(AOF) – On the third floor of the JR Nagoya Takashimaya mall in Japan, Hermès is reopening in a new location, the doors of its third store in the city. This new store encompasses the house’s sixteen professions, with a generous lounge hosting the women’s and men’s collections, including shoes and accessories, as well as a space dedicated to perfumes and beauty.
“The two facades with identical patterns attract the eye thanks to the brightly colored ceramic tiles, made using ancestral techniques and arranged in such a way as to suggest an impression of movement”, specified the luxury group.
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Key points
– Luxury family group created in 1837 of medium size but with a worldwide reputation, with 306 exclusive stores and e-commerce platforms in 28 countries;
– Sales of €6.4 billion, split between Asia-Pacific for 60% including Japan for 11%, Europe for 24% including France for 9% and the Americas for 16%;
– One of the most diversified brands in the world of luxury goods, from leather goods (47% of sales), to clothing and accessories (25%), including silk and textiles (6%), perfumes (4%), watches (4%), tableware, etc.;
– Business model based on vertical integration, the “power of the hand”, the maintenance in France of the know-how of the 5,600 craftsmen in 51 production sites (out of a total of 64) and the sharing with 3 thirds the value created (investments, shareholders, storage);
– Company controlled by family shareholders (66.6% of capital and 78.2% of voting rights) of which Axel Dumas and Henri-Louis Bauer (representative of Emile Hermès) are general partners;
– Sound financial solidity with, at the end of June, €9.4 billion in shareholders’ equity and €7.7 billion in net cash, combining maintenance of operational investments and generosity towards shareholders.
Challenges
– Long-term strategy based on:
– an artisanal model of excellence, vertical integration and the strength of creation, a multi-local dynamic and resilience via financial autonomy,
– a singular communication,
– an omnichannel approach with a target of €1 billion in revenue;
– Innovation strategy inherent in the creative profession, with Petit H, Hermès Horizon and deployed in the omnichannel;
– Environmental strategy:
– by 2030, 50% reduction and 100% offsetting of carbon emissions from own activities (vs. 2018) and 3rd commitment to Livelihoods carbon funds,
– by 2020, 50% reduction in carbon emissions from own activities vs 2018,
– by 2025, stop using single-use plastics,
– quality of raw materials certified by independent third parties (objective 100% for the leather and textile sectors for 2024),
– repairability at the heart of the design;
– Asia held up well, with sales driven by Australia, South Korea, Singapore and Thailand.
– Ability to resist fads and economic contexts thanks to its “classic” image, its timeless character and its strategy of securing supplies;
– Profitability driven by the weakness of the euro against the dollar, production being located in France.
Challenges
– Evolution of price differences – of 50% – between Europe and the rest of the world;
– Welcoming customers to sales price increases in 2023, staggered between 5 and 10% depending on the continent;
– Impact of investments in production capacities -5 new leather goods stores in France and work on the Textile Lyonnais site as well as in the distribution network – omnichannel services and store openings;
– After an increase, exceeding market forecasts, of 32.5% in activity at the end of September, confirmation of the medium-term objectives of “increase in turnover at ambitious constant exchange rates”.
The axis of sustainable development now a priority
This is one of the strongest expectations of customers aged 25 to 40, who represent a growing proportion of sales. This also represents an advantage in recruitment for major luxury brands. LVMH, Fendi, Imperial College London and Central Saint Martins UAL have teamed up on a two-year research project to develop new biotextiles for fur in the sector. Recently the manifesto for a regenerative fashion, developed in partnership with the Alliance for the circular bioeconomy (CBA) was signed by Burberry, Chloé, Stella McCartney, or Armani. As for Kering, it has developed a tool that measures its CO2 emissions, water consumption and land use throughout the supply chain.