Hermès Strategic Analysis

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Hermès Strategic Market Position In China: Is There Promise Of Growth In The Long Term? Hermès was established by Thierry Hermès in 1837. It specialized in saddles and leather goods at the beginning, then Hermès change its strategy and direction into leather goods, ready-to-wear fashion clothes, accessories, and perfume.( Jolly,2012) High-quality materials, hand-craftsmanship, and long waiting list drive premium prices and well reputation for Hermès, and made Hermès stand into the top of the luxury brands pyramid. (Banga, 2010) The importance of China luxury market has raised sharply in the recent years, (Kapferer and Bastien, 2009), based on the World Luxury Association report, in 2011, the luxury sales in China reached $12.6 billion, which is nearly a quarter of global luxury annual sales. (Li & Fung Research Centre, 2012) China just overtook France, Britain, Italy and Japan, became the second largest luxury goods market. (Xinhua, 2011) At the moment, the western world was suffering from the recession and main consumers-middle classes, were lack of interests and demands in purchasing luxury goods, but China seems not much affected by the economic woes, the China’s luxury market keep increasing dramatically, Yuan rose in value compared with devaluate of European currency unit will also increase purchasing power of Chinese consumers. (Xinhua, 2011) The luxury brands and companies are eager to enter and dominate the very profitable China market. Hermès is one of the companies leading the expansion of the emerging market, since the first Hermès store opened in 1997, now there are 20 stores in China. (Red luxury, 2010) Hermès’s competitors like LV, Gucci, and Burberry also put China market as a core target. The essay is aim to analysis Hermès’s business strategy in China and evaluate is it strategy successful to keep it grow or not. Literature view SWOT

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