two years of training, increasing expenditures and pressure on HR The production time is long, e.g. 16 hours on average for a Birkin or Kelly (Thomas, 2014)

products to new segments and product lines.

Despite the long-term success, the brand faces a few challenges. Although the brand provides items other than leather and silk, the brand equity in several different product lines is not as strong. Improving its marketing practices will allow the brand to achieve high sales concerning these products. Other shortcomings include product substitution and brand takeover. The fashion industry has a variety of brands that have gained fame from their unique products.

For this reason, competition remains a challenge. Some of the close competitors are Louis Vuitton, which has a brand takeover of 22% (Kapferer and Valette-Florence, 2018), and other brands such as Dior and LV that take have a

S-T STRATEGIES

THREATS The growing popularity of the second-hand and resale market Counterfeits produced by former employees High level of competition: many fashion luxury brands already collaborated with well-known hotels Major competitors from LVMH (LV, Dior and Cheval Blanc) More established riding centres and resorts which have higher customer loyalty

Hermes could maximise its strength of having a solid brand reputation and customer loyalty.

To differentiate from luxury conglomerates by having more power and control to stay true to its core values, aesthetic principles, and brand heritage.

Economic instability after the COVID-19 lockdowns Hermes Development Project | Page 24

W-T STRATEGIES Adopted more sustainable raw materials for production

fair share of the market segment. There is also a threat of counterfeit products and product substitution with such a competition.

Hermes could adopt omnichannel relationship

Combine innovative plant-based leather with its signature handbag designs and introduce new products Improve experiential offerings in stores and combine them with other e-commerce or convenient online booking

management, as it has become increasingly important in the luxury industry. The company could focus on developing new channels of communication, which could enhance the overall shopping experience.

Hermes Development Project | Page 25

Competitive Advantage In all businesses, competitive advantage is the attribution used to outdo the competitors in a similar market. Various aspects are considered, including the availability of resources, finances,

the

target

group,

technology

advancement,

geographical location, entry barriers, and prices. Venturing into a new market is one of the most challenging issues because some common barriers are felt in all businesses (Hepner et al., 2020).

These include unique tax benefits, customer loyalty, patent protection, and cost switching. In this case, the firm needs to analyse and implement measures that suit the operation of the business in a different country. Hepner et al. (2020) depict that this guarantees the company to retain reliance on the process in the long run. Another aspect is identifying the customers’ wants concerning their taste and preference over time. Fashion is an ever-changing trend that requires the company to keep updating its products. As a result, the brand gains significant customer loyalty and popularity, outdoing the other similar competing companies in the fashion industry.

Figure 32 &33

Hermes Development Project | Page 26

Hermes Development Project | Page 27

Figure 34

Section 03

External market analysis The Luxury Market Highlights Post pandemic luxury expenditure has evolved from experiences to experiencebased items. Although some international travel regulations restrict tourism consumption, the overall market shows strong signs of recovery.

According to Euromonitor International (2021), e-commerce was a primary driver of growth last year and should continue to rise in the future. Luxury internet purchases have increased from 11% in 2019 to 17% in 2021.

Whilst the epidemic has underlined the significance of e-commerce, luxury goods retail will still be dominated by physical stores. Many brands are adopting an omnichannel strategy, broadening their services across traditional and digital channels. The difficulty is to ensure that buyers receive the same degree of premium service as they would in physical shopping (Krec, 2022).

Consumers seek authentic luxury experiences that enable them to switch effortlessly between e-commerce and physical channels. Hence those two channels will continue to merge. After all, the customer experience is the result of all interactions with the brand across multiple channels. Customers will expect to be delighted and valued; therefore, offline merchants will have to develop innovative strategies and discover new methods to foster loyalty.

Hermes Development Project | Page 28

Hermes Development Project | Page 29

The Luxury Market Trend For decades, luxury goods have influenced fashion and trends, as well as the overall consuming culture. According to Berry (1994), there is a clear link between a branded product's status as a luxury and its status as a creation of desire and dreams.

Currently, consumers are looking for more experiential approaches to luxury consumption. Affluent customers tend to purchase excessive goods, and their basic needs at Maslow's Hierarchy (1987) are satisfied easily. Material comfort has developed in contrast to past decades, and as a result, individuals seek personal fulfilment and growth needs through experiences (Yeoman 2011). In other words, people have developed higher targets, such as the need to explore and gain more knowledge (Cognitive needs), self-actualisation, and experience transcend beyond individuals (Maslow, 1970), while goods with a luxury label cannot simply satisfy those symbolic desires.

Thus, luxury is more than tangible commodities and the display of social status via branding, with many brands moving to offer extravagant travel and superior immersive experiences.

Figure 35&36

The Hospitality Market In 2021, the fastest-growing segment was experiential luxury. Luxury hospitality began to recover, and occupancy rates gradually recovered.

However, overall expenditure on hospitality remained slightly below pre-pandemic levels due to restrictions on overseas travel (Kreč, 2022).

The luxury hospitality market size was approximately £ 95.07billion in 2021. By 2028, the market is expected to reach £189.67 billion. This represents a growth rate of approximately 10.4% (Schmitt et al., 2022). The largest market concerning the luxury hospitality industry in the U.S. The region contributes a market share of approximately 30%.

Europe and China both have a market share of 35% when combined.

Hermes Development Project | Page 30

Hermes Development Project | Page 31

Competitor Analysis

Brand Positioning

Hotels and suites owned by luxury fashion brands

Figure 38

More locations

Name: Bvlgari Hotel & Resorts with Marriott Hotels Development Locations: 8 Cities currently (Milan, London, Dubai, Bali, Beijing, Shanghai, Paris and Tokyo) 5 in the future (Moscow, Rome, Tokyo, Miami Beach and Los Angeles) Price from (Paris, off-peek season) Lowest Executive Room €1,753/ night Highest Executive Suite Terrace €5,903/ night (Bulgari Hotels & Resort, 2022) Mission statement: “Bulgari Hotels & Resorts aims to be the leading luxury hospitality collection in the world.

Comprised of a few, selected properties in major cosmopolitan cities and luxury resorts destinations, its aim is to convey the excitement of the Bulgari brand, its timeless glamour and its heritage of magnificent Roman jeweller.”

Services and Amenities: Spa, swimming pool, gym workshop, beauty & styling service, ballroom for social events, dinning and private cinema

Personalised service

Moderate service

USP: The Bvlgari spa has a limited private membership offering that combines customised Bulgari treatments with exclusive 'workshop gymnasium’ training and evaluation services. Each member will be actively supported by its committed team while immersing oneself in health and fitness (Bulgarihotels, n.d.).

Annual Bvlgari membership (Bvlgari Spa London, 2022): Joining Fee £2,000 Single Membership Fee £5,500 Joint Membership Fee £10,000

Less locations

Hermes Development Project | Page 32

Figure 37

Hermes Development Project | Page 33

Figure 39, 40 & 41

Name: Cheval Blanc by LVMH Locations: 5 (Paris, St-Tropez, St-Barth Isle de France, Randheli and Courchevel) Price from (Paris, off-peek season): Deluxe room 45 m² €1,900 / night Seine Suite 105 m² €5,700 / night Quintessence Suite 650 m² on the top floor, including a private garden, fitness suite, spa, sauna and swimming pool. (Cheval Blanc, 2021a) Mission statement: “Cheval Blanc was born from the desire to redefine the notion of hospitality experience in rare and exceptional destinations.”

The brand is built based on four core values - “exclusive privacy, craftsmanship, creativity and Art de Recevoir”.

Services and Amenities: 5 restaurant including Plénitude (three Michelin stars), gallery of contemporary art, displays of Dior’s bag, Dior Spa, private celebration service, hair salon by Rossano Ferretti, swimming pool, fitness studio, yoga sessions, sauna, hammam and snow shower (Cheval Blanc, 2021b).

USP: Invitation-only events by the Dior Spa: collaborating with fashion shows and expert makeup artist and private coach.

Art de Recevoir: the Maison's professionally trained Alchemists will build dreams filled with surprise and joy. The service is tailored to each need with an extraordinarily personalised and caring attitude (Cheval Blanc, 2021b).

Name: Palazzo Versace Luxury Hotels Locations: 2 (Dubai and Gold Coast Australia) Price from (Gold Coast, off-peek season): Lagoon King 40 m² €332.25 / night Lagoon Suite m² €533.62 / night Three Bedroom Condominium €1420.97 / night (Palazzo Versace, 2022) Mission statement: Palazzo Versace inspires to create “the world’s first fashion-inspired hotel, offering an exclusive chance to be immersed in the Versace lifestyle.”

“The definition of luxury, glamour and sophistication.” (Palazzo Versace, 2022) Services and Amenities: 3 award-winning restaurants, water salon, The Beauty Room, fitness & wellbeing centre, Versace boutique, business lounge and wedding venues.

Name: Armani Hotel Locations: 2 (Dubai and Milano) Price from (Milano, off-peek season): Premiere Room 50m² €1,320 / night Executive Suite 90m² €3,000 / night Special offer: book 4 night for price of 3 Mission statement: “Armani Hotel Milano is a place that embodies Giorgio Armani’s design and lifestyle philosophy, and promises a ‘home-away-from-home’ experience, delivering luxurious comfort and a unique experience."

Services and Amenities: Italian cuisine, Ristorante, lounge bar, spa, relaxation pool, saunas, beauty treatments, gym on the top floor, business centre, private venue, and other personalised experiences.

USP: The hotel aims to offer visitors the same type of welcome that Mr Armani would personally express to his family and friends.

The 'Made to Measure' and 'Made to order service' will enable the development and customisation of Giorgio Armani collections in the comfort and private hotel rooms.

A permanent exhibition of Armani's signature collections is available for the guests to view at the hotel.

Armani/Fiori presents a floral display wall and workshop with specialised florists. The guests could make their own composition that they may preserve as a memento of the event (Armani Hotel Milano, n.d) The website exhibits a 360° virtual tour of the entire building, along with relaxing music, navigation info and a share link to social media (Panotour, n.d). This is a very user-friendly design and cannot be found on any other brand's website.

Indirect competition Hermes will face indirect competiton from businesses in other sectors in the luxury market, including high-end department stores, fine dining, fine arts and other experience-based goods (Bain, 2022). Other riding schools located near Hermes' proposed resort will be competing with the brand as they have similar service offerings. Additional competition might come from luxury hotels that offer yoga retreats. For instance, Aman has launched a collection of Extreme Fitness Retreats in rural locations such as the Dolomites and Phuket. The brand creates a customised programme with a group of professionals to

USP: One unique offering is the “Rolls Royce experience” tailored to meet specific needs, including transportation from the airport and driving service to any specific location. The car's interior is adorned with the brand's signature elements, including Versace’s fragrance. The second offering is a private marina where visitors may park their boats while dining at one of the restaurants (Eckenschwiller, 2019).

ensure that customers are completely prepared for the adventure (Globetrender, 2021).

Beside, the hotel offers benefit for guests, including: 15% off on Versace Home 20% off on Versace Jewellery 20% off on F&B and at The Spa

tour guides will customise itineraries according to the client's interest and aspirations, and offer services from transport,

Hermes Development Project | Page 34

Holiday rental sharing businesses could emerge as indirect rivals as privacy and greater localisation become increasingly essential to luxury travel clients (Dykins, 2022). High-end travel agencies provide consumers to have an unbranded experience, an entire stay crafter for themselves and in any location according to their selection. For example, Prior is a member-only travel club that customise creative full-service planned journeys around the globe, with an annual fee of $849. The professional accommodation to local experience (PriorWorld, 2022).

Hermes Development Project | Page 35

Porter's 5 forces

Figure 42 &43

Threat of New Entry - Low Any new entry into the industry will require a significant initial capital and resource commitment to launch a new designer brand. This, in turn, reduces the threat of newcomers. Hermes has extraordinary product quality and a distinct value proposition. As a result, new entrants with similar offerings will find it challenging to gain market share. It is also very challenging for new brands to find trustworthy suppliers and reliable manufacturers.

Another challenge for new businesses is they lack customer loyalty compared to established labels. Showing a strong brand heritage and profound history is the key to success for luxury brands. Thus, the threat level of new entrants remains relatively low for Hermes.

brands started to take legal action. For example, seven of Hermes' former employees were on trial for six years in prison for producing and selling more than hundreds of fake bags with an annual profit of 1.8 million pounds. The brand's former craftsman made counterfeits using the same technique and the special saddle stitching, with stolen leather as a genuine Birkin bag (Willsher, 2020). Thus, the threat of counterfeit substitutes remains a moderate impact on the brand.

Bargaining power of customers - Low Hermes is a product-oriented corporation that prioritises the quality and artistry of its goods over the requests and demands of its customer base. Consequently, Hermes' clients have very little negotiating power and will always pay the brand's premium costs. The customers are also following the 'unspoken rule' set by the brand, where they need to have purchase histories of other items before getting a bag (see appendix).

This is due to consumers' long-term devotion and loyalty to the fashion house.

Threat of Substitution - Moderate The growing popularity within the luxury resale market could be a threat as purchasing a Hermes bag has become more difficult recently. It requires a considerable amount of effort, money and time. Although the secondhand market offers the option of getting the same product at a higher price, consumers do not need to spend extra time and money on 'plus buys'. Especially now, when consumer behaviour is shifting so that convenience and efficiency are crucial (YPulse, 2022).

Many luxury fashion brands are on a battlefield with counterfeit products, where similar items are sold at a lower charge. On the other hand, customers are typically devoted to Hermes and want to feel involved with the brand, even if it means spending a lot more money. The artistry and quality of goods purchased in the counterfeit market are far below authentic Hermes items, implying that most clients are willing to pay the premium prices for genuine products.

However, according to the former CEO, Patrick Thomas (2012), 80 per cent of Hermes' bags available on the Internet are not genuine. When counterfeiting became artisanal, it threatened the luxury goods industry, and many Hermes Development Project | Page 36

Bargaining power of suppliers - Low The campany has created long-lasting relationships over 20 years, with 50 top suppliers in the luxury sector. Keeping a close connection with suppliers enables Hermes to establish a strong position and maintain consistency in product quality.

It is difficult to switch between suppliers because the potential price would rise, and the quality of raw materials might vary. The company evaluates its suppliers regularly to verify that they fulfil its stringent quality requirements.

Therefore, switching suppliers would be a complicated procedure, even though many choices are available. Hermes has recognised its suppliers' negotiating strength and implemented the Supplier Diversification Policy to diminish the suppliers' bargaining power (Hermes International, 2022).

Hermes Development Project | Page 37

Figure/ Table 44

Porter's 5 forces

Political

Economic

•High taxes and constantly changing business laws

•Opportunity for significant growth in the emerging

in different countries the organization is operating in

markets

•The involvement of the organization's owners and

•Economic

other stakeholders is likely to damage the company's

performance of the organization in the countries

Some of the major fashion brands competing with Hermes are Chanel, Dior, Louis Vuitton and Gucci (see appendix for more details). In today's increasingly complicated luxury goods sector, brands need to expand beyond creating unique designs and fashion trends to sustain growth and preserve a competitive advantage (Solca, 2018). Although Hermes has produced highly differentiated leather goods, the brand should elaborate on its service offering as a more sustainable business strategy.

However, there is a risk of being overtaken by one of the luxury conglomerates. For example, the LVMH group is another industry leader and has more financial capital than Hermes. The corporation has a larger market share in both the luxury fashion and the hospitality industry. There is no doubt that conglomerates, including LVMH, Kering and Richemont, have significantly more control and influence over most luxury brands (Stokes, 2020). Meanwhile, LVMH's acquisition of Tiffany & Co ($15.2 million) indicates that the industry has moved to an era where sales figures, commercial deals and high profile sponsors are becoming more potent than the artistic and creative process (Solca, 2018).

reputation.

concerned (Shin, 2020)

•Volatile political condition globally

•Slow economic growth due to Covid 19 impact

•Implication:

•Implication:

High taxes affect the profitability of Hermes in

This might results in some financial challenges.

different countries globally. The business's operations

However, Hermes’s target clients are HNWIs and

in various countries such as Russia and Ukraine are a

above, who are unlikely to be influenced by economic

result of political volatility.

uncertainties (O'Connell and Curry, 2022).

PESTLE Analysis

Competitive Rivalry for luxury brands - Moderate

Social

recession

is

likely

to

affect

the

Technological

•Delivering wellness opportunities through the journey

•Rapid development in the e-commerce segment due to technological advancement. e.g. virtual showrooms and new engagement tools (Poile, 2020) •The different digital platform facilitates a quick transaction •Engagement with customers digitally (Creevey et al 2022) •Implication: •To develop more online experiences, such as building an invite-only website for Hermes’ VIPs •Use digital platforms to enhance direct communication, build a loser relationship and increase conversion rate.

Legal

Environmental

•In 2020, Gen X holds more wealth than Boomers, and their household net worth will keep increasing by 25.4% annually (Schneider, 2021).

•5 Key drivers of luxury customer: Health preservation, conscious luxury, maxmsing potential, life celebration and unique experience (Poile, 2021) •Gen X luxury consumers' attitude is centred on maximising their lifetimes of better physical condition to participate in their ultimate fantasy experiences.

•Implication: •Creating a tailored one-to-one experience

•There is a need to adhere to different business

•The use of exotic animal skin during production is a

regulations in the countries the organization is operating

major environmental concern (Bohnert et al 2022)

•Lawsuits concerning trademarks, licensing, and

•Increasing

copyright

environmental sustainability practices

•Constantly changing business regulations

•Increasing demand to use renewable materials during

need

for

organisations

to

focus

on

production (Poile, 2021)

Figure 43

•Implication: Higher cost of operation as the company attempt to

•Implication:

adhere to different legal concerns

Highlighting supply and production chain transparency, adopting sustainable materials, and developing green and natural holiday options.

Hermes Development Project | Page 38

Hermes Development Project | Page 39

Chapter 04

Drivers of Change:

Strategy summary

Shifts The trend towards the democratisation of the luxury market continues to emerge. While ultra-high-net-worth individuals only account for 1% of the global economy (O'Connell and Curry, 2022), luxury companies have adjusted their strategy to reach a broader audience. Affluent households (20%) have shown an increasing willingness to spend their spare funds on luxury travel (Geerts, 2017).

Advanced technology has enabled customers to purchase products and book services more efficiently. Many companies made significant investments in developing digital innovations to improve the online experience.

In an ageing world, Gen X and Boomers are two of the wealthiest age groups. They considered health as the new wealth (Poile, 2021).

Since 2016, the wellness tourism market has been booming, with an anticipated increase to $1.1bn by 2025 (GWI, 2021).

Figure 45 &46

Consumer Trend Canvas - Adapted from Trend Watching (2020)

Figure 47

Inspiration: A sumptuous VIP area is available for private events, seasonal previews, and personalised shopping service at Burberry's new Paris store. Also in Paris, the redesigned Dior flagship features a luxury suite on the 4th floor where VIP guests can stay overnight. The entire store and in-house museum are exclusively available to the guests at any time (WGSN Content Team, 2022).

'The 9' by The Mall of the Emirates is a full-service luxury lifestyle expansion of the traditional experience. Members have personal styling and tailoring services, with access to a private restaurant, lounge, salon and hotel (Cole, 2021).

Hermes has launched a fitness class pop-up store in NY, Paris and Shanghai. HermesFit allowed visitors to "be an everyday athlete with elegance and agility," responding to consumers' desires for wellness while remaining faithful to its artisan heritage (Medeiros, 2022).

Basic Needs:

Triggers Physical experiences have been substantially disrupted by lockdowns during the pandemic. However, luxury experiences, including "hospitality, cruises and fine dining", will recover steadily.

Yet, they are heavily reliant on the recovery of tourist traffic and business trips. Also, the world is showing how tourism has bounced back during holiday seasons (D'Arpizio and Levato, 2021).

Accessibility to exclusive events and in-store services has

Even though access to luxury items is becoming more commonly accessible, demand for

become more appealing in a post-pandemic retail scenario when

exclusive service and VIP access to goods and experiences are crucial to the manifestation of prestige

physical access and engagement are limited (WGSN Content Team,

(WGSN Content Team, 2022).

2022).

Consumers' expectations towards health and wellness have extended beyond aesthetic

The home-wear market has become more popular due

motivations as they showed increasing concerns towards mental and physical wellbeing. Healthy

to the epidemic. Customers now value the comfortability and

consumers require a combination of nutrition, exercise, mental happiness and sustainable lifestyles

aesthetics of the home much more because of remote working

(Global Wellness Institute, 2018).

(Poile, 2021).

Hermes Development Project | Page 40

Hermes Development Project | Page 41

Emerging Expectations

new worth as elite clients seek opportunities to engage and reaffirm their position.

Savvy marketers are transforming the retail idea

Wellness experiences that provide relaxation and

into an engaging and interactive experience by creating

getaways from the stress of daily life are in high demand.

new, immersive places that communicate the entire brand

Gen X want to slow the ageing process and

philosophy (Saunter, 2021). In a post-pandemic society,

maintain their youth and health (Poile, 2021). They also

consumers have increasing demand for multi-functional

The access to luxury items is becoming more

retail space to allow them to socialise, relax, work out

democratised, yet affluent customers demand unique

and reconnect outside the home. In other words, human

service and VIP access to collections remain crucial to the

connection and brand interaction have become more

manifestation of prestige status (WGSN Content Team,

valuable.

2022).

Figure 48&49

The propsal for Hermes will create a coherent

Many consumers began to think that city centre

journey that immerses customers with the brand. The

locations are less relevant for retail yet they prefer rural

new concept store will combine elements of its equestrian

areas that inspire experience-based product discovery.

Consumers' expectations for physical retail

Saunter (2021a) signifies a trend of destination-oriented retail tourism.

space have exceeded a singular purpose. The function of stores began to combine product fulfilment, brand enrichment, and immersive experience (Saunter, 2021b).

Older travellers have the greatest desire to spend holidays with family due to feelings of loneliness from the epidemic. Travelling with family and friends is now twice as essential as travelling to achieve personal goals (WGSN Insight Team, 2021).

Innovation Type •

An equestrian centre for Hermes' members (sign A new concept store, including a bistro and afternoon tea area

•

professional riding classes for the visitors. The first floor is dedicated to expressing the brand identity through lifestyle dining, presenting customers with a typical Hermes afternoon vibe. The retail space aims to transform Hermes' brand DNA into an interactive odyssey. For example, the consumer could

Figure 50&51

see how the saddles are being made by professional artisans.

Target Audience: Who?

High-net-worth individuals (HNWI) with assets valued above £10 million and affluent households with more than £81,000 annual disposable income (TPO, 2016).

Empowered elders who take great care of personal health and are motivated by an adventurous lifestyle.

up both online or at any boutiques) •

value and brand personality. The ground floor provides

Local enthusiasts who enjoy luxury travel in domestic locations. Hermes'

resort will promote French heritage and make a positive contribution to the local community.

The brand will offer a pony club for multigenerational travellers who seek activities that involve the whole family.

Hermes Resort and SPA for VIPs

Customers who seek refreshments in life. Self-love seekers (Westbrook,

2022) are driven by unique experiences and passions for equestrian

Innovation potential 'Inner

circle

status'

creates

activities. Their focus on wellness is shifting to a holistic process that permanent

attraction for HNW clients. This attitude is fostered by invitation-only clubs, and VIPs feel entitled to visit such exclusive settings whichl elicit positive emotions.

This method is being used by luxury businesses to develop more meaningful and interpersonal connections (WGSN Content Team, 2022). Hence, the creation of personalised and private services remain fundamental for luxury brands. Private salons and invite or members-only clubs are reinventing

integrates mental health, resulting in increased demand for goods and services that promote wellbeing and emotional balance.

Impulsive spenders who want personalisation and

engagement with a brand, from shopping to holiday experiences (Shridhar, 2020). Their shopping decisions are heavily impacted by other celebrities and social

media. They want to keep up with the last fashion trends and get the newest item from fashion runway.

They seek curated experiences and high personalistion

that is tailored to their taste from fashion shopping to holiday stays.

Hermes Development Project | Page 42

Hermes Development Project | Page 43

The Ansoff Matrix

Figure 53

Future competitive positioning

Based on (Meldrum and McDonald, 1995) Figure 52

Product development

More guest rooms

Luxury travellers are seeking distinctive experiences beyond traditional retailing and products.

Therefore, renowned designers are taking advantage of their history, reputations, trademarks and aesthetic identities to open luxury hotels.

Hermes will develop a new retail landscape by entering the hospitality market. The brand does not currently have any restaurant, hotel room, and riding centre. Hermes has an opportunity to enhance its brand equity and expand offerings beyond ultra-luxurious leather goods and its expertise in silk (Wachenfeldt,

Personalised service

Moderate service

2019). The hospitality industry shows strong signs of blooming after the pandemic, which is a perfect opportunity for Hermes to grow its business, increase

Market Penetration

market share and at the same time meet customer trends. Introducing a holiday resort and boosting

Hermes will foster relationships with its loyal followers by offering upgraded services for existing products. This will be primarily

customer awareness will allow the brand to achieve its expansion goals.

achieved by engaging customers through exclusive events and

Less guest rooms

activities, plus taking the initiative to respond to emerging consumer demands.

Besides, it is vital for Hermes to develop a more engaging online experience rather than having a website that only informs the audience about the brand's offerings. Thus, the brand could create a more user-friendly website for its valued customers while keeping its prestige value.

Value Proposition

According to the primary research, other Hermes products apart from quota bags are considered as 'plus buys' for most customers.

Hermes’ proposed resort will present a

It is a challenge for the brand to make most consumers truly appreciate

crossover between French heritage and innovation,

the strategy of spending more than thousands of pounds on lifestyle

celebrating its timeless elegance with its signature

products (e.g. furniture, tableware and other decorative collections).

craftsmanship and contemporary design. Hermes

The proposed campaign would enable Hermes to present its lifestyle

will corporate the spirit of French savoir-faire

and core value to the target audience through activities. By creating

and chivalry, emphasising its root in equestrian

interaction and border engagement with customers, the brand could

productions. The resort invites clients to experience

alter some negative perceptions of its current marketing strategy (see

an unforgettable and remarkable journey with their

appendix 3&4 ), thus improving its overall brand reputation.

loved ones. With only 23 rooms and suites, the brand aims to offer the most personalised and subtle service, plus extreme attention to detail for every guest.

Hermes Development Project | Page 44

Hermes Development Project | Page 45

RACE Model

The Smart Insights RACE Planning(2022).

Framework Adopted from Smart Insights

•

Reach PLAN

Define goals and strategy

The pre-launch campaign will build awareness for the new Hermes

It is crucial for brands to develop a long-lasting impression

Resort. The social media strategy focus on reaching younger clients through

and committed relationship with new clients. Hermes would adopt

owned media, including a new web landing page on Hermes' website,

the most advanced CRM software to record, analyse and evaluate

Instagram posts and YouTube videos.KEYSales associates would inform their MEASURES

each customer's interest, lifestyle, preference and personality. For

BUYERSTAGE: EXPLORATION

regular customers at the boutique or online (through email or messages).

example, the employees at Hermes Resort could make sure every

The brand would also use paid media, including a press release, articles

detail perfectly suits the customer before arrival. Therefore, first-

Invest in always-on and campaign activi:y including organic and paid search, social media, PR, display and influencer marketing

•

.......

Audience volume Audience quality Audience value and cost

KEY MEASURES

time customers would be very willing to come back after having a

• Time on site • Subscribers, Likes and Shares

memorable experience that is aligned with their personal values.

on fashion, luxury lifestyle and equestrian magazines, and search engine • Leads/Lead conversion rate

BUYER STAGE: DECISION MAKING

Be worth finding using clear persona customer journeys and a content hub that is relevant, inspirational, useful and creates leads

marketing (SEM).

KEY MEASURES

BUYER STAGE: PU RC HASE

KPIs & Metrics:

Persuasion marketing using CRO, marketing aut:>mation and retargeting to ensure contextual relevance, brand trust and value drives conversion

• Sales {on and offline-influence} • Revenue/Profit • Conversion and Order Value

Unique visitors, revenue per visit, bounce rate, audience volume and cost.

I

KEY MEASURES

BUYER STAGE: ADVOCACY

'.

I

Thrilled customers are key to social media marketing, social proof, repeat sales and referral. E nsure you research your customer loyalty drivers1

Repeat Purchase (Lifetime '✓alue} Brand satisfaction and Loyalty Advocacy

KPIs & Metrics: Customer lifetime value, # of active customers (advocacy), repeat purchase, brand satisfaction and loyalty.

Figure 54 (Author, 2022) Figure 55

Act

Convert

The main aim at this stage is to create interactions and

The focus at this stage is to strengthen the hedonistic potential,

increase engagement. For online channels, Instagram stories,

pleasure and fantasies related to luxury products.

live and posts would be created, allowing any stakeholders

The new concept store aims to change consumers' attitudes

to communicate with the brand. Once the public became

toward Hermes' product strategy by increasing the desirability

aware of the brand's new launch, fashion publications,

of other products besides the iconic bags. In other words,

influencers and celebrities would generate a much broader

the purpose is to make more consumers appreciate Hermes'

media coverage (WOM marketing).

entire product range, and to increase their own willingness to

Besides, the brand would create a separate website for the

purchase rather than being suggested by salespeople.

Hermes Resort and an app for members to register, book

Apart from the hotel suites, all the experiences at the Hermes

riding lessons and sign up for the hotel waiting list.

Resort could be booked online, at any Hermes boutiques, or with a sales associate.

KPIs & Metrics: Time on site, engagement rate, # of members sign up and

KPIs & Metrics:

lead conversion rate.

Sales revenue, profit, % Conversion to sale and sales value.

Hermes Development Project | Page 46

Proposed Brand Equity

I I

Engage

Hermes Development Project | Page 47

Target audience

Pen portrait Olivia 58

Segment A

Olivia owns a large family business. Her husband is the CEO of a well-known international

Affluent Achievers (Acorn, 2014)

corporation, and they have a very high household income. They live in a large house worth 2 million pounds in Kensington. She owns a Mercedes-Maybach S and Bentley Flying Spur, and has a driver to drive her to work. She is about to retire, so her son and daughter began to take more charge of the business. She

Demographic & Geographic: The target customers of Hermes are among the most financially successful individuals around the world. They might be baby boomers, who are wealthy retirees, or Gen X with high disposable incomes and successful careers.

Most are company directors or entrepreneurs with incomes above six figures (Acorn, 2014). They dwell in affluent and high-status areas, mostly in large houses in semi-rural, suburban or metropolitan districts.

Hermes’ primary customer segment is dominated by woman (Hermes, 2021); therefore, some of them are housewives of top executives, politicians, lawyers and Premier League footballers (Acorn, 2014).

has premium bank accounts but prefers to manage her cards online. She has a relatively low response to social media marketing, but she uses digital devices to organise leisure actualities, travel, finances and household services (Acorn, 2014).

Fashion is a very important part of her life, and she has a large walk-in wardrobe for all her luxury collections. She organised her garments, bags and accessories very well according to brand and colour. She takes excellent care of her bags, and there is a particular shelf for the Hermes collection.

They own multiple properties in their own country or abroad, bringing sizeable investment values. They are unlikely to experience any significant problems as a result of economic downturns (Thomas, 2007).

Thus, these people have enough money to live very pleasant and luxurious lives with little financial worries.

Even though Olivia has a personal stylist, she still enjoys shopping in various luxury boutiques and chatting with familiar salespeople. She prefers niche and exclusive brands that are not generally available in local department stores or high-street. Her favourite brand includes Hermes, Loro Piana, Graff, La Perla and Haute couture from Chanel, as they

Psychographic & Behavioural

offer unrivalled quality, distinctive craftsmanship and longevity (Kabra, 2021).

Hermes’ core clients require refined, classic, sophisticated and chic products, which satisfy their aesthetic needs (compassion and the pursuit of

Although she does not need to worry

beauty) and self-fulfilment (Maslow, 1987). They mostly shop in upmarket

too much about life, she thinks maintain wellness

department stores such as Harrods and Printemps, or luxury boutiques. They

alongside a balanced diet is essential. She receives

also have personal stylists or sales associates to select and deliver garments

fresh food deliveries four times a week from

home when they are busy.

Daylesford Organic, a farm in London. She likes to do spas and facials at a clinic near Harrods after

They share similar beliefs about maintaining a healthy and well-

shopping. In her free time, she practices yoga and

balanced lifestyle by engaging in sports such as playing golf and riding and

pilates every two days with a private instructor.

focusing on nutrition and organic foods. Other typical interests include

Since high school, she has been an advanced

art, antiques, horse racing, wine, and travelling (Acorn, 2014). They value

dressage rider, but now she rides less frequently. She

spending time with family and children and enjoy regular holidays.

owns a Dutch warmblood horse named Fayette. She

Mid-aged customers prefer to use iPads (Acorn, 2014) and were forced

enjoys hacking with Fayette in Richmond park two

online during the pandemic, making them more familiar and confident with

times per month. Overall, she wants to maintain

technology. They might use apps for socialising, health checks, monitoring

a youthful lifestyle, appearance, and fitness level.

finances, learning and managing lifestyles, in addition to browsing and

She enjoys spending personalised vacations with

shopping online (Angus and Westbrook, 2022).

her family, including detoxing spa treatments, Hermes Development Project | Page 48

mediation, yoga, and shopping.

Hermes Development Project | Page 49

Figure 56

Target audience

Pen portrait Emilia 32

Segment B

She is currently studying MBA in Hospitality Management at EHL, Switzerland. She comes from

Affluent young generation

a wealthy family where her mom and grandmom are all Hermes' loyal clients. She lives in a sophisticated Figure 58

two-bedroom flat with her husband and daughter.

She often returns to her home in France to meet her

Demographic & Geographic

family during the weekend.

Hermes has a long term business plan that targets millennials,

She is also a blogger on Youtube with 539k

and Gen Z. Bain & Co (2021) estimates that both groups combined will

subscribers and 560k followers on Instagram. Most of

account for 70 per cent of the luxury goods consumption by 2025. The two

the contents are about home decoration, fashion and

age groups will contribute to an increase of 130 per cent in the luxury sector

travel. Her favourite brand is Hermes as her grandma

within the next ten years (D'Arpizio and Levato, 2017).

and mom are all the brand’s loyal customers. She loves the Petit H collection because they are artisan

The brands' target customers are likely to live in higher-priced

products recycled with playful and innovative designs.

flats in the central area of large cities, such as London and Paris. Those

Sustainability has a major influence on her purchasing

individuals are well educated with a Bachelor's degree and above. Most are

decision. Thus, she prefers classic and long-lasting

in professional or management positions, with earnings above five figures.

products. She believes that having a unique fashion

They have a saving account and other investments, commonly in the form

statement is more important, but she also wants to

of stocks or ISAs. While some of them are still students or recent graduates

keep up with the latest trend.

climbing up the career ladder (Acorn, 2014), they receive disposable income

of more than £3k from parents per month. Some also include housewives

Luxury travel is an essential part of her life. She likes

and influencers who are not working at the office.

to ski and enjoys spa and wellness retreats at Kulm Hotel St. Moritz. Her favourite resort brand includes Aman, Capri Palace and Patina Maldives (Smith

Psychographic & Behavioural

Global Ltd, 2022). She enjoys spending holidays near the sea at Kranidi, Capri, Hawaii and Bali.

Most young professionals have a very optimistic and futureembracing shopping behaviour, where their income is often spent on luxury rather than savings (Langer, 2021). They like to share new feeds on social media frequently, especially Instagram. They tend to be fashion-conscious early adopters and have a high aesthetic standard. They also like to follow trends from the latest fashion shows or celebrities online. A majority of them prefer shopping online, including fashion, food, personal care, event and travel bookings. They tend to read blog posts and consumer reviews before shopping. Some are also bloggers and influencers who share recent fashion purchases frequently on Instagram and YouTube.

Most of them are environmental consciousness and avoid buying from fast fashion brands. They enjoy an urban, pleasurable and high-quality lifestyle. They usually eat out in Michelin restaurants during leisure time and

Figure 57

go to galleries and theatres. Other typical interests include art, sports, music, fashion and film.

Hermes Development Project | Page 50

Hermes Development Project | Page 51

Primary Research

Interview with Hermes’s consumers Objectives:

Research Design:

• To explore the brand’s actual services offering from a

Research Outcome Figure 59

customer’s perspective.

The proposed business plan will include innovative solutions using experiential marketing, which would provide customers with more distinctive experiences and lasting memories. In order to develop a feasible and desirable strategy, the researcher has gained a deep understanding of how consumers value and experience the ‘moments of luxury’.

• To

Interviews with various Hermes clients has been conducted to gain different perspectives and form a more evident evaluation of the luxury shopping experience.

provoke positive moods.)

Interview 1 Emily, 35 Millennials This interview is connected with a relatively new customer at Hermes who has just purchased a Birkin 25 bag.

She quite young and has limited shopping experience at the boutique in London.

Her most memorable experience with the brand is the HermesFit popup event.

Highlights of the event:

" Exclusivity is always a plus. People all want to be different and to stand out from the crowd. "

The first thing that she loves is the visual display.

Everything was branded and in the signature orange colour.

There was a live performance, which made her feel so involved with the brand.

She loves how Hermes combined its history with the current fashion trend and kept a perfect balance between elegant and sporty.

There were scarves, shoes, watches, bracelets and hats for sale at the event. However, all the handbags were for display only.

She thinks it is fun to get something from events because it commemorates the whole experience. She also values products that are only available at the particular popup.

She thinks what is unique about events is that the vibe could stimulate lots of positive emotions. For example, the music, smell and interaction with people at the event can make a whole different experience, apart from browsing online. Especially for Hermes, where there are only a few products available online. She is doubtful about buying any silky items online as she wants to try them in person.

Hermes Development Project | Page 52

examine

various

motivations

of

consumer

Mystical experiences, experiences with nature, aesthetics and wellbeing

engagement in luxury consumption.

Transcendence needs

• To analyse the impact and contribution of wellbeing.

(Does it stimulates consumption, or does luxury experience

VIP PRIVACY

Self-fulfillment; Seeking peak experiences

Interview 2 with Eun-Jeong Seong, 54 Gen X, Interior designer and hotel manager

creation of dreams Imaginative transformation; A short moment of luxury; Seeking an escape from ordinary life.

Her family has been loyal customers of Hermes for more than 20 years. This interview discussed how fashion brands influence people’s lifestyles, tastes and purchasing habits.

She has a Kelly bag from 'special order' that cost two years. She loves Hermes because it delivers items specially tailored to her preference. For example, she wanted the strap to be short and matching with the colour of the bag. Hermes still made customisation that suited best for her, even though it was not normally available.

She thinks keeping a personal style is very important.

Hermes offers repair services for handbags in the boutique. Customers can take it to Hermes for a refurbishment. They will make it shine again by changing the metal parts or anything that needs improvement.

When a bag is unavailable for purchase, and she is frustrated with a particular salesperson, she will walk out of the store and return another day.

She collected every issue of Le Monde d'Hermès magazine. They are such a great source of knowledge about the brand's leathers, aesthetics, and styles by different designers.

Exclusivity A sense of accomplishment gained through effort to demonstrate social position and perstige.

Tailored EXPERIENCE

Feeling different from the mass Distinctiveness though personalisation The desire to stand out from the crowd

SERVICE LEVEL

Pleasure and personalised service thought the journey

Authenticity Coherency of the brand's heritage, vision and value

High-quality goods, craftsmanship, superior materials and uniqueness

Product quality

TRUSTED Relationship (Security of information, 24/7 Support, Professional Guidance)

Hermes Development Project | Page 53

Chapter 05

Primary Research

Artefact Development

Interview 3 & 4 with Sales Associates at Hermes Objective: •

To gain insight into how the brand achieves a high level of engagement and highly personal service.

•

Those interviews are exploratory research where questions and themes emerge from the participant's

Mission statement

conversation (Bell and Waters, 2014). The primary aim is to explore Hermes’ CRM strategy and how it

To create a luxurious and artistic Equestrian lifestyle for Hermes’ loyal and new

maintains a top desirable luxury brand over time.

customers. Hermes Resort is a celebration of every moment in life, a representation of French craftsmanship and a revolution in the luxury experience.

Key findings:

Hermes wants its clients to be loyal to the whole production line. The customers need a purchase history

Product Hermes’ new concept store

of scarves, shoes, watches, and especially furniture and tableware. Although the brand aims to offer 'the best'

shopping experience, sometimes customers are unhappy because they had spent a considerable amount of money but could not get the bag they wanted.

Ground Floor: The Equestrian Centre‘s main indoor arena & The grand lobby

Social media has made Hermès accessible to more people and has encouraged those who have been afraid

to set foot in the store to come and visit. Popular entry-level products include small leather goods, scarves, pony bag charms and fashion jewellery.

Some influencers like to show up their handbag collection, which resulted in customers only caring about

the quota bags: Birkin, Kelly and Constance. The sales associate thinks some people want to buy these bags just for fame and satisfy their vainglory, which does not align with Hermes' brand value. Some popular store locations only

The lobby includes a concierge and lounge for club memberships. The lounge

allow a maximum of two bags per household each season or year.

features sofas, desks and TVs for guests to use. A Heritage In Motion Exhibition

Hermès's website usually has only a few garments, small leather goods, fashion accessories, home decor,

will also be held at the centre, including photos and real objects from Hermes’ past

saddleries, and fragrances. It is because our brand has to increase the rarity of leather goods, but also to increase

collection. Hence, the brand image will be enhanced as new customers are informed

sales of other items.

by the brand heritage and value through seeing the displayed objects.

Consumer-Brand Relationships

Figure 60 (Author, 2022)

Communicating brand identity Raise customer awareness Enhand engagement

Retail Experience

Online Communication

Holistic service

Informative website design

Store atmosphere

Meaningful social media

Immersive sensory: sight,

marketing & interactions

sound, touch, taste and smell.

Keep a cohesive message via

In-store technology or

different channels

Interaction with sales Exclusive product collection

"The Moment of Luxury"

New physical retail formats Pop-up innovation

Effective online reservations Consumers involved in the brand's lover community or

Personal and cultural considerations

fan group

Positive emotions and lasting memories Strengthening customer-brand relationships Hermes Development Project | Page 54

Hermes Development Project | Page 55

Figure 61

2nd Floor: Shop with Hermes The Rider's Boutique

1st Floor: Dine with Hermes (VIP only access)

Including 2 VIP lounges Members-only entrance to the dining area down stairs

Hermes | Bistro x Epicure Hermes will collaborate with Che Eric Frechon to design

Above the Cafe is a Hermes boutique offering an exclusive

innovative French cuisines, embodying the brand’s unique

collection of ready-to-wear and activewear, riding boots, scarfs, belts,

heritage. He is one of Parisians’ favourite 3 Michelin starred

hats and gloves. This boutique will offer Made to Measure service to

Chef at Epicure Le Bristol. The well-dressed servers will

the saddles. Customers who come to this store usually have their own

note every member's preference prior to the appointment,

horses. When they come to the store, a shop assistant will measure the

creating unexpected delights for every client.

horse's height, weight, and dimensions to customise the horse's saddle and other gear for the best suit.

Hermes | Cafe

The garments from the new Equestrian collection will be co-

Surrounded by toughened glass, Hermes| Cafe is

created with the house's owners, and are intended to provide comfort

the perfect representation of contemporary artistry. By

and mobility with a touch of French chic. The innovations accompany

locating above the main arena, customers could see their

riders in the most renowned contests by combining breathable and

friends or family practising horsemanship downstairs

ultra-soft textiles with advanced production processes by Hermes'

while enjoying a wide variety of aromatic teas, cakes, and

known hows. Each piece made by Hermes’ savoir-faire will be a work

wines. The customers who prioritise physical health could

of art, where its value excessed beyond a commodity.

also request personalised superfood recipes, including

In addition, the brand will hold trunk shows in the boutique,

nutritious soup, salad bowls, Ketogenic desserts and

showing the latest collection to a group of guests who would not

organic mocktails. Besides, the Cafe will offer horse-

usually attend the fashion week. The customers could buy or order

shaped macarons exquisitely packaged in the signature

garments during the event before they become available for the public

Hermes boxes.

to shop in the stores. By offering trunk shows, Hermes would be able to reach a broader range of audiences and drive up sales for its readyto-wear line. Also, the brand could obtain sales figures demonstrating pre-season information on which styles will be popular (Posner, 2015).

Hermes Development Project | Page 56

Hermes Development Project | Page 57

Figure 62

The Hermes Resort | Stay with Hermes

3rd Floor: Restore with Hermes SPA Centre

The relatively limited number of suites is designed to create a sense of exclusivity and scarcity while

Located on top of the new concept store, the spa centre is specially booked for Equestrian

still allowing the resort to operate at maximum capacity all year. The interior design will make reference

club members. The attendees might be tired and sweating after the riding sessions, and they will

to Hermes’ horse motifs, including exclusive artworks and sculptures. Each suite will have a specific

desire a tranquil and quiet place to recover. Hermes SPA will provide seven private treatment

theme inspired by Hermes’ past runway and fashion collections. All the furnishings and decorations will

rooms for the VIPs to enjoy a wide range of body massages and facial treatments tailored

be designed and created by the artisan’s innovational know-how. Every piece will be available to buy for

specifically to the guest's needs.

customers. Thus the hotel also enables the guests to try all the furniture before purchasing. All the rooms

It will be a marriage of luxury and sensations dedicated to offering the most personal

will include a private Jacuzzi, garden, plush blankets and pillows, 4D TV, large bathroom and walk-in

and inspiringly beautiful experience of true wellbeing. The upcoming Hermes SPA is where

wardrobe.

experience is enhanced by savoir-faire and where fantasies inspire and become realities. This

The hotel will offer a wide range of breakfast options, from elegantly made croissants to the

Floor will also include steams rooms, saunas, and a relaxation pool dedicated to improving the

perfect superfood smoothie bowl for a fresh morning start. The guests are welcomed to enjoy a buffet in

guests’ physical and mental relaxation, which are available every day from 8 a.m. to 10 p.m.

its restaurant exclusively designed for the hotel residents. The personalised room service also enables the customers to customise their dining options. Each room will have a manager to take notes about their preferences and special requirements. For example, if a resident feels lazy in the morning, she could enjoy breakfast on the bed by just messaging her manager.

rd a o b d o o M spirations in

Figure 63

Top Floor: Rooftop Garden The terrace at Hermes Equestrian Centre is a sensory celebration of Parisian art and horticulture, creating a sequel to the Hermès Secret Garden in Faubourg Saint-Honoré. The visitor would gain a view of the entire resort while taking a break from the riding lessons. They could enjoy a cup of champagne or freshly pressed juice to chill out on a sunny afternoon.

The garden will present a signature spot for photoshoots, where all the guests are welcomed to take photos with the splendid view above the resort. They will be encouraged to use #SecretGardenHermès or #HermèsRider to share photos and videos on Instagram.

Figure 64

Figure 65

Hermes Development Project | Page 58

Hermes Development Project | Page 59

Price

Calculate based on competitors' offersing (Bvlgari Spas, 2022) (Cheval Blanc, 2021b)

Annual Hermes' Equestrian Club Membership Joining Fee : £6,000 Basic Membership Fee

Annual Hermes' Wellness SPA Membership Joining Fee : £3,000 Figure 66

Single £14,000

Membership Fee

Joint £25,000

Single Membership Fee £15,000 Joint Membership Fee £25,000

Includes: •

5 Fitness assessments

Includes:

•

60 hours of riding lessons (* additional fees

•

Physical Assessment and consultation

required for advanced instructor)

•

20 Hours of personalised message & treatments

•

3 Hours personalised massage

•

70 hours of yoga & stretch class

•

Exclusive access to the Rooftop Garden with

•

Free usage of Hermes fragrances and makeup

complimentary treats

•

10 salon passes from Hermes’ makeup and hair artists

•

Unlimited access to all the facilities at Hermes Spa

•

5 Passes for guest

•

Wellness follow up after each visit

•

Exclusive gift

•

Exclusive Gift

Place

Signature Membership Fee Single £20,000 Joint £35,000

Figure 67

Includes: •

Fitness assessments and monthly follow ups

•

Unlimited hours of riding lessons (* additional fees required for advanced instructor)

•

Exclusive access to the Cafe and Bistro

•

5 Complimentary afternoon tea

•

Exclusive access to the Rooftop Garden

•

Complimentary organic treats, champagne and freshly pressed juices at the Rooftop Garden

•

5 hours of personalised massage

•

Unlimited access to all the facilities at Hermes Spa

•

Complimentary blow dry service

•

Complimentary Hermes fragrances

•

10 Passes for guest

•

Exclusive gifts

Hermes Development Project | Page 60

Hermes Development Project | Page 61

Promotion

Follow the rider's adventure to meet and discover

Owned Media

Pre-launch Promotion

Story plot:

It is crucial to increase industrial discussion and social

The film features some of the most famous horses throughout

media coverage before the campaign. In order to raise public

history. Hermes will take the audience on time travel to see

awareness about the grand opening, the proposed strategy

those legendary creatures.

different horse breeds around the world.

What will she discover during the journey?

Find out on Hermes’ website, YouTube channel, and IGTV.

Hermès

SUBSCRIBE

180k subscribers HOME

VIDEOS

PLAYLISTS

CHANNELS

DISCUSSION

ABOUT

Hermès | The Rider’s Odyssey 12.000 views • 1 week ago

“The first client is the horse; the second, the rider” declared Jean-Louis Dumas,

will be carried on through social media, print publications,

1945.

Follow the adventure of the rider to meet and discover different horse breeds

The Heavenly Horses of Ferghana (Waley, 1955)

magazines and direct emails.

around the world. What will she discover during the journey? Find out one Hermes’ YouTube channel and IGTV. The film features some of the most famous horse throughout history. Hermes will take the audience on a time travel to see those legendary creatures.

The horses are Turkmen in origin and were

A fashion movie on YouTube and the official website The rider’s odyssey by Hermes

introduced to China in the Han dynasty. They were named

The campaign aims to improve the awareness of the new

glands become very visible under the fragile skin, which

product development through storytelling.

creates the perplexing look of bleeding.

-----------------------------------------------------------------------------------------------

UPLOADS

PLAY ALL

the Chinese term Han Xue Ma, meaning horse that "sweats blood". The film will introduce why they got the unusual

Objectives:

name: they have thick blood vessels, and then they run, the

•

Editable Video Name - Exemple

Editable Video Name - Exemple

Editable Video Name - Exemple

Editable Video Name - Exemple

Editable Video Name - Exemple

Editable Video Name - Exemple

100.000 views • 2 days ago

200.000 views • 3 days ago

100.000 views • 4 days ago

200.000 views • 5 days ago

100.000 views • 6 days ago

100.000 views • 7 days ago

To gain 10,000 new followers on YouTube within one month of the new movie publication.

•

To reach over 35,000 views and 30,000 likes on the movie after one month of publication.

Figure 68

Andalusian Horse from Spain

•

To acquire 5000 new customers who purchased from the official website each week during the campaign.

The origin can be traced back to 20,000 years on the Iberian Peninsula. The movie will bring the viewer to medieval Europe, on a battlefield with this courageous and

Figure 69

beautiful breed.

Dutch Warmblood stallion They were shown in the "Lord of the Rings”. This breed is among Europe's most renowned showjumping and dressage horses (Jones, 2022). The film will bring the audience to an Olympic competition, where a Dutch Warmblood has won a gold medal.

Azteca Horses from Mexico This is a muscular and powerful horse with exceptional athletic abilities. The rider in the film will go to America and participate in a polo competition.

Selle Français - The story behind Hermes’ Logo The film will also tell the story of ‘Le Duc Attelé’,

The Art of Riding (7 episodes) Short video series introducing & explaining house riding terms

Instagram post mockups

The primary aim is to educate and introduce the target customers with background knowledge on French house riding. The Instagram campaign will enable the brand to increase its interest level and reach a broader audience.

The short video will be

Hermès

Hermès

continually developed after the launch event, therefore maintaining a high engagement rate online.

an artwork by Alfred de Dreux in the 1920s, to deliver an immersive and experiential context. Luxury is often linked to hedonic escapism, where consumers seek extraordinary experiences to get away from dull regimes (Scott et al., 2017).

The “moments of luxury” not only include traditional luxury attributes such as exclusivity, symbolic values, aesthetics 25,698 likes

and heritage (Kapferer and Bastien, 2009) yet also require

“The first client is the horse; the second, the rider”,

-- Jean-Louis Dumas, 1945.

hermes Watch to the new series of videos introducing you to the world of Hermes Equestrian Centre.

In Episode one, we will tell 5 tips to do a perfect sitting trot. #LeMondeDHermes #HermesRider

the audience to be actively engaged and immersed within the customer journey.

Hermes Development Project | Page 62

25,698 likes hermes Watch to the new series of videos introducing you to the world of Hermes Equestrian Centre.

In Episode one, we will tell 5 tips to do a perfect sitting trot. #LeMondeDHermes #HermesRider

Hermes Development Project | Page 63

Figure 70

Launch Event invitation (left) Previews and livestream on Instagram

Paid Media

hermes

Traditional Adverting | Billboards To inform all the stakeholders about the live event on social media.

The Art of Riding (down) Videos of equestrian glossary via Instagram story

Press release tagline: Hermes will invite its loyal customers to its latest paragon: Hermes Equestrian Centre & Resort, at the heart of the world’s fashion capital - Paris.

This prestigious venue promises guests the most memorable stay and one-of-a-kind experience, which people cannot find anywhere else. Let us take a closer look at the inside of the world of Hermes and discover its spectacular offerings to visitors around the world.

Figure 71

Earned Media Magazine feature and Editorial The author discovered Hermes' upcoming projects as a result of the company’s constant promotion efforts and opted to include it in an article.

Figure 72&73 Objectives: •

To achieve over 60,000 likes for each Instagram post and video during the campaign for two weeks.

•

To acquire 100 new members for the riding centre through online campaigns in the first year.

Hermes Development Project | Page 64

Hermes Development Project | Page 65

Launch Event The Saut Hermès

Press Release - Paris, 20th Jan 2024 Hermes organise the Saut Hermès competition as part of the opening ceremony of its new Equestrian Centre on 20, 21, and 22 May 2024.

Hermes is pleased to present its first Equestrian Centre and Resort at Bois De Boulogne, Paris. The event will gather a community of equestrian enthusiasts around the globe’s greatest riders and horses in show-jumping.

Hermès is delighted to bring together over 88 riders from around twenty different countries, and more than 140 horses in the highest grade competition classified by the French and International Equestrian Federation.

In this new space designed in the event’s distinctive colours, visitors will be treated to a three-day celebration of equestrianism, high-level sport, and exceptional craftsmanship.

Demonstrations of know-how by the Parisian house’s saddlerleather tailors, a themed café and bistro, and a unique show will bring a festive and joyful spirit to the brand’s new concept store.

Throughout the weekend, an outdoor arena in Bois De Boulogne (a large public park) will offer equestrian activities and events to the public free of charge. After the existing days spent at the venue, the riders and visitors will be invited to restore at the Hermes spa. Experts will offer body treatments and massages tailored to each individual's condition and needs.

PRACTICAL INFORMATION Tickets are now on sale to the general public. Hermes' customers could purchase the tickets from its website and boutiques. The brand also offers FFE licensed riders the opportunity to attend the event for free on 20th May 2024.

Limited places available on saut-hermes.com

The Opening Ceremony posters Outdoor advertising in the brand's boutiques and other department stores.

Hermes Development Project | Page 66

All the stakeholders are more than welcome to join the opening event via Instagram Live. Please follow @hermes to discover this exciting journey.

Hermes Development Project | Page 67

Mobile Phone - Membership Sign up

Website Design Laptop - Membership Sign up

Hermes Development Project | Page 68

Figure 74

Hermes Development Project | Page 69

Process

Figure 75

Waiting Time

Hermes Development Project | Page 70

Hermes Development Project | Page 71

Chapter 07

Chapter 06

Risk, Opportunity and Sensitivity

Costings The anticipated budget for Hermes' Resort

expansion plan is shown below. Hospitality sales will provide

for most of the project's earnings, followed by membership fees, riding programs, spa treatments,

retail sales and

Figure 77

service revenue. Since these are some of the essential areas of advertisement, the strategy budget allotted the majority of capital to pre-launch campaigns and advertising. The

marketing strategy is expected to consume 20 per cent of the

forecasted cash flow in year one. The expenses are estimated based on Hermes (2020) annual financial report. Hermes'

marketing campaign is expected to consume 20 per cent of

the forecasted cash flow in year one. The expenses are

estimated based on Hermes (2020) annual financial report.

According to a report published by Boutique

Hotelier (Monk, 2021), the acknowledged average occupancy

rate for luxury hotels has increased to 71 per cent. Nonetheless, as Hermes Resort has a small

number of rooms and adopts a waiting list strategy to operate at maximum capacity in all seasons, the occupancy rate was expected to be higher than the reported average.

The luxury fashion brands entering the hospitality industry face different risks and opportunities. One of Figure 76

the major opportunities is using technology to communicate with the targets (Jung and Yim 2018). If appropriately used, technology can allow luxury fashion brands entering the hospitality industry to connect with customers from different parts of the world easily.

In euros

Strategy Component Events

Pre-Launch Launch

I Total Events Website

Totals 450,000.00 750,000.00 1,200,000.00

Design & Development

55,000.00 25,000.00

I Total Website

80,000.00

Outdoor Billboards

665,000.00 315,000.00

Live Chat Capability ; CRM

Jan-2024

Feb -2024

Mar -2024

Apr - 2024

100,000.00

100,000.00

250,000.00

May- 2024

Jun- 25

300,000.00

450,000.00

-

"-

The technology will also enable the brand to keep up with the customers' constantly changing needs and

Marketing Budget

Jul -25

Aug -25

Oct -25

Nov - 25

Dec-25

the shortest time possible. However, the organisation might suffer from finical risks without proper planning.

-

-"

"

A company is required to spend a considerable amount of capital in marketing its products and services in the

. 55,000.00 25,000.00

industry. Currently, internet platforms are among the best places where an organisation can interact with a border

Advertisement

Online Advertisements

I Total Advertisement

75,000.00 30,000.00

50,000.00 25,000.00

100,000.00 35,000.00

100,000.00 45,000.00

75,000.00 50,000.00

125,000.00 65,000.00

. 50,000.00 20,000.00

25,000.00 15,000.00

15,000.00 10,000.00

. 10,000.00 5,000.00

15,000.00 5,000.00

25,000.00 10,000.00

YouTube

42,500.00 42,500.00

ITotal Social Media

85,000.00

ITotal Budget

2,34s,ooo.oo

audience. However, the use of technology can cause risk for the business (Meraviglia 2018, 450). The firm should be careful while using these platforms as different concerns can arise, such as customers' privacy or having a long

980,000.00

Social Media lnstagram

demands. Besides, the equestrian industry or riding centre has remained a relatively untapped market for luxury fashion brands (Hoang and Heidari, 2019). This allows Hermes to tap into the sector and achieve success within

-

-

-"

Sep -25

2,000.00 2,000.00

2,000.00 2,000.00

1

I

2,000.00 2,000.00

6,000.00 6,000.00

8,000.00 8,000.00

6,500.00 6,500.00

Hermes Development Project | Page 72 Percentage of Year One Forecasted Sales

20 %

1

6,000.00 6,000.00

2,000.00 2,000.00

2,000.00 2,000.00

2,000.00 2,000.00

2,000.00 2,000.00

2,000.00 2,000.00

waiting time.

Hermes Development Project | Page 73

Chapter 08

Conclusion This business plan was constructed to develop Hermes' riding centre and holiday resort based on a detailed examination of external and internal business environments, including an analysis of the fashion and hotel industries, market segments, and customers' purchase behaviours.

It is also vital to research the company's history, current positioning in the luxury industry worldwide, and customer perception to guarantee that this marketing campaign would be successful and align with its brand value. Those analyses have supported the development of the marketing plan by examining a designer branded hotel's advantages, limitations, opportunities, and challenges. A combination of primary data analysis and literature reviews was undertaken and evaluated to ensure the most accurate information.

Hermes Resort aims to enhance its overall brand awareness and reputation. The campaign also took the opportunity of the expanding millennial segment's demand for immersive travel as well as their growing disposable income. The project has created a new customer experience for Hermes' consumers, luxury tourists and horse lovers.

Digital content marketing, new website design, and new service were developed to attract the younger generations.

It will enhance customer loyalty and Hermes' desirability by creating an intimate experience that others had not previously offered. Most importantly, Hermes Resort will remain true to its core values and reflect its reputation for excellence, exclusivity and craftsmanship throughout the journey.

Recommendations For many fashion luxury brands, hospitality and wellness travel have become an essential point of differentiation, given the rise of hearty-mined consumers and luxury tourism. As Hermes expands into the hospitality industry, the brand creates holistic, trustworthy and highly personalised offerings in order to stand out and maximise competitive advantage.

Luxury companies are working hard to attract younger customers by experimenting with different immersive marketing tactics and refining traditional communications to reintroduce the brand's vitality and enhance customer awareness. In this proposal, Hermes has tested new channels, and concepts for physical retails. Napoli (2022) has highlighted businesses are innovating age-old marketing methods, which embody the idea of escapism and hedonistic desire. However, the primary research suggests that it takes more than those two attributes to convert a shopping experience into a long-lasting memory. Something else is required to create customer advocacy. The researcher believes infusing the hedonistic escapism experience with elements of conventional luxury is the key to creating highly differentiated luxury moments.

Figure 78

Hermes Development Project | Page 74

Hermes Development Project | Page 75