Why Did Hermes Dare To Go Up In Price?

Why is Hermes in the pricing strategy against the trend? Luxury industry insiders told reporters that Hermes's existing capabilities and brand positioning can support its rise in price. Different luxury brands have different pricing strategies and their market segmentation positioning. In the future, the luxury market will show more obvious two level differentiation.

As early as March 2015, Chanel announced the global price adjustment for reasons such as exchange rate fluctuations and purchasing trend. Titiago, Patek Philippe, Dior, Cartire and other brands joined the price reduction army. However, Axel Dumas at that time, in an interview with the media, made it clear that the group would not adopt similar strategic adjustment in order to stimulate sales in China.

At the annual general meeting of the company in June 2nd, Axel Dumas said again: "in the face of the weakness of the euro, we will probably make some adjustments, but we will still take our pricing policy as the criterion.

In 2015, we will raise about 4% of the price in Switzerland. "

He also said that a wider range of prices would be considered in 2016.

Axel Dumas said that Hermes has an annual exchange rate balance policy, which can ease the impact of the weakening euro on profits.

He said the company always believed that the price of the product should reflect the cost of production, especially in the famous brand platinum producing area, France.

He said: "this is why we do not adopt such a solution to" reduce prices in some places and then raise prices in France ", because this is unreasonable for French consumers.

Hermes continued to rise in price, probably from its general downturn in the luxury sector.

In 2014, sales of Hermes Group continued to push up to 4 billion 119 million euros, with a sales growth rate of 9.7%, ranking the first among the major luxury goods groups, far away from the annual revenue growth of 3.9% of its largest competitor and the world's largest luxury group LVMH fashion leather goods department.

At the same time, Hermes group's profit reached 859 million euros, the annual growth rate was two percentage points higher than that of 2013 (9%), and the annual sales of the same store increased 12.7%.

"Existing capacity and

It can support the price increase of Hermes, "Zhou Ting, President of luxury goods expert and Research Institute of wealth and quality, told reporters.

First, Hermes has adopted a temperate way of development. When the luxury market is developing at a high speed, other luxury brands are expanding their sales through shop expansion. Hermes is prudently expanding, keeping the growth rate of single digit stores for many years, and even constantly adjusting stores in some countries and regions in appropriate time.

Separation ensures the visibility of high-end groups.

Secondly, Hermes has always maintained its core business.

While many other luxury brands have cut off less profitable custom businesses in the fast developing market, they have developed rapidly growing standard garments and other businesses.

Hermes has maintained and enhanced the stickiness of high-quality old customers through customized services, while other brands in the "consumption upgrading" and "industrial upgrading" will find that they are losing old customers and the quality of new customers is relatively low.

Third, the original product positioning price of Hermes is separated from other luxury brands in the market, which excludes the low assets crowd and attracts high-quality customers. The price increase strategy based on Hermes not only does not affect its sales.

It is worth noting that the development strategies of the expansion stores are significantly different from those of the major luxury goods groups. The number of global stores in Hermes group has been decreasing in the past three years. In 2014, only 311 stores were retained, returning to the level before 2008, but sales and profit margins were not affected.