Hermes

i.    The Entrepreneur

 

ii.                    Picture of Product

 

 
 
iii. Brieff description of products/services/business concepts.
 

Hermès Frères era 

            

            After Charles-Emile Hermès's retirement, sons Adolphe and Émile-Maurice took leadership and renamed the company Hermès Frères. Shortly after, Émile-Maurice began furnishing the czar of Russia with saddles. By 1914, up t 80 saddle craftsmen were employed. Subsequently, Émile-Maurice was granted the exclusive rights to use the zipper for leather goods and clothing and, thus, became the first to introduce the device in France. And, in 1918, the first leather golf jacket with a zipper, made by Hermès, was introduced. It was followed by Hermès's first leather garment, a zippered golfing jacket for the Prince of Wales. Named after its exclusive use of the zipper, the mechanism was called the fermature Hermès (the Hermès fastener).
Throughout the 1920s when he was the sole head of the firm, Émile-Maurice added an accessory collection. And he groomed his three sons-in-law (Robert Dumas, Jean-René Guerrand and Francis Puech) as business partners.

In 1922, the first leather handbags were introduced after Émile-Maurice's wife complained of not finding a suitable one to her liking. He created  a handbag collection himself.
In 1924, Hermès established a presence in the United States and opened two shops in French resorts In 1929, the first women's couture apparel collection was previewed in Paris. And, during the 1930s, Hermès produced some of its most recognized original goods. In 1935, the leather Sac à dépêches (later renamed the "Kelly bag") was introduced, and, in 1937, the Hermès carrés (scarves) were introduced.

Following the introduction of scarves, the accessory became integrated into French culture. In 1938, the Chaîne d’ancre bracelet and the riding jacket and outfit joined the classic collection. By this point, the company's designers began to draw inspirations from paintings, books, and objets d’art. The 1930s also witnessed Hermès's entrance into the United States market by offering its products in a Neiman Marcus department store in New York; however, it later withdrew. In 1949, the same year as the launch of the Hermès silk tie, the first perfume, Eau d'Hermès, was produced.

In a time during his management, Émile-Maurice summarized the Hermès philosophy as "Leather, sport, and a tradition of refined elegance." 

 

iv. A brief introduction of how the business started. 

 

            The Hermès family, originally Protestant Germans, settled in France in 1828. In 1837, Thierry Hermès (1801–1878) first established Hermès as a harness workshop on the Grands Boulevards quarter of Paris, dedicated to serving European noblemen. He created some of the finest wrought harnesses and bridles for the carriage trade. Monsieur Hermès's earned citations included the first prize in its class in 1855 and the first-class medal in 1867 at the Expositions Universelles in Paris.
Hermès's son, Charles-Émile Hermès (1835–1919),took over management from his father and moved the shop in 1880 to 24 rue du Faubourg Saint-Honoré, where it remains today and where the new leader introduced saddlery and began retail sales. With the aid of sons Adolphe and Émile-Maurice Hermès, the company catered to the élite of Europe, North Africa, Russia, Asia, and the Americas. In 1900, the firm offered the Haut à ourroies bag, specially designed for riders to carry their saddles with them. 

 

v. Achievements attained in terms of Market Share, Sales Turnover, Number of Outlets 

   Recognition, Adoption & Acceptance of Product, etc.

The rise and fall and rise of Hermès

Despite the company's apparent success in the 1970s, exemplified by multiple shops being established worldwide, Hermès began to fall, compared to competitors. Some industry observers have assigned the cause to Hermès's insistence on the exclusive use of natural materials for its products, unlike other companies that were calling on new man-made materials. During a two-week lapse in orders, the Hermès workrooms were silent.

Jean-Louis Dumas, the son of Robert Dumas-Hermès, became chairman in 1978 and had the firm concentrate on silk and leather goods and ready-to-wear, adding new product groups to those made with its traditional techniques. Unlike his father, Jean-Louis was related to the Hermès maternally. Travelling extensively and marrying Rena Greforiadès, he entered the buyer-training program at Bloomingdale's, the New York department store. Having joined the family firm in 1964, he was intrumental in turning around its downhill progression.
 

            Dumas brought in designers Eric Bergére and Bernard Sanz to revamp the apparel collection and, in collaboration, added unusual entries. They included the python motorcycle jackets and ostrich-skin jeans, which were dubbed as "a snazzier version of what Hermès has been all along." (Annual sales in 1978, when Jean-Louis became head of the firm, were reported at US$50 million. By 1990, annual sales were reported at US$460 million, mainly due to Dumas's strategy.) In 1979, Jean-Louis launched an advertising campaign featuring a young, denim-clad woman wearing an Hermès scarf. The purpose was to introduce the Hermès brand to a new set of consumers. As one fashion-sector observer noted, "Much of what bears the still-discreet Hermès label changed from the object of an old person's nostalgia to the subject of young peoples' dreams." However, Dumas's change-of-image gesture created outrage both within and outside of the firm.
 

            Also in the 1970s, the watch subsidiary, La Montre Hermès, was established in Bienne, Switzerland. Then, throughout the 1980s, Dumas strengthened the company's hold on its suppliers, resulting in Hermès's gaining great stakes in prominent French glassware, silverware acquiring venerable tableware manufacturers such as Puiforcat, St. Louis, and Périgord.

Hermès's growth

From the 1980s, tableware became a strong segments of the firm. And, overall, the collection of Hermès goods expanded in 1990 to include over 30,000 pieces. New materials used in the collection included porcelain and crystal.
 

            Hermès relocated its workshops and design studios to Pantin, just outside of Paris. By June 1993 and possibly a grave mistake, Hermès had gone public on the Paris Bourse (stock exchange). At the time, the equity sale generated great excitement. The 425,000 shares floated at FFr 300 (US$55 at the time) were oversubscribed by 34 times.Dumas told Forbes magazine that the equity sale would help lessen family tensions by allowing some members to liquidate their holdings without "squabbling over share valuations among themselves."
 

            To this point in time, the Hermès family was still retaining a strong hold of about 80% in stocks, placing Jean-Louis Dumas and the entire family on the Forbes list of billionaires. Mimi Tompkins of U.S. News & World Report called the company "one of Paris' best guarded jewels."
In the years to follow, Dumas began to decrease Hermès franchises from 250 to 200 and increased company-owned stores from 60 to 100 to better control sales of its products.The plan was to cost about FFr 200 million in the short term but was to increase profits in the long term. Having around FFr 500 million to invest, Hermès pressed ahead, targeting China for company-operated boutiques, finally opening a store in Beijing in 1996.
 

            In 1997, Jean-Louis hired Belgian modernist designer Martin Margiela to supervise women's ready-to-wear.
 

            By the late 1990s, Hermès continued extensively to diminish the number of franchised stores, buying them up and opening more company-operated boutiques. The fashion industry was caught off guard in September 1999, when Jean-Louis decided to paid FFr 150 million for a 35% stake in the Jean-Paul Gaultier fashion house. Greeted nonetheless as a positive development both for the relatively small Gaultier group and for Hermès, it was seen as part of a consolidation in the luxury goods market. In the latter part of the 1900s, the company encouraged its clientele to faites nous rêver (make us dream), producing throughout the period artistically atypical orders.

The 2000s to today

In 2000, Hermes moved the clothing segment to China, managed by family member Claude Brouet. And the first John Lobb footwear store was also opened that year in New York. In 2003, iconoclastic Margiela left Hermès, and the highly controversial Jean-Paul Gaultier, as the head designer, debuted his first haute-couture collection for fall/winter 2004–05.
 

            After 28 years as head of the firm, Jean-Louis Robert Frédéric Dumas-Hermès retired from the firm in January 2006. Known for his charm and one of Europe's greatest experts on luxury, he died in 2010 after a long illness. Patrick Thomas, who had joined the company in 1989 and who had worked with Jean-Louis as the co-CEO from 2005, replaced him that month. Thomas became the first non-Hermès to head the company. Jean-Louis's son Pierre-Alexis Dumas and niece Pascal Mussard became the co-creative directors.

Hermès today

As of 2008, Hermès has 14 product divisions encompassing leather, scarves, ties, men's wear, women's fashion, perfume, watches, stationery, footwear, gloves, enamel, decorative arts, tableware, and jewelry.
 

            Hermès sales are composed of about 30% leather goods, 15% clothes, 12% scarves, and 43% other wares. The company licenses no products and keeps tight control over the design and manufacture of its vast inventory.

Scarves

The scarf or carré was introduced in 1928. One of the first, which was a print of white-wigged females playing a popular period game, was a custom-made accessory named Jeu des Omnibus et Dames Blanches. Hermès oversaw the production of its scarves throughout the entire process, purchasing raw Chinese silk, spinning it into yarn, and weaving it into fabric twice as strong and heavy as most scarves available at the time.
 

            The company's scarf designers spend years creating new print patterns, individually screen-printed with vegetable dye. Each added color dries for a month before the next color is applied. Designers chose from over 200,000 different colors. Forty-three is the highest number of screens used for one scarf to date, which is the "Charity" scarf, released in 2006.When scarf production first began, a dedicated scarf factory was established in Lyon, France; the same year, Hermès celebrated its 100th anniversary.
 

           So popular are the scarves that some have found themselves:

•             worn by Queen Elizabeth II in a portrait for a 1956 British postage stamp.
•             worn by Princess Grace Kelly in a photograph on the cover of a 1956 issue of Life magazine.
•             used as a sling by Princess Grace for her broken arm.
•             employed by actress Sharon Stone in a bondage scene in the film Basic Instinct.
•             made into pillows or otherwise as framed wall-hangings. 

 Partnership with the Tuareg

 

            For years, Hermès has partnered with Tuareg tribesmen on silver jewelry. The well-publicized Saharan nomads' traditional motifs are often mirrored in various Hermès products, including in scarves.

Leather

A Hermès Birkin bag.

Hermès is renowned for its handmade luggage and handbags. The company does not use assembly lines. Only one craftsperson, who may have been employed by the company for decades, makes a single handbag at a time, hand-stitching individual pieces with linen thread and using an awl. One bag might require 18 to 24 hours to produce. The construction of each "Kelly" bag, for example, requires 18 hours to fully realize. Hermès's leathers come from all over the world. Claims abound that customers must wait one year for delivery of the "Kelly" and "Contance" bags are not true. Incidentally, should Hermès's leather goods require repair, owners can bring an item to any Hermès store, where it will be shipped to the Atelier Hermès in Pantin, near Paris, for repair or reconditioning.
 

            Another famous Hermès handbag, the "Birkin", was named after British actress Jane Birkin. After a chance encounter with Jean-Louis Dumas, she complained that her "Kelly" bag was not practical for everyday use. Consequently, he invited her to France where they co-designed the bag. Ironically, Ms. Birkin has since stopped carrying her namesake bag, saying it contributed to her tendonitis. Nevertheless, the bag is highly popular with others, regardless of its very high price.

Perfumery

Since 1951, the company has created several scents for both men and women.

Shareholder structure

At December 31, 2010, the Hermès family collectively owned a 62.79% stake in Hermès International S.A. through a number of individual and company holdings; the stake entitled the family to 73.96% of voting rights in the company. The luxury goods company LVMH held 20.21% of shares (amassed in the latter half of 2010) and 13.08% of votes at the same date, with 0.39% of shares held as treasury stock and the remaining 16.61% free float.Speculation that LVMH will launch a takeover bid for Hermès has been repeatedly denied by its chairman Bernard Arnault. Some industry insiders are in doubt, such as René Weber, an analyst at Zürich's Bank Vontobel, who has claimed: "Arnault is not afraid of a fight and a lot of his battles have been successful for him and his shareholders. Whether he can eventually succeed with [a takeover of] Hermès is still an open question." Bertrand Puech, who chairs the main Hermès family holding company, has criticised LVMH's acquisition of Hermès shares and called on the company to reduce its stake by half. 

 

vi. How the product got its name.

Robert Dumas-Hermès (1898–1978), who succeeded Émile-Maurice after his death in 1951, closely collaborated with brother-in-law Jean-René Guerrand. Dumas became the first man not directly descended from Hermès père to lead the company because his connection to the family was only through marriage. Thus, he incorporated the Hermès last name into his own, Dumas-Hermès.

The company also acquired its duc-carriage-with-horse logo and signature orange boxes in the early 1950s. Dumas introduced original handbags, jewelry, and accessories and was particularly interested in design possibilities with the silk scarves. Ironically, during the mid-20th century, scarf production diminished.World Tempus, a Web portal dedicated to watchmaking, states: "Brought to life by the magic wand of Annie Beaumel, the windows of the store on Faubourg Saint-Honoré became a theatre of enchantment and [established the store as] a Parisian meeting-place for international celebrities." In 1956, a photo of Grace Kelly, who had become the new Princess of Monaco), was shown carrying the Sac à dépêches bag in a photography in Life. Purportedly, she held it in front of herself to cover up her pregnancy. Thus, the public began calling it the "Kelly" bag. The name was subsequently adopted by Hermès, and the bag became hugely popular.
 

            The perfume business became a subsidiary in 1961, concurrently with the introduction of the Calèche scent, named after a hooded four-wheeled horse carriage, known since the 18th century - the Company's logo since fifties. (In 2004, Jean-Claude Ellena became the in-house perfumer or "nose" and created the successful Hermessence line of fragrances as well as others.)
 

vii. Unique features about the product that makes it an outstanding product.
 

                 As of 2008, Hermès has 14 product divisions encompassing leather, scarves, ties, men's wear, women's fashion, perfume, watches, stationery, footwear, gloves, enamel, decorative arts, tableware, and jewelry. 

                

                Hermès sales are composed of about 30% leather goods, 15% clothes, 12% scarves, and 43% other wares. The company licenses no products and keeps tight control over the design and manufacture of its vast inventory.
 

viii. Key Factors contributing to the success of the business. 

            

            The company also acquired its duc-carriage-with-horse logo and signature orange boxes in the early 1950s. Dumas introduced original handbags, jewelry, and accessories and was particularly interested in design possibilities with the silk scarves. Ironically, during the mid-20th century, scarf production diminished.World Tempus, a Web portal dedicated to watchmaking, states: "Brought to life by the magic wand of Annie Beaumel, the windows of the store on Faubourg Saint-Honoré became a theatre of enchantment and [established the store as] a Parisian meeting-place for international celebrities." In 1956, a photo of Grace Kelly, who had become the new Princess of Monaco), was shown carrying the Sac à dépêches bag in a photography in Life. Purportedly, she held it in front of herself to cover up her pregnancy. Thus, the public began calling it the "Kelly" bag. The name was subsequently adopted by Hermès, and the bag became hugely popular.