value strategy opposed to volume strategy

Suzy Menkes recently wrote an excellent article about Hermes, the last bastion of luxury in today’s fashion industry. You can find it here. It seems that Bernard Arnault of LVMH acquired a 17.1 percent stake in the company. At first, this horrified me because I’m sick of him buying all decent family created and owned fashion houses in Europe and I don’t like it because he commercialised them and controls them and directs their strategy towards the very profitable mass market. I believe Hermes and Versace are two of just a few still independent houses not owned by Arnault. Why do I think that is good? Check out the quote from the article that epitomises my reasons:

Patrick Thomas, chief executive of Hermès, argues that the company must remain independent to pursue its focus on craftsmanship and creativity. “We have adopted a strategy of the ultimate quality, the value strategy as opposed to the volume strategy,” Mr. Thomas said during a recent interview. “We’ve never been tempted by mass-market techniques because it’s not part of our culture.”

Manfredi Ricca, managing director of Interbrand Milan, a branding consulting firm, said that Hermès seemed to have found the right balance in its strategy. By virtue of a “very focused, very cautious” approach to growth over the years, Mr. Ricca said, “Hermès is probably the quintessence of luxury today, in the sense of the purity of the brand, in the way the brand has preserved its meaning from the origin.”

Not that I can afford Hermes, but it is nice to know that there is a brand that refuses to trade quality for quantity and stays true to its vision. But when you think about it, it is a very good approach because people often want what they can’t have and Hermes is normally something you can’t have so you want it and you want it bad. Plus, luxury brands have a certain market which wont collapse because there will always be that 1 or 5% of people rich enough to afford it. I hope Hermes will manage to keep its strong position and remain a good example of a successful brand not blindly following the market trends.

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