Last time we went through the alluring SWOT analysis of Bblunt – An Only Salon Brand Crossed 1 Million Haircuts in India. This time let’s have a look at the SWOT Analysis Of Hermes.
Several brands lead to great success stories and Hermès is one of them. Being a French high-end luxury fashion brand, it has been established for almost two centuries now. It is renowned for its fashion and luxury products and is also recognised as the world’s leading luxury brand with an image of wealth, quality, and style.
The reason why Hermès became the world’s leading luxury brand is its application of effective marketing strategies which also include digital marketing strategies. It is essential for every business in the market to have a digital presence as most people nowadays are online. If you want to know what digital marketing is and how to use it to your advantage – check out our Free MasterClass on Digital Marketing 101 by the CEO and Founder of IIDE, Karan Shah.
Thus this makes us keen to know how Hermès has gained such success in its industry, here we have done an alluring SWOT Analysis Of Hermes. But before starting its SWOT Analysis Of Hermes let’s get a brief idea about Hermès as a company, its products, competitors, financials, and more.
(Hermès Luxury Store At The Chanakya Mall, Delhi, Source: The Chanakya)
Hermès is a French luxury goods manufacturer international company, founded by Thierry Hermès in 1837 as a harness shop in Paris. Its logo has had Duc carriage with the horse since 1950. Hermès has iconic status in the world of luxury. Hermès has fourteen product divisions that are leather, ties, scarves, men’s and women’s wear, perfumes, watches, gloves, footwear, tableware, decorative arts, stationery, jewellery, and enamel wear.
Hermès is owned by two brothers Pierre-Alexis and Axel Dumas. Both are co-chairmen of the brand. Axel Dumas is the Chief Executive Officer (CEO), and Pierre-Alexis is the company’s creative director, whose father, Jean-Louis, revolutionized Hermès, growing it into an international luxury retailer.
Hermès has been globally the most valuable luxury brand consistently. Today, Hermès ranks 23rd among the Best Global brands with a brand valuation of 18 billion dollars.
|No. of Employees||14,284+|
|Market Cap||$ 182.87 Billion (2021)|
|Annual Revenue||€ 6.88 Billion (2019)|
|Net Income/ Profit||€ 1.528 Billion (2019)|
Products by Hermès
Hermès is a combination of heritage, exquisite craftsmanship, an eye for detail, and high levels of quality and professionalism through the entire manufacturing process that gives it a position in a very competitive and ruthless world of luxury. It deals in a variety of products.
- Leather goods
- Lifestyle accessories
- Home furnishings
- Other Fashion Accessories
Competitors of Hermès
- Louis Vuitton
- Tiffany & Co.
Now that we understand the company’s key business, let’s look after the SWOT Analysis Of Hermes.
SWOT Analysis Of Hermes
Talking about the Hermès business, let’s understand how this corporation can cater to different individuals using SWOT Analysis. SWOT Analysis Of Hermes helps us to understand companies through the lens of internal and external factors. Internal factors refer to strengths and weaknesses, which can be controlled by the corporation.
To better understand the SWOT Analysis Of Hermes, refer to the infographic below:
Now first let’s begin with the strengths of the company from the SWOT Analysis Of Hermes.
Strengths of Hermès
- Global Appearance: Hermès is a French-based international company that was established in 1837. It has 300+ production units across France, Europe, Asia, America, and Asia-Pacific and has more than 15000 employees. It has revenue of 6389 million euros in the year 2020. Hermès has a strong brand name, awareness and global presence which makes it one of the biggest strengths of the company.
- Strong Brand Image: Hermès has a good presence and a wide variety of products. The company is also successful in keeping the product differentiation and superior quality products. It is also engaged in various sponsorships through which its brand can get awareness worldwide.
- Maintain Status Quo: To maintain its status in the market it does not encourage celebrity endorsement for building its brand image and also never put its products on sale and discount. The products are standardized across the globe to keep things the way they are presented.
- Wide Variety of Products: It deals in a wide range of products like for men and women, it deals in watches, perfumes, jewellery, lifestyle accessories, leather goods, tableware, wallpaper. It also focuses on new product lines and also introduces the existing product to a new segment, Hermès earns good revenue by selling its products to China and the Asian market.
Weaknesses of Hermès
- Close Competitors: It has various close competitors one of the main is Louis Vuitton, LVMH has taken the brand takeover of 22 percent. Hermès is focusing on the travel brand and it has been able to retain its customers. LV charges a huge amount on the bags and also keeps tight control on who can sell their products. Other competitors are Burberry, Prada, Hugo Boss, Christian Dior, etc.
- Counterfeited Products: Nowadays has made it easier for design pirates to make fake products due to which fake products look more accurate and quicker than ever as detailed shots of the products are posted within a few minutes of launching them, so sometimes it is hard to trust them, due to which other brands also suffer somewhere.
Opportunities for Hermès
- Brand Equity: Brand equity is a value premium that a company generates through its product with a recognizable name when compared to others. Hermès has a wide variety of products in which it deals, it’s especially leather goods. The watches are going slow from 2016 and they only contribute three per cent of the brand’s 5.2 billion revenue. Hermès is working hard on brand equity to widen its range of products.
- Global expansion: Hermès has 300+ stores but still, in a few countries, there is not much awareness about this brand, so by providing brand awareness to the products they can target their customers more globally. Hermès is facing certain turndowns in some categories, wider economic, shifting of consumer preference, and fluctuating demand.
- Strengthening Product Line: The brand has already a well-established name and is globally recognized for its innovations and craftsmanship. It can use its strength to its other products such as ties, fragrances, watches, hats, and others. Hermès has to be very particular about its marketing strategy, it can introduce its product to a new segment and should also focus on new product lines.
- Investing in Digitalisation & E-commerce: Hermès has been investing in its online store for the past few years and e-commerce platforms have also been successfully established for the new customer base. Hermès has more growth and revenue from Asian markets such as China, so in October 2018, Hermès.com opened in China which adopted new payment methods, using traditional & digital sentiments in its product line can help the brand in establishing a stronghold in the country.
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Threats to Hermès
- Brand Takeover: Hennessy Louis Vuitton (LVMH) has already taken over 22% of the Hermès company and Hermès is doing whatever to prevent that share from rising. LVMH is a close competitor of Hermès. LVMH bought huge stakes in 2010 and then the brand feared a hostile takeover. It has also created a family holding of 50% to prevent a takeover.
- Substitution of the Product: Easy substitution of the products is possible as various options are available to the customers such as Burberry, Prada, Hugo Boss, Christian Dior, Moet Hennessy Louis Vuitton, etc.
- PETA: The backlash from People for the Ethical Treatment of Animals (PETA) over the use of animal skin for the products as most of the products such as belts, watches, wallets, etc are manufactured using leather and many products area such made that its deficit is from the animals and are dependent on that on a large scale.
This ends our elaborative SWOT Analysis Of Hermes. Let us conclude our learning below.
Hermès is one of the oldest and prestigious brands, which has a market franchise with experience of more than 150 years. Also, it has been using different kinds of marketing strategies to gain brand awareness and to get global reach to the customer.
They have been having many showrooms for centuries and now launching digital stores and pop-up stores to make their brand more accessible, it has also been focusing on its digital marketing strategy for better brand visibility and brand awareness.
As most people are using digital media, every business needs to make a strong digital presence of its business thus digital marketing is very essential. If you are interested in learning and upskilling, check out IIDE’s 3 Month Advanced Online Digital Marketing Course to know more.
We hope this blog on the SWOT Analysis Of Hermes has given you a good insight into the company’s strengths, weaknesses, opportunities and threats.
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