“Managing an Iconic Old Luxury Brand in a New Luxury Economy: Hermès Handbags in the US Market”, 2014-03 (; backlinks; similar):
The Hermès brand is synonymous with a wealthy global elite clientele and its products have maintained an enduring heritage of craftsmanship that has distinguished it among competing luxury brands in the global market. Hermès has remained a family business for generations and has successfully avoided recent acquisition attempts by luxury group LVMH.
Almost half of the luxury firm’s revenue ($2.06$1.52012B in 2012) is derived from the sale of its leather goods and saddlery, which includes its handbags. A large contributor to sales is global demand for one of its leather accessories, the Birkin bag, ranging in price from $13,358.14$10,0002014 to $333,953.46$250,0002014.
Increased demand for the bag in the United States since 2002 resulted in an extensive customer waitlist lasting from months to a few years. Hermès retired the famed waitlist (sometimes called the ‘dream list’) in the United States in 2010, and while the waitlist has been removed, demand for the Birkin bag has not diminished and making the bag available to luxury consumers requires extensive, careful distribution management.
In addition to inventory constraints related to demand for the Birkin bag in the United States, Hermès must also manage a range of other factors in the US market. These factors include competition with ‘affordable’ luxury brands like Coach, monitoring of unsolicited brand endorsers as well as counterfeit goods and resellers.
This article examines some of the allocation practices used to carefully manage the Hermès brand in the US market.