The Hermès strategy revolves around our values: spirit of conquest, creativity, craftsmanship, quality, authenticity and independence. It is based on three pillars: freedom of creation, the high standards of craftsmanship savoir-faire and the balance of the exclusive distribution network.
Creation at the core of Hermès's strategy
In this singular context, creation is at the heart of the model. It is the best response to the crisis, with unique objects that last and arouse desire beyond fashions and circumstances.
Hermès creates and manufactures quality objects designed to last, to be passed on from one generation to the next, to be repaired. This approach, as well as the search for excellence, particularly in materials, requires consideration of the challenges of sustainability and quality at every stage from design to sales.
Hermès’ strategy is based on creative freedom, driven by its creators and Artistic Directors around the theme, which inspires the House’s creative activities. With pride in its craftsmanship model, in 2020 Hermès paid tribute to the extraordinary tool that is the human hand, as well as to the ingenuity that drives every one of the House’s craftpeople and women. For it is this combination that characterises the innovative spirit of Hermès, the Saddler's spirit.
Uniqueness and performance of the craftmanship model
Hermès leverages its craftsmanship division, the second pillar of its strategy, with nearly 5,600 craftpeople and women in France. A House of over 180 years, backed by a rich history shaped by six generations of craftpeople, Hermès draws from its past through its savoir-faire, and is geared to the future through values that address the concerns of our modern societies. Hermès moves with the times, but always respecting tradition, transmission and innovation. The quest for excellence and quality, the search for precision and elegance are the values that guide its action. It is over this long period of time that the House has forged its savoir-faire and its values, and that the Hermès strategic vision has developed.
Strength of vertical integration
To guarantee the long term excellence of this craftsmanship model, the House takes particular care to secure its supplies of materials. Vertical integration, through partnerships and acquisitions, supports the development strategy, with regards to materials as well as techniques and savoir-faire. More than 60% of production is integrated and 80% is located in France.
This vertical integration is present throughout the production chain, from supply to the distribution network. Strongly anchored in France, based on the mastery and excellence of savoir-faire, a métier rather than a task, it has enabled the Group to be agile in the face of the crisis. As a result, the Group has been able to adjust its production volumes and reallocate its orders to some geographical areas in order to enable optimal inventory management. Its craftpeople have all mobilised to ensure the continuity of production and thus limit delivery disruptions.
The vertical integration and sustainable relationships with its partners ensure rigorous traceability of its supply chains, strict control of its supplies and reinforce the House’s responsible development strategy with regard to materials, techniques and savoir-faire.
The dynamics of an exclusive distribution network
The omnichannel offer has been further developed this year in the exclusive and geographically balanced distribution network. This in-house distribution model, with Hermès’ own network of stores and e-commerce sites, proved its effectiveness during the crisis. The House’s tools have been adapted to a transformed customer relationship in order to respond to rapid changes in demand, and thus maintain a special relationship with customers. 2020 saw the widespread rollout of an omnichannel service relationship that enabled business continuity.
The exclusive distribution network, consisting primarily of branches run by the Group around the Hermès brand, is the third pillar of Hermès’ strategy. Each of the 306 stores across the world offers a personalised selection of objects, to exceed the specific expectations of its customers and offer a distinct purchasing experience in each and every store. Each store enables its customers to explore and discover the most beautiful products, and extends the House’s lustre worldwide.
An entrepreneurial spirit and freedom of purchase
The entrepreneurial spirit has been at the heart of Hermès since its creation, never leaving its side and guiding all facets of the Company’s development. It is illustrated by its abundant creativity, a capacity for constant innovation, new métiers, new production workshops and store openings. An entrepreneurial and innovative spirit underlies the creation of every object.
The strategy offers store managers freedom of purchase, to meet the specific needs of their customers. Two podiums are organised every year, presenting the fall-winter and the spring-summer collections. These bring together all store and country managers, managers of the different métiers as well as designers, to present all collections to the sales teams in all regions of the world. They are thus responsible for their own collections and make their store unique with a special mix of products. The presentation of the collections adapted to new formats this year, turning to digital presentations of the collections. This freedom means that in each country where Hermès is present, the Group’s customers are presented with a diversified and unique mix of products resulting from this flurry of creativity, blending iconic products and the House’s new references, created by its designers, artists, colourists and Artistic Directors, to best meet local expectations and dedicated to the elegance of its customers.
An independent house
Hermès continues to assert its independence, underpinned by a strong family-based shareholding structure, committed to retaining most of its production in France and perpetuating its savoir-faire to serve creativity and its long-term vision.
This independence, and the House’s financial strict management, made it possible to continue operational investments in 2020, both in production capacities and in the network and cross-functional projects, in order to preserve the House’s long-term performance and value creation.
Virtuous and responsible growth underpined by humanist values
The majority of Hermès’ production takes place in France, at 51 production sites grouped to create regional clusters. Hermès’ strategy is to pursue this sustainable, responsible and social value-based growth model, with commitment to regions where there is a high level of manufacturing savoir-faire to create high-quality jobs.
Hermès is a humanist company, deeply respectful of all those who, with their commitment, savoir-faire and passion, are working to make the House a success. In response to the crisis, Hermès employees acted with solidarity and commitment to overcome obstacles and move forward.
Hermès’ remarkable solidity is the result of this strategy, which is based on high standards, the transmission of unique savoir-faire, local anchoring and strong vertical integration. It reinforces the choices made in the past and encourages the Group to show initiative and innovation to forge the successes of tomorrow.
This strategy is the result of the high standards of a House founded on craftsmanship and independence and driven by its exceptional savoir-faire to serve unbridled creativity. It hinges on historical savoir-faire while remaining resolutely forward-looking, through its accelerating transformations, its creativity and innovation, and its ability to understand and anticipate the aspirations of its customers today.
The crisis we have been through has seen the affirmation of commitments with social and environmental responsibility, the digitisation of uses and the positive market dynamics in Asia. Taking into account these profound and lasting changes allows us to remain confident in the future.
For Hermès, craftsmanship is a sustainable and human adventure, in a constantly changing world.