Legacy Retailer Reinvention

retailer reinvention

contents

01 company
background
05 competitive
02 financial analysis

information 06 strategic

03 sales by analysis

channel 07 challenges &
considerations
04 customer
profile
08 mockups

01 company
background

company background

founded in 1837 by Thierry Hermès

originally crafted leather riding gear

Thierry’s son Charles-Émile Hermès
moved the company’s shop to 24
Rue Du Faubourg Saint-Honore in
Paris

company background

between 1880-1900, Hermès introduced their product into retail
stores

in 1900 Hermès released their “Haut à Courroies” bag
1930 Hermès entered the United States in Neiman Marcus
“Birkin Bag” introduced in 1982
today, the brand operates 307 stores globally across
the U.S., Russia and Asia with over 13,000 employees

02 financial
information

financial history

past 5 years

Stock (Actual Price) 298 361 391 448 487

financial history

past 2 quarters

Stock (Actual Price) 637 670

financial trend analysis

more exclusive due to celebrity adoption of the brand
consumers in China make up a third of Hermès’ clients and, due to cuts

on import tariffs, shopping is more accessible to them
recently added lipstick to their product offering
revamped e-commerce platform

03 sales
by channel

sales by channel

no information available, sales by channel
can be compared to Louis Vuitton’s:

e-commerce vs. brick & mortar

0.52% 99.48%

($279.7m) ($52.7b)

04 customer
profile

target customer

men and women aged 24-50
income of over $250,000 a year
married or in a long term relationship
college-educated with an obtained
bachelor’s or master’s degree
lives a sophisticated and luxurious
lifestyle in major cities such as New York
or Paris

customer persona

Nikol Johnson

45 years old and happily married in Miami
BA in merchandising from LIM College
founder and CEO of Fresh Beauty Studio and Nikol
Cosmetics, making an income of $450,000
very sociable and follows the latest trends
(experiencer); professional, goal-oriented, and
committed to her job (achiever)
enjoys creating beauty videos for her YouTube,
embraces her gray hair, loves French bulldogs, and
is an avid collector of Hermès bags

05 competitive
analysis

heritage

conservative trendy

modern

competitor pricing summary

competitor profiles Target Customer
+ wealthy men and women aged 35-65 who prefer to shop
Louis Vuitton less frequently but will make a few big purchases a year
+ affluent fashionable females aged 18-34 who have a large
disposable income and shop frequently
+ both value craftsmanship and exclusivity

Competitive Advantage
+ one of the most profitable brands in the world, with profit
margins north of 30%
+ strict control over their product distribution and pricing
+ appeal to a wide age range: Virgil Abloh is the artistic
director, which draws in a younger target market, yet their
heritage and old-world brand aesthetic keeps an older
generation interested

Prada

Target Customer
+ a global customer that is modern, sophisticated, fashion
forward, and expects craftsmanship and exclusivity
+ men and women between the ages of 18-35 who reside in
urban areas and come from wealthy families or work in a
lucrative field

Competitive Advantage
+ wide distribution: they sell their product through
brick-and-mortar stores and wholesalers
+ frequently uses technology to stand out from their
competitors: in the past they have partnered with LG
Electronics and AI influencer, Miquela
+ to appeal to a younger target market, Prada collaborated
with Adidas in 2019

Burberry Target Customer

+ men and women aged 21-37 who are fashion-forward,
tastemakers, brand loyal, and part of high society with a high
disposable income

+ appeals to a broad age range because of their varied
product assortment

Competitive Advantage

+ complete rebrand under the new creative director,
Riccardo Tisci, in 2018

+ transformed from an underperforming brand to one that is
relevant and desirable to a younger consumer, the trench
coat keeps an older generation loyal

+ renewed focus on leather goods, faster and more regular
product drops, and broader range of price points

+ controlled brand image by closing smaller, non-strategic
locations to focus on high-visibility, influential fashion
markets: full inventory on Farfetch to broaden distribution

BVLGARI Target Customer

+ women between the ages of 40-70 in the top echelon of
wealth, well-educated, and live in North America, Europe, or
Asia

+ an elegant world-class traveler that defines luxury and
exclusivity, not afraid to show off wealth

Competitive Advantage
+ varied portfolio from watches to luxury resorts: their
product is sold through their own boutiques and
wholesalers
+ in 2020, they announced B.Zero1 Rock collection: the new
line marketed to a younger target market and revises the
unisex ring style to include pyramid studs
+ progressive marketing materials show the ring alongside
bright, colorful clothing and tattooed models
+ 2020 ambassadors include Zendaya and Lily Aldridge

Tiffany & Co. Target Customer

+ women aged 20-45 in upper-middle to upper-class who
appreciate the finer things in life and seek products that will
be cherished for generations

+ those looking for special occasion gifts such as
engagement rings, anniversaries, graduations, or holidays

Competitive Advantage
+ wide product assortment: offering everything from watches
to pizza cutters and tape measures
+ early proponent for sourcing materials in a socially and
environmentally responsible way
+ acquired by LVMH in November 2019: bringing new energy
+ turnaround strategy involves targeting younger customers,
lowering the cost of jewelry, and introducing items more
often

06 strategic
analysis

Market Expansion strategies

+ existing format for a new target market Market Penetration
+ new target market is 20-35 year olds in Asia
Pacific + existing format for the same target market
+ Hermès is going to collaborate on a new + Hermés Getaway is a luxury vacation destination
handbag with fashion blogger Tao Liang AKA in Aspen, Colorado, and Napa, California
Mr. Bags + all-inclusive package includes a stay at a bed &
+ Mr. Bags has 5 million followers on Weibo breakfast furnished by Hermès, horseback
and has had successful collaborations with riding through Napa vineyards or the Colorado
Givenchy, Tod’s and Burberry countryside, chauffeur, and a spa treatment

market expansion schedule

market penetration schedule

competitive advantages Market Penetration

Market Expansion The $5,500 all-inclusive package
provides an exciting and exclusive
China has 400 million millennials, vacation that no other luxury brand
and accounts for 58% of luxury is offering
goods buyers Consumers value memorable
Mr. Bags has extensive insider experiences over products
knowledge of the handbag market The B&B will be furnished with
and the Chinese consumer Hermès homewares and clothes.
The handbag collaboration with This provides the guest with a new
Tod’s sold out in 6 minutes and way to experience the products and
made around $500,000 purchase if desired
The collaboration will appeal to Using customer relationship
millennials and result in new, loyal management, the Getaway
customers package will improve existing
relationships and retain customers

heritage

conservative trendy

modern

heritage

conservative trendy

modern

updated persona

Vivid Wu

23 years old and single, based in San Francisco
and Singapore
BA in fashion and lifestyle marketing from USC
fashion stylist, brand influencer, and founder of
Re:store, making an income of $175,000
goes against the mainstream for personal style
while still following trends (experiencer); very
brand loyal (believer)
enjoys curating vintage luxury items for her
closet, sharing content to 330k followers on social
media, and searching for the best
instagrammable spots

07 challenges &
considerations

market expansion - collaboration

Corporate culture
Hermès typically collaborates with artists on only scarves/accessories or store layout, so an
influencer collaborating on a bag would be a innovative step for them to take
Human and capital resources
Acquisition of influencer
Marketing
Marketing needs to be effective and relative to the new target market in Asia Pacific
They will have to revamp their traditional marketing to draw attention to now 20-35 year
olds
Merchandising
Hermès will have to create a presentation of the new handbag collaboration that appeals to
their target market
Pre-existing customers are used to a certain type of merchandise and presentation from
Hermès so how will this bag continue to reflect the brand?

market penetration - vacation packages

Corporate culture
Hermès will need to consider how they are going to maintain their exclusivity and how this
will translate into their vacation packages
Human and capital resources
Available to all Hermès consumers, so how will this benefit them and would this be a
beneficial use of their resources
Will the customer acquisition help Hermès profit in the long run from this experience
through customer loyalty
Marketing
A challenge would be creating marketing to entice their customers to spend more to have
the option of going on luxury vacations and experience a getaway with Hermès
Would need to consider if current customers value this as an extra offering
Merchandising
Displaying Hermès merchandise in the accommodations will keep reminding the consumer
of the brand

08 mockups



Hermes x Mr. Bags Collaboration

LIANG BAG

$7,600

Orange H

Bag in Epsom calfskin with chevron canvas
lining, interior pocket, and palladium plated
Clou de Selle snap closure
Made in France
Measures 13.5" long, 10" high and 6.5" deep

Appearance: Small, regular and slightly glossy
grain; uniform; deep colors
Feel: Dry, with a slightly "up and down" grain
Hand: Round and firm
Change over time: Keeps its shape,
scratch-resistant. The grain fades in areas
exposed to a lot of contact or rubbing













sources Financial History https://finance.hermes.com/en/Reports-and-Presentations/Annual-reports
https://hypebeast.com/2019/7/hermes-q2-2019-sales-growth
Competitor Pricing https://www.hermes.com
https://finance.hermes.com/var/finances/storage/original/application/02fa8d7d34ed777dc01ff4a20bce0934.pdf
https://www.bulgari.com
https://www.tiffany.com
https://www.burberry.com
https://us.louisvuitton.com/eng-us/homepage
https://en.wikipedia.org/wiki/LG_Prada
Target Customer/Personas http://www.strategicbusinessinsights.com/vals/ustypes.shtml
https: //www.f reshbeautystudio.com/meet-nikol/
Sales by Channel https://ecommercedb.com/en/store/louisvuitton.com
Strategies http://studiowm.com/Hermes-Maison-Showroom-Milan
http://www.mrbags.com/index.php/2018/02/14/mr-bags-givenchy-2018/
Competitive Advantages
https://www.business.hsbc.com/navigator/made-for-china/six-things-you-may-not-know-about-chinese-millennials
https://www.businessoffashion.com/articles/news-bites/mr-bags-sets-new-record-3-24-million-rmb-on-wechat-in-6-minutes