Executive Vice President Sales and Distribution Hermes International Florian Craen. (GA Photo/Mohammad Defrizal)
Jakarta. At the forefront of the public’s love affair with Hermes for the past two decades are its Birkin and Kelly bags, both of which have reached iconic status, with a special language for its different colors and types of leather. Buying one is similar to ordering a personalized latte in Starbucks.
In a Hermes boutique, an avid buyer might ask: “Do you have in stock a small, rouge Casaque Epsom leather Birkin, with gold hardware?”
One can’t just say “red” as there are perhaps 50 shades of red. The arduous art of coloring leather is something Hermes has mastered.
Fancy a bag made from something exotic such as Himalayan crocodile leather perhaps?
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“This whole Birkin craze is both a blessing and a curse,” said Florian Craen, executive vice president of sales and distribution for Hermes.
“It becomes difficult for us to tackle, and we have to be faced with everything around this,” he told GlobeAsia at the recently renovated Hermes store in Plaza Indonesia.
The brand has two arms: manufacturing and retail, and Florian is in charge of the latter.
Dating back to 1837, Hermes is still a family-owned, independent company that employs 11,000 people worldwide and has 315 exclusive stores, 203 of which are operated directly. All of its products are designed and made in France.
Hermes’ first foray into Indonesia was with the duty-free shop in Bali, and now it has two official shops in Jakarta, one at the Grand Hyatt, Central Jakarta, and the other at Pacific Place mall in South Jakarta. Hermes does not advertise much, nor does it employ brand ambassadors, and it rarely puts its logo on its products.
Florian even claims that there is no such thing as a marketing department at Hermes. High quality craftsmanship and scarcity, and the status that comes with carrying the holy grail of bags, are what make the brand what it is today.
In 2013, the Hermes group reported revenue of 3,755 million euros ($4.1 billion), a rise of 8 percent.
Topping their revenue stream are leather goods, accounting for 44 percent of sales, followed by ready-to-wear and accessories (22 percent), and finally silk and textiles (12 percent).
“Hermes has growth coming from all world regions and product categories, although watches were struggling a bit last year,” said Florian, who has been with the company for over 18 years.
“So Hermes’s success is not just about one bag, but really about 16 product categories,” he added.
In Asia, excluding Japan, the company saw 16 percent growth. And although Europe has gone through a difficult economic period, the company still booked a 12 percent increase in sales in the region — Florian hinted that foreign buyers, including Indonesian tourists, contributed to the European sales increase.
“I don’t think there is such a thing as the Indonesian buyer type or the Singaporean or Chinese buyer because in every market you have a spectrum of buyers,” he said.
“At one end are those who are very knowledgeable, who know Hermes for many years, and then at the other end of the spectrum you have new customers pushing our doors for the first time.
“One thing’s for sure, plenty of Indonesian buyers shop our products beyond the borders of Indonesia.”
The combination of Hermes’ scarcity and high demand has spurred a grey market and rampant counterfeiting.
“We are faced with something we don’t want. This reselling, parallel distribution is a big problem to us, but we can’t fight it in Indonesia because it’s not illegal here,” Florian said.
“In France selected distribution is protected, so it would be illegal. It’s an unfortunate situation that we have to live with,” he added.
In Jakarta, so-called “high quality” counterfeit Hermes bags can sell for well over $1,000. Not only are the bags are fake, but so is their certificate of “authenticity,” and even purchase receipts — a must-have if one were to sell the item in the secondary market.
GlobeAsia
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