Hermes International S.a Inc.

This expansion demonstrates how the luxury industry is now run by massive corporations whose focus is only on growth, visibility, brand awareness, advertising, and most importantly, PROFITS! With growth and expansion, has come a decrease in quality and rarity. The luxury garments produced are mostly not handmade but are even outsourced to large factories in places such as China and Turkey. Also, to meet quarterly turnover projections, “designers churn(ed) out increasingly trendy collections of clothes, handbags, and shoes.” (Thomas, Pg. 246) With hundreds of new stores around the globe the surplus of designer labeled merchandise is immense hence, the proliferation of outlet malls.

These companies sought to differentiate their brands through craftsmanship, quality, and design, but success often depended on external factors. Sales boosted by an expanding economy could erode quickly in an economic downturn, leaving distribution centers brimming with inventory. Consumer confidence was the cornerstone of consumer spending and, concomitantly, of the performance of the apparel and footwear sectors. Europe’s apparel and footwear industry saw compound annual growth of 2.3% in 2006 and 1.7% in 2005.4 A trend observed in recent years for consumers to split their spending between high-end luxury goods and value merchandise was attributed to the availability from chains such as Hennes & Mauritz of increasingly trendy apparel and footwear tagged at affordable prices. The perpetually shifting demands and preferences of the public encumbered the apparel sector with the need to maintain large-scale inventory systems, the financial burden of failed items, and the risk of stock-outs of popular items. The speed of change together with the lag between production and retail availability made accurate inventory forecasting a persistent challenge.

The condition of Australian fashion retailers have been under-serviced and underwhelmed when it comes to fashion choice, especially in affordable variety (Wells 2013). There are only numerous fashion labels are available to dress 23 million people. In addition, the price cannot be compared to international brands’; the volumes produced by big international retailers like Zara and H&M are to service global market, unlike Sportsgirl or Country Road who produce much smaller volumes.

The Lululemon brand ranked highest among their competitors for “luxury fashion apparel”. Organizing a like-minded community for body-conscious and health-aware as well as fashion-pursuing female customers is one of the most fundamental parts of Lululemon’s marketing strategy. Lululemon is the first mainstream clothing company to really put the “salon” business model into every detail of their business management. Resembling the core of Apple’s retail strategy, in which like-minded thinkers came together to share their own opinions, culture, and theories. Customers go to the Apple store and salesmen will teach them how to use the products. Lululemon will do the same thing, they could teach customers. In recent retail environment, buyer and seller are put on the same sides under the effect of this strategy. Both are focused on an idea of self-betterment that overshadows the commercial transaction itself. This ethic strategy transforms the stores into a space for personal communication with low pressure. The employee have the chances to talk to the customers about their passions and pursuits, and customers will select the ideal garments with the help of the employee. The final purchase transaction comes to be an investment in customers themselves, representing their own ideas and goals. In fact, Lululemon keeps setting goal behind the counter to make customized service to guests. Salon-model strategy is a trend to interest consumers overtook the desire to just own or consume more

The following case analysis will assess Coach Inc. and its strategy in the accessible luxury brand goods market. The coach strategy focuses on its luxury rivals in matching key quality styles while offering it at a cheaper price. The company offers most products at a 50% off discount price less than other brands which gives them a competitive advantage pertaining to its customer base. Coach marketed its products to middle –income consumers desiring taste of luxury, but also affluent and wealthy consumers with means to spend considerably more on a handbag (Gamble, 2012. P.C-73) .The Company also has several other strategies such as to increase global distribution, improve same store sales productivity and continue its multi-channel business model which includes indirect whole sales to third party retailers but also focuses on direct consumer sales. Coach has done well in the luxury goods industry but the companies profit margin is still below the levels achieved prior to the onset of a slowing economy in 2007 ( Gamble, 2012. P.C-73.The Company had experienced a decline in sales as they are unsure if the company recent growth could remain constant and maintain their competitive advantage with other successful luxury lines Michael Kors, Salvatore Ferragamo, Prada and Dolce & Gabbana.

Fashion and leather goods retailers can differentiate themselves quite strongly through the styles and designs of their goods. Even un-known designers can become successful from one collection to another due to the unpredictable nature of fashion. Products are determined by designers, sub-cultures and are subject to sharp and unpredictable changes

The author who inspired the topic of this thesis is Dana Thomas. As a fashion writer, Dana Thomas, has analyzed the changes in luxury fashion business. Thomas has been writing about fashion for the past twenty-five years in various journals such as Newsweek, The New York Times Magazine, New Yorker, Harper’s Bazaar, Vogue, Financial Times, and more. Dana Thomas’ two books, Deluxe and Gods and Kings, are the inspiration for this thesis. Deluxe: How Luxury Lost Its Lustre goes into great detail the secrets of the leading luxury industry brands, namely Prada, Gucci and Burberry, to showcase the “New Luxury” of today and how “luxury lost its luster” by featuring the manufacturing and logistical processes. Thomas exposes that many luxury brands use the same Asian factories that mass-market retailers employ, which raises questions concerning quality and craftsmanship for luxury brands.

The store that is being analyzed is Steve Madden, an Omni-channel marketer. Steve Madden is a publically traded footwear company that was founded in 1990 with an investment of $1100 from Steve Madden. From a factory in Queens, New York, Steve Madden has revolutionized the shoe industry and is sold in over 80 countries worldwide. With years of experience as well as unique and creative designs, Steve Madden has displayed how significant willpower and understanding of trends can result in millions of customers worldwide (About Steve Madden). Steve Madden has become a true lifestyle and has now expanded into selling other items such as accessories and handbags. The company is continuously growing, with 120 stores

Hermès International, sometimes also referred to as Hermès of Paris or Hermes, is a French luxury goods manufacturer. It has been consistently ranked as the world’s most valuable luxury brand in different valuation and ranking studies published by leading consultancies. Hermès as a brand enjoys an iconic status in the world of luxury. A combination of rich heritage, exquisite craftsmanship, eye for detail and high levels of quality and professionalism through the entire manufacturing process gives Hermès a position of superiority in the very competitive and ruthless world of luxury.

It is hard to imagine that after the financial crisis swept across Europe, many great transitional enterprises had to face collapse and bankrupt while the luxury goods industry become more prosperous. Recently, the French luxury goods group LVMH announced their recent business condition. The volume of the first week in October had incredibly increased by 12% the previous week. The Hermes Corporation also said that in order to meet the increasing number of market demand, it would open 15 branch stores in the latter half of the year. These aroused some fierce debates, the public held a skeptical opinion towards the questions: How can the luxury companies maintain their positions? Why didn’t they strike down by financial crisis?

Gucci happens to be one of the most sought after brands in the industry. The latter emanates from the fact that Gucci is classified as one of the most successful brands in the fashion industry, owing to the fact that its products are of top-notch quality (Bhasin). Being a household name for quite some time now, Gucci prides itself in having a huge customer base on the global scene especially after changing designers, a fact that contributes greatly to its increase in sales which translate to subsequent profits (Cartner-Morley; Bowles). While it can be arguably said that Gucci is a force to reckon with in the fashion scene, a lot of factors affect the operations of this company, both internally (micro) and externally (macro

Burberry’s retail distribution is through DOS (comprising flagship and regular price stores), concession, designer outlets and factory shops. The flagship store are important since they act as a showcase for the brand creating a sense of theater through Burberry can promote a lifestyle and its product ranges . The store are also used to trial new products and concepts, and they carry exclusive lines. Burberry flagship stores are normally require upwards of 10,000 square feet of space and are specifically located in exclusive areas of key cities around the world like London, Tokyo , Barcelona , new York etc. A part of its repositioning a number of stores were closed , renovated or relocated according to image and performance. Burberry continues to move from a relatively static, traditional, wholesale structure to a more dynamic, retail culture and mindset. Burberry became more consumer-centric, responsive organization. This move positively impacted on directly operated stores, franchise partners, wholesale customers and licensing partners worldwide.

According to Forbes (2014) “Hermés International SCA engages in the design, manufacture, and marketing of luxury products. It operates through the following segments: France, Rest of Europe, Japan, Rest of Asia-Pacific, Americas, Rest of the World. Its activities include sale in stores under the Hermés name. It markets silk products, leather goods, accessories, jewellery, and home decors. It also sells perfumes, watches, and table decors in specialised stores. It manufactures shoes and offers subcontracted production services. The company was founded by Thierry Hermés in 1837 and is headquartered in Paris, France”

With concern to 26 to 45 years old consumers, we believe that a personal shopper service and made ​​to order service might be useful solutions in order to have their loyalty giving them specific services that only luxury brands do. In fact, that way they can get the most out of their luxury buying experience. To finish, we also suggest the creation of events during which the can purchase new collections in advance, generally the day before the collections are officially out in stores.

In 2013, 36% sales in the US, 21% sales in Europe, 16% sales in Japan, 11% sales in China