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Strategy

The Hermès strategy revolves around our values: spirit of conquest, creativity, craftsmanship, quality, authenticity and independence. Creation hinges on two pillars: our craftsmanship activities and our exclusive distribution network.

Défilé PAP FAH 2020
Women’s autumn-winter 2020 runway show © Jean-François José

Creation at the core of Hermès's strategy

The Hermès strategy is underpinned by the freedom of creation, championed by its designers and artistic directors around a given theme, which shines a common far-reaching light on all activities of the House. Every year, this theme inspires the collections presented to country managers and store managers at the podiums. “In the pursuit of dreams” was the theme for the year 2019. Celebrating the dream of Hermès means asserting the need to dare to see even further, to open the field of the imagination that stimulates creation. This creativity revolving around traditional know how is coupled with innovative processes to revisit timeless models and create exceptional pieces, without departing from Hermès’ trademark humour and imaginative flair. This is true of the House’s 16 métiers and of its other products and brands, in particular bootmaker John Lobb, cristallerie Saint-Louis and silversmith Puiforcat. This unbridled creativity is present in each métier, as reflected in the numerous scarf designs printed every year. It is expressed through over 50,000 references, developed around a unique identity and a style blending exceptional quality, innovation, surprise, elegance and simplicity.

Hermès’s mission is to create unique and original objects to elegantly satisfy the needs and desires of its customers. Its goal is the pursuit of excellence, in each of its métiers and services, with craftsmanship at the heart of its model.

Uniqueness and performance of the craftmanship model

Hermès leverages its craftsmanship activities, the first pillar of its strategy, with nearly 5,200 craftsmen in France. A House of over 180 years, backed by a rich history shaped by six generations of craftsmen, Hermès draws from its past through its savoir-faire, and is geared to the future through its values that address the concerns of our modern societies. Hermès moves with its 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.

The craftsmanship model is one of the pillars of Maison Hermès, and ensuring that it lasts is key to its strategy. The House thus works alongside those who master, preserve and transmit craftsmanship know how through their knowledge of materials and their exceptional techniques. With each new leather workshop, around 250 new jobs are created, promoting a pleasant working environment on a human scale.

The House attaches great importance to the continuous improvement of its artisans’ skills and savoir-faire, as evidenced by its école du cuir. The craftsmanship model is at the heart of all the métiers of Maison Hermès, using exceptional materials.

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.

Hermès employeur d'artisans d'excellence
Leather goods know-how © Alfredo Piola

The dynamics of an exclusive distribution network

The exclusive distribution network, consisting primarily of branches run by the Group around the Hermès brand, is the second pillar of Hermès’s strategy. Each of the 311 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 our customers to explore and discover the most beautiful products, and extends the House’s lustre worldwide.

Customers are placed at the core of the multi-channel and integrated network, so as to best meet their expectations and offer them a unique experience. Across the world, Hermès stores are veritable “object homes”, offering customers a unique experience, complementary to its website hermes.com. This offer is backed by innovative services aimed at welcoming and serving them at all times in the best possible manner. The House also offers special occasions that strengthen the bonds among Hermès’ stakeholders, revolving around events in the world and dynamic and animated set designs. Each opening or reopening is an opportunity for the House to bring together customers that value its creativity and savoir-faire. Hermès’s unique way of communicating ensures that the House is recognised in France and worldwide.

The development of new technologies has incited Hermès to boost the omni-channel dynamics of its organisation and to improve the customer experience in its stores and online.

Maison Hermès, present in 45 countries following the opening of a store in Poland at the end of 2019, thus has a geographically balanced network of stores, with a steady pace of development and the constant search for prime locations.

Magasin Hermès dans le quartier de Meatpacking, New York
The store in the Meatpacking district of New York © Franck Oudeman
Hermès, l'orange passe au rouge

An entrepreneurial spirit and freedom of purchase

Beyond its history, the right times for action and the spirit of conquest set the tempo at Hermès, drawing inspiration from the work and talent of all employees driving its corporate vision. This opportune time for action means the art of understanding one’s time and capturing the essence of it.

The entrepreneurial spirit has been at the heart of Maison Hermès since its creation, never leaving its side and guiding all aspects of its development. It is illustrated by creative synergies, the capacity for continuous innovation, new métiers, such as the Beauty line launched in early 2020, the establishment of manufacturing units and new 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 autumn-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. This freedom means that in each country where Hermès is present, the Group’s customers are thus 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.

Hermès’s strong and sustained development is the result of sound and rigorous management, a resilient business model, and prudent financial management. They contribute to preserving the uniqueness of the House, part of the CAC 40 index since June 2018, in a context of strong growth. This is achieved by maintaining the Group’s profitability, its high cash level, its operating cash flows, targeted and qualitative investments, and the security of its assets. Financial independence ensures that its long-term strategy is safeguarded.

Escalier du magasin de Vancouver au Canada
Hermès store in Vancouver, Canada

Virtuous and responsible growth underpined by humanist values

The majority of Hermès’ production takes place in France, at 43 production sites grouped to create regional clusters. Hermès’s 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 quality jobs.

Through its engagement with local authorities and communities where its production sites are located, Hermès contributes to revitalising regions, and provides working conditions that offer proximity and stable employment. Control and security of supply are at the heart of the strategy. Through its integrated production, Hermès can produce most of its objects in its internal and exclusive workshops.

Hermès is a humanist company, deeply respectful of all those who, with their hands, commitment, savoir-faire and passion, are working to make the House a success.

Hermès's craftsmanship model leaves a careful environmental footprint. In its direct sphere of influence, biodiversity in particular is systematically taken into account in the construction of its production sites, and in its indirect sphere, the Group has a positive impact on its supply chain, by preserving autonomous ecosystems and by participating in global initiatives.

As regards sustainable development, Hermès is determined to leave a positive global footprint, by paying utmost attention to the performance of corporate social responsibility, in keeping with the House’s DNA and its craftsmanship model. Hermès’s objects are created, designed and made to last, using the most beautiful and robust natural materials and the best craftsmanship savoir-faire. A Hermès object acquires a beautiful patina over time and frequently improves with age. Craftsmanship of excellence means a piece that can be repaired. The House has therefore always had craftsmen dedicated to this activity, in France as well as abroad. Offering long lasting, repairable objects, which are meant to be handed down is also a way to reduce the impacts of over-consumption and the wasting of resources, one of the principles to which Maison Hermès is particularly attached. There is a strong commitment to the creation of social value, both collectively through job creation in communities, and individually through bonus share awards, profit-sharing and incentives to employees, testimony to the Group’s desire to share the fruits of its growth with those who make it happen on a daily basis. Hermès’s commitment also implies strong signals from management. For example, since 2019, 10% of the Executive Chairmen’s variable compensation is subject to CSR criteria, such as industrial energy consumption, the local integration of our sites and gender equality.

Le pôle de formation de la nouvelle maroquinerie iséroise
The Ateliers de Fitilieu training hub © Benoît Teillet

Hermès’s remarkable growth is the fruit of this strategy. It 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. Hermès’ strategy hinges on historical savoir-faire while remaining resolutely forward-looking, through its regular transformations, creativity and innovation, and its ability to understand and anticipate the aspirations of its customers today. For Hermès, craftsmanship is a sustainable and human adventure, in a constantly changing world.

Couverture du rapport financier
Publication

2019 Universal registration document

Maroquinerie de Sayat
Press releases

Hermès continues to invest in its production capacity in Auvergne, France