Any information on 2015 price increase?

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#436
mistikat said:
If you look back at previous price increase threads, the reaction is pretty much the same. People say Hermes prices are now too high and they will stop buying. Some do. Most don't. While there are likely economic reasons (higher costs for labour, materials, shipping, currency issues, etc.) I think that Hermes raise prices simply because they can, and because regardless of the initial sticker shock, people continue to buy, year after year.

Hermes is likely not concerned about customers for whom a 10 per cent increase prices them out of buying. Not saying this to be unkind, but they are a carriage trade company and see their customers as those who don't, for the most part, worry about price. I am sure their sales will continue to be robust this year regardless of the increase or those customers who now feel it is too expensive across the board.
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I haven’t gone through the old threads but I suspected that every year people have the same reaction but I think what I’m feeling is specific to this year because of the Euro and the economy.

I agree that for the most part Hermes doesn’t worry about it’s price increases because they think most of their consumers don’t worry about price tags but since I’ve been frequenting my boutique regularly in the US I’m not sure that this is the majority of their customer base anymore. There’s no way that the most affluent individuals in the world skyrocketed their spending to increase Hermes global sales at the rate they’ve climbed in recent years. The growing middle class around the world did that for them, allowed them to open new stores and add product lines. I would consider myself one of those new consumers.

What is upsetting to me is that in light of the current global economy and knowing that labor, materials, transportation etc did not climb 10% in 2014 that they are going on the offensive to shut out the group of consumers like myself from their price point. I may be projecting but I run a high end business and I have 20 years experience in retail and this feel like a slap in the face. As has been pointed out again and again, with the Euro falling prices in the US will be close to 35%-40% over the French price before VAT refund. It’s bad business on paper so it must be strategic. That’s what’s upsetting me.
 
#437
MrsOwen3 said:
I haven’t gone through the old threads but I suspected that every year people have the same reaction but I think what I’m feeling is specific to this year because of the Euro and the economy.

I agree that for the most part Hermes doesn’t worry about it’s price increases because they think most of their consumers don’t worry about price tags but since I’ve been frequenting my boutique regularly in the US I’m not sure that this is the majority of their customer base anymore. There’s no way that the most affluent individuals in the world skyrocketed their spending to increase Hermes global sales at the rate they’ve climbed in recent years. The growing middle class around the world did that for them, allowed them to open new stores and add product lines. I would consider myself one of those new consumers.

What is upsetting to me is that in light of the current global economy and knowing that labor, materials, transportation etc did not climb 10% in 2014 that they are going on the offensive to shut out the group of consumers like myself from their price point. I may be projecting but I run a high end business and I have 20 years experience in retail and this feel like a slap in the face. As has been pointed out again and again, with the Euro falling prices in the US will be close to 35%-40% over the French price before VAT refund. It’s bad business on paper so it must be strategic. That’s what’s upsetting me.
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^This.
The unsettling issue is the massive price discrepancy between Euros and dollars, not the % increase, per se.
This is pretty unheard of with international companies, they purchase massive amounts of currency or
place hedges to avoid both intra-market fluctuations and currency discrepancies. H could easily avoid this discrepancy, but it looks like this is intentional.

I think all of the luxury sector expects to see a decline in growth this year due to the oil market downturn
and other issues. The US is looking to be the strongest market, so H is hoping to pad their revenues with the US consumer. I think you make a good point that they are taking the US consumer for granted, and their plan here may not play out as expected.
 
#438
I would question that Hermes is looking to or has ever looked to the middle class as a key customer segment for them. If you queried people, I would guess that very few would think $10,000 for a handbag is rational, much less a must have. Or $500 +/- for a scarf. I agree the amount of the increase feels like a slap in the face to many of their existing customers, no matter their financial means (no one enjoys paying a lot more for something, regardless of their personal finances) but I am betting that by the end of this year, their sales will be as robust, if not more so, than in previous years. Chanel and LV are not far behind them in terms of pricing or price increases. I doubt those brands will suffer much either.
 
#439
Monceau said:
^This.
The unsettling issue is the massive price discrepancy between Euros and dollars, not the % increase, per se.
This is pretty unheard of with international companies, they purchase massive amounts of currency or
place hedges to avoid both intra-market fluctuations and currency discrepancies. H could easily avoid this discrepancy, but it looks like this is intentional.

I think all of the luxury sector expects to see a decline in growth this year due to the oil market downturn
and other issues. The US is looking to be the strongest market, so H is hoping to pad their revenues with the US consumer. I think you make a good point that they are taking the US consumer for granted, and their plan here may not play out as expected.
Click to expand...

Add £ to that too! The disparity of the prices between different currencies are the biggest with Hermes. If you look at LV, the price variance between £ and euro is much smaller.
 
#440
Monceau said:
^This.
The unsettling issue is the massive price discrepancy between Euros and dollars, not the % increase, per se.
This is pretty unheard of with international companies, they purchase massive amounts of currency or
place hedges to avoid both intra-market fluctuations and currency discrepancies. H could easily avoid this discrepancy, but it looks like this is intentional.

I think all of the luxury sector expects to see a decline in growth this year due to the oil market downturn
and other issues. The US is looking to be the strongest market, so H is hoping to pad their revenues with the US consumer. I think you make a good point that they are taking the US consumer for granted, and their plan here may not play out as expected.
Click to expand...

+1 to Monceau and MrsOwen's comments. Maybe it's more upper middle class or lower upper class than actual middle class but whatever you want to call it, it's a group of people making aspiring purchases and you have to start somewhere. Theoretically this group will continue to increase their wealth and possibly eventually become wealthy enough to make these purchases more easily and if they get a bad taste in their mouths from a company's particular business practices, whether actual our perceived, they may take their money elsewhere.

Also, while there may be some luck involved, those who are truly wealthy but maybe irritated with, say, this particular increase, may end up making their purchases in Europe, so that takes care of their possible strategy of padding the US purchases.
 
#441
klynneann said:
+1 to Monceau and MrsOwen's comments. Maybe it's more upper middle class or lower upper class than actual middle class but whatever you want to call it, it's a group of people making aspiring purchases and you have to start somewhere. Theoretically this group will continue to increase their wealth and possibly eventually become wealthy enough to make these purchases more easily and if they get a bad taste in their mouths from a company's particular business practices, whether actual our perceived, they may take their money elsewhere.

Also, while there may be some luck involved, those who are truly wealthy but maybe irritated with, say, this particular increase, may end up making their purchases in Europe, so that takes care of their possible strategy of padding the US purchases.
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Hermes's business practice is and always has been to be a very high end luxury brand and to sell to the upper echelon of buyers. Again, not saying this to be unkind - that's what they've always done and how they've always marketed. The fact that this latest increase puts their products out of reach for some buyers or potential buyers is not a huge factor to them, whether or not we like it. People who easily have $10,000 for a bag will also easily have $11,000 for a bag. They may not like paying more, but finances per se are not what would prevent them from buying.

They will continue to raise prices annually, and customers will continue to buy.
 
#443
klynneann said:
+1 to Monceau and MrsOwen's comments. Maybe it's more upper middle class or lower upper class than actual middle class but whatever you want to call it, it's a group of people making aspiring purchases and you have to start somewhere. Theoretically this group will continue to increase their wealth and possibly eventually become wealthy enough to make these purchases more easily and if they get a bad taste in their mouths from a company's particular business practices, whether actual our perceived, they may take their money elsewhere.

Also, while there may be some luck involved, those who are truly wealthy but maybe irritated with, say, this particular increase, may end up making their purchases in Europe, so that takes care of their possible strategy of padding the US purchases.
Click to expand...

Couldn't agree more! I think that H definitely targets the middle and upper middle class as a hotbed of revenue. Other than some of the flashy nouveau riche, many truly wealthy people are quite conservative with their money and that is how they stay rich. They would, as stated above, be the ones to fly to Paris for their goods in order to save money on them since the price of the trip + the shopping would be less than just buying it close to home. That just makes good financial sense for those who have the time and mobility to do so.
 
#444
mistikat said:
if you look back at previous price increase threads, the reaction is pretty much the same. People say hermes prices are now too high and they will stop buying. Some do. Most don't. While there are likely economic reasons (higher costs for labour, materials, shipping, currency issues, etc.) i think that hermes raise prices simply because they can, and because regardless of the initial sticker shock, people continue to buy, year after year.

Hermes is likely not concerned about customers for whom a 10 per cent increase prices them out of buying. Not saying this to be unkind, but they are a carriage trade company and see their customers as those who don't, for the most part, worry about price. I am sure their sales will continue to be robust this year regardless of the increase or those customers who now feel it is too expensive across the board.
Click to expand...

this.
 
#445
mistikat said:
I would question that Hermes is looking to or has ever looked to the middle class as a key customer segment for them. If you queried people, I would guess that very few would think $10,000 for a handbag is rational, much less a must have. Or $500 +/- for a scarf. I agree the amount of the increase feels like a slap in the face to many of their existing customers, no matter their financial means (no one enjoys paying a lot more for something, regardless of their personal finances) but I am betting that by the end of this year, their sales will be as robust, if not more so, than in previous years. Chanel and LV are not far behind them in terms of pricing or price increases. I doubt those brands will suffer much either.
Click to expand...

Sadly, I think that is true. Look at Chanel...their classic flap prices has doubled in the past few years, yet their sales stay robust.
I must admit that I feel really bummed about the latest H. price increase, because I was planning to get 2 K's this year and I didn't see an increase of 10% on a Kelly coming here in Europe. It hasn't been that much in the past few years. And it's interesting that the Kelly in Togo is now more expensive here than a Birkin in Togo.
I only wish my SA had warned me about the bigger price increase for K's, because he had a Kelly on hold for me in December, which is now 10% more in price. On the other hand I do understand he might would get in trouble if he had shared that information, or maybe he didn't even know at that time.
There could be a time in the future, where I can't swallow their prices anymore, and I'm sure others feel the same, but like you said...their sales would stay as robust. Because there always will be other customers who continue to buy.
 
#447
if resellers can find buyers who are willing to pay ridiculous markups on H bags and accessories (just look at ebay), I think H is being nice to increase prices by ONLY 10%.
 
#449
I get what you're saying Mistikat but the sales numbers don't support this. Hermes' own financial reports credit aspirational buyers around the globe for their double digit sales growth. Aspirational buyers will be affected by a jump from 10K to 11K and it's those customers that spurred the company's growth. It's all well and good to say if you can easily afford 10K you can afford 11k but I don't think this year's sales figures will reflect this. I guess we just have to wait what happens this time next year. I appreciate everyone's input into the conversation.
 
#450
The idea the Hermes is only focused on high net worth customers is the illusion they want to portray, but the facts don't bear it out. As klynneanne stated, they are just as focused on the aspirational buyer, because that's where they can show growth on the balance sheet. Look at their marketing strategy over the past decade: Hermes, Chanel, and the rest of the lot have expanded production, advertising, stores, and product line. Each company continues to introduce products at lower price points while keeping their marquee product high.

Compare this with the 70s and 80s, when my mother was a typical client. These were much smaller brands then. Certainly well known, but far fewer boutiques and offerings, and less marketing, less focus on "growth"

The same is true in jewelry, autos, etc. Patek started offering mid-level watches a decade ago, and Mercedes now offers cars at the Honda price point. Most of these companies are chasing growth. These were not "growth" companies two decades ago.

That being said, price increases happen, whether for milk or a Birkin.
The only reason I'm surprised at the 10% increase in the US, is that it puts US prices completely out of balance with other markets. I may not drive two blocks to save a dollar on a gallon of milk, and I won't jump on a plane just to save on a bag, but I will delay some purchases until I head to France this summer, and fewer foreigners will head to the US to shop, so there will be some disruption in volume here in the US.
 
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