Hermès. Birkin. The two words have become synonymous with each other. After all, it was the Birkin bag that propelled Hermès to the top of the proverbial luxury food chain, and the Hermès brand that has now solidified the Birkin bag as the most exclusive handbag in the world. Quite a formidable duo to say the least- teamwork definitely made the dream work here.
Image Credit: @flaviastuttgen
However, since its inception (and even since the introduction of the Kelly bag before it), Hermès as a brand has ventured into other facets of the luxury industry. In fact, one might even say it has added a touch of luxury to traditional consumer goods such as homeware. Even today, handbags and leather goods aren’t the only proponents to its success, but shoes, ready-to-wear and accessories have all aided in Hermès growing financial prowess.
The Numbers Game
In fact, it was these divisions of the luxury house that nearly doubled in sales in Q1 of 2021, contributing to Hermès’ staggering YOY (a.k.a. financial performance from one year to another) increase of 41%. Fast forward to the most recent financial results presented and the brand continues to soar. Q3 saw Hermès revenues soar into the double digits with 31% growth over the same period in 2020. The house’s other business lines, which include homeware, ready to wear, accessories and jewelry, grew by 77% from 2020 figures.
Image Credit: thebeautylookbook.com
With growing interest in the brand and its other items beyond leather goods, Hermès launched a beauty line. It introduced a lipstick range in 2020, a blush in March 2021, and now a collection of nail polishes! The first two did exceptionally well in terms of sales, setting expectations for yet another sellout proposition.
Image Credit: kellilash.com
Given such an interest expressed by consumers in so many other Hermès product lines, this begs the question- how long can Hermès keep betting on the Birkin? And will its golden child forever remain golden? Some wonder whether the brand slowly will migrate its focus to other emerging trends and popular products in order to keep up with the changing purchasing habits of luxury consumers. That’s especially the case for the ever-growing millennial (and younger) consumer segment. Could this strategy allow for Hermès to tighten its grip over the luxury goods industry? On the other hand, perhaps the Birkin will always reign supreme among handbags – the ultimate HGB.
More than Just the Birkin...
A recent JingDaily articles examines this very question by zeroing in on a very important concept- diversification.
While it is indispensable for brands to create a signature piece, it’s never wise to stop creating new ones…
-Lisa Nan, JingDaily
She does have a point. Take Apple for example. The tech company’s most well known and popular product is arguably the iPhone. Nevertheless, Apple did not stop there. Rather, the company has delved into a plethora of products from computers to headphones, tracking devices to streaming services. Even though, the iPhone, and even its Mac computer, are arguably Apple’s cementing glory, they are now a drop in the ocean when it comes to the brand’s product line.
Image Credit: Richard Levine/Sipa USA via Reuters
In applying the same logic to Hermès, it’s reasonable to see why it would look to expand its product offerings. In fact, we reported earlier about how luxury consumer demographics are changing- specifically in a part of the world that has driven sales and growth in this sector over the course of the past 18 months.
The Asian market increased its share of global luxury consumption to 20%, with sustained growth expected to continue through to the middle of the decade. Of this market share, millennials currently account for nearly half of all luxury purchases, and are expected to grow to almost 70% of the Asian luxury consumer segment by the mid 2020s. Moreover, these young consumers interest in the most popular and sought after luxe products is waning. In fact, they are now looking to vintage and the preloved market.
Image Credit: 1stDibs
Could this potential wave of conscious shopping and interest in designs past be a point of concern for Hermès? If young shoppers no longer see the “big deal” over the Birkin, perhaps Hermès as a brand will no longer hold its allure. Of course, on the other hand, turning to the secondary market also could be a way of attaining items (like the Birkin) not otherwise obtainable. Whatever the answer, it seems Hermès is doing something to start preparing for a shift in buying habits, no matter how drastic (or not) they may be.
Image Credit: Reuters
Blushes and Lipsticks and Nail Polishes, Oh My!
“Hermès’ leap into cosmetics might well bring new consumers to the company. The line offers shoppers a lower entry price point, enabling the luxury house to reach a broader audience that wants a touch of the historic brand,” says Dao Ngyuen, founder of Essenzia, a marketing and strategy company focused on the cosmetics industry. Additionally, the house’s venture into mushroom leather, an alternative to regular cowhide, has already proven attractive to the likes of conscientious shoppers looking to incorporate sustainability and environmental responsibility into their purchasing habits. However, things like lipsticks, blushes and key tags are hardly the status symbol that the Birkin has become.
Image Credit: Hermès (top) bagsofluxury.com (bottom)
When the luxury house was developing its nail polish line, CEO of Beauty and Fragrances Agnès de Villers recalls contemplating whether a nail file should be created as well. “At the beginning, we wondered- ‘Should we do a nail file at Hermès? Is it okay?’” explains de Villers, “but yes—it’s necessary. Let’s go for it.” Small, simple and functional- made of Orange Boîte–coloured poplar wood and branded with the house’s logo, it’s sure to be a hit. But it’s no Birkin.
Love, PurseBop
XO
Updated: November 8th, 2021
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