Pegged as “one of the world's most elegant businesses” Hermès is also one of the most resilient. It fairs substantially better than its competitors during slower economic times and spikes in demand during times of economic recovery. Perhaps as synonymous with the brand as its trademark horse and carriage calèche is its dedication to family ownership.
It’s familial vigilance that enabled Hermès to maintain control over its company vision while gracefully expanding.While most luxury brands today expand to increase accessibility, Hermès focuses on quality. The focus has paid off, as Hermès is a leader in luxury brands. LVMH, a French conglomerate, bought 15,016,000 shares of Hermès; it holds a total of 18,017,246 shares, or a 17.1 percent stake. At 17.1 percent, LVMH has become the largest non-familial stakeholder, prompting some to inquire if an acquisition is around the corner.
Whether LVMH’s move bespeaks a takeover remains unclear, but charting Hermès’ evolution highlights its covetable nature. Its ability to keep a semblance of its original vision in-tack when so many luxury brands have turned to mega-marketing schemes, distinguishes it in the minds of consumers when compared to rival brands, like LVMH-owned Louis Vuitton.
According to a LVMH company-issued statement, “LVMH has no intention of launching a tender offer, taking control of Hermès, nor seeking board representation.”
Ask analysts, like Luca Solca at Sanford Bernstein, and a different picture materializes. Solca theorized to the Wall Street Journal of the move: "LVMH is in a pole position for a future Hermès acquisition.” Solca predicts the nature of Hermès’ role if the potential acquisition takes place. She explains, “LVMH is very much in 'mass luxury' and Hermes could complement that with a higher-end focus."
If Hermès joins the LVMH family, it would be the chic and studious equestrian-loving older sister (who remains aloof when siblings try to engage her). Sibling rivalry might rear its ugly head, with brands like Fendi being owned by the same parent company. Hermès gained notoriety for timeless pieces that embody the intimacy of a whisper, whereas LVMH brands often shout their message in monograms. Would the tone of Hermès change if it became adopted by LVMH?
The distinguishing feature of the Hermès brand is within its iconic Birkin and Kelly handbags, silk scarves and classic pieces that emphasize craftsmanship. The inherent craftsmanship of a Birkin connotes an intimacy that its consumers crave. If it acquired by LVMH will its bags be bathed in logos, sprayed with sequins, embellished with a goal of democratizing merchandise in mind? If Hermès gets adopted by LVMH will its merchandise start to resemble its new siblings?
If the reins change hands, new tactics that forever alter the brand’s reputation and relationship with its niche customer could be tested out. Look at Louis Vuitton’s shift, when Marc Jacobs sought to bring the brand up-to-date, he collaborated with artist Takashi Murakami (who played with the notion of superflat by splashing anime figures atop LV monograms).
If the thought of a bedazzled Birkin elicits a heart stopping response, it must be noted that this would be especially arresting to the prototypical Hermès customer. Altering Hermès would alienate its loyal customer.
By creating covetable and classy pieces Hermès maintains its position as a power player in luxury goods; it doesn’t need a face-lift. CEO of LVMH, Bernard Arnault, jockeys his brands to win and will most likely realize Hermès needs to remain a familiar face, if not a familial one.
This means lower-priced accessories, cheaply made street fashion spin-offs – such as cotton t-shirts, toiletry cases and denim handbags— which have never been options for expansion of this French powerhouse, would not become viable avenues to explore if under LVMH’s direction.
Fret not, lovers of the label. With a Hermès silk scarf allegedly sold every 20 seconds, the brand is not in danger of going under the metaphorical knife, even if some prophesize it is about to get adopted. Hermès has proven its success in its high-luxury heritage, aging with the grace of a French film star. Therefore, it dodges the bullet of brand-surgery. Even if Hermès is about to be taken over by LVMH we predict its leather goods will remain regal and wrinkled.
