The Biggest Fool in Town?
The Biggest Fool in Town?
Decoding Luxury And Hermès' Art of Exclusivity
Hello there!
Today, let's start with a question. Take a close look at the picture below; don't rush, take a moment.
Corporate wants you to spot the differences between these two pictures.
If you have no eyesight issues or even an iota of sanity, your answer is going to be:
You're not entirely mistaken. Both shirts boast a 100% cotton composition, sharing the same 'L' size. However, the first tee is tagged at a modest INR 300, while its counterpart is priced at a staggering 200 times that, approximately INR 60k.
Now, you might be wondering, what sets them apart? The answer lies in a name subtly stitched onto the back tag of that piece of cloth - Dolce & Gabbana.
And with this, welcome to the world of luxury or tomfoolery (?) Brace yourself for what you are about to read.
Why Luxury Works
At a distant glance, luxury often seems illogical, especially concerning items with limited practical value, such as watches, clothes, handbags, and perfumes. While it makes sense to upgrade from a house to a mansion with extra amenities if you have the money, spending crores on a handbag seems unnecessary when one that costs much less serves the same purpose.
But why do we crave luxury, and what fuels the exceptional appeal of luxury brands? Why do we choose them over often cheaper alternatives that serve the same purpose?
The answers lie in the psychology behind luxury.
Firstly, there's an inherent human quest for authenticity, as the sentimentality of owning the real thing plays a crucial role in the appeal of luxury brands.
Second, luxury items can boost self-esteem and offer a sense of belonging, fulfilling our psychological need for identity.
Third, indulging in luxury can be a form of retail therapy, providing satisfaction, a sense of differentiation, and self-expression. These motivations are rooted in the strong emotions tied to purchasing exclusive brands. In the luxury world, buying is emotionally driven, offering a feeling of accomplishment, increased self-esteem and social acceptance.
While the desires of luxury consumers may change across generations, the central purpose of luxury brands - providing a sense of exclusivity and accomplishment - remains the driving force in the luxury market.
And luxury brands always come with such complex names!
The use of such names is a deliberate choice to evoke a sense of sophistication and craftsmanship. It adds an air of mystery and exclusivity, setting them apart in the competitive world of luxury.
Also, fun fact: did you know that Peter England, Archies, Colorbar, and Louis Philippe are all Indian brands? But why such foreign names, you ask? I think you know the reason ;)
Coincidentally, as I delved into dissecting luxury brands, a recent news story caught my attention: Heir to the Hermès retail empire plans to leave his billion-dollar fortune to his 51-year-old gardener. Intriguing, isn't it?
Now, when you think of Hermès (pronounced as Er-mess, with the ‘H’ silent), envision accessories, watches, scarves, and multiply the average price you'd expect by at least 100.
But How did Hermès reach this pinnacle, charging exorbitant prices that people willingly pay? Let's unravel the story.
The Story of Hermès
In 1837, Hermès embarked on its journey, initially crafting leather equipment for French noblemen, including riding gears. Over time, the brand diversified its offerings to include items like saddles, watches, ready-to-wear, and accessories.
You've probably heard of fashion giants like Gucci and Louis Vuitton, but what if I told you about a brand that surpasses them all? A brand so exclusive that its products are never available online or publicly displayed. Hermès, a brand that selectively sells to a curated list of its highest-spending customers, refusing preorders, waiting lists, and any form of return, refund, or exchange after purchase.
With a moderately-sized retail footprint of just 300 stores, Hermès spends the least on marketing. The brand's playbook is unparalleled, setting it apart from the conventional strategies of its competitors.
Hermès is best known for its exquisite leather bags, following an independent craftsman model for manufacturing. Remarkably, 80% of all Hermès products are meticulously handmade in France. Unlike traditional manufacturing, Hermès rejects the assembly line concept. Each bag is cut from hides and entirely hand-stitched with needle and thread by the same craftsman from start to finish. The process can take anywhere from 25 to 48 hours for a single Hermes bag.
Here lies the difference - while most businesses focus on speed, technology, scale, and automation to reduce costs, Hermès cherishes the art of handmade craftsmanship. The brand's craftsmen undergo extensive training, attending vocational school for four years, graduating from in-house tanning schools, and completing 18 months of mentorship.
Hermès bags, especially the iconic Birkin, Kelly, or Constance, aren't just expensive; they're also elusive, accessible only behind closed doors to an exclusive clientele. These bags embody a paradox – the more desirable the brand becomes, the more it sells; yet, the more it sells, the less exclusive it becomes.
Supply is intentionally limited, and production deliberately slow.
To become part of this exclusive club, you must
show extreme loyalty by regularly purchasing Hermès products beyond bags, such as shoes, perfumes, and scarves.
When a new bag is offered, you can only pray for the chance to buy it based on your loyalty and purchase history.
However, the presented opportunity may not align with your desired color, yet refusal is not an option.
Failure to seize the opportunity might lead to being deemed unworthy, resulting in a loss of loyalty points and potential exclusion from future purchases.
Well….
The system essentially pressures you to buy the offered bag, regardless of the price - an entirely irrational way of selling that remarkably works for Hermès.
And it has worked amazingly for them. In 2022, Hermès boasted a revenue of $12.42 Billion!
Let that sink in!
Food for Thought: The Luxury Conundrum
As we sit here, bantering and sharing a laugh, let's take a moment to ponder. We all might personally know people who are investing five digits in Jordans.
If you really look at it, and take this with a pinch of salt:
What Air Jordans represent to you, a Hermès bag symbolizes to them.
Now the question arises: Is it wrong? Most definitely not.
No, but is it necessary?
Ah, and now the distinction between personal choices and societal expectations seems to blur. I believe it boils down to individual preferences, and ultimately, subjectivity steals the spotlight!
Until next time, keep pondering the nuances of life, luxury, and personal choices.
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