Hermes Declines to Follow Chanel’s Lead

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Fresh off a 7% rise in operating income in 2014, Hermes declared it has no intention to follow Chanel’s lead and harmonize prices internationally. As previously covered here (Chanel Adopts New Pricing Scheme), Chanel recently decided to bring their international prices in line after a dramatic widening stemming from Europe’s economic and currency woes. In a bold move, Chanel today increased prices in Europe while decreasing them in China (Global Implications on Chanel Street), now one of their largest markets. For Hermes, a company that still identifies itself as French through and through, the risk of alienating the domestic market with a price increase was just too great. As CEO Axel Dumas stated in a call with analysts, “We have a very strong French and European customer base. If we significantly increased our prices at this juncture, that would mean giving up on local customers and that is something we do not want to do.”

With same-currency sales expected to grow by 8% next year, there is simply little incentive for one of the world’s most luxurious brands to take the kind of risk Chanel is. Chanel is betting that the future of luxury is in Asia – China specifically. Hermes is sticking with France.

picture from Masters Golf Feature

Whose strategy do you think is better?
Will Hermes lose international customers or will support from the French market make up for it?
Share your thoughts below.

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3 Responses to “Hermes Declines to Follow Chanel’s Lead”

  • As I mentioned on Instagram I enjoyed reading the article and very pleased with the decision of Hermes. I love both brands and I think both of them represent pure luxury and exclusivity, which makes them so desired. France has always been the soul and inspiration of both brands. Staying loyal to the French and European customers is and should always be one of the core values behind the Hermes brand. Chanel on the other hand has been showing the world its modern, rebellious approach to fashion for the past seasons. This price increase might be a mere marketing step or a major image change.

  • Though I am a complete Chanel obssessed person, I must say a support Hermès´ decision to stay loyal to it´s roots. What H´s CEO said is simply perfect!!! I think CC made a very very bad decision in increasing prices in Europe… it´s extremely unfair. Want to decrease prices in Asia? fine, I agree to that, but not at Europe´s expense. Great post :) XOXO

  • Not sure about Chanel’s decision to level prices worldwide. In Europe the price increase is very significant. And for me personally, if I were to choose between the two brands, now priced very similarly, Hermes would always win.