Hermès Faces Class Action Suit Over Birkin Sales Practices

[cravin]

This makes sense as a corporate policy. Yet, anecdotally, high traffic stores (Beverly Hills, Madison, San Francisco, Seattle, etc.) are considered, at least on tPF, to be more competitive.

How could both be true at the same time? If higher revenue stores get allocated more bags, theoretically it shouldn't be any harder to acquire bags there?

This is just my personal observation. We used to shop in a small store in Connecticut. On a “busy” Saturday, when we walked in, there may have been 20 customers total in the store at one time.

On a “busy” Saturday a few months ago, we stopped into Madison Avenue. There must have been at least 300-400 people in the store. Every floor was packed.

So now let’s say Greenwich store receives one bag for every 10 that Madison does, you’re still not blowing away the demand with supply. Also, folks travel to visit Madison as a part of destination travel to NYC, while Greenwich serves local clients.

 

[benjinito]

These are some good points.

One way I can see the system making sense/being true is under two circumstances. Both of them assume that the repeat, local, high spenders subsidize those with a lower spend.

1) Tourists can walk out with a bag after one or two shopping trips in which they spend 1:1 or 1.5:1, which is still high but less than locals who have to spend, say, 2:1 or 3:1. This might be why we hear in non-touristy and probably lower sales stores, "we show loyalty to our local customers." Where sales are low, I don't think stores get the liberty of sending bags out the door with low/no prespend. Again, I believe it'd send up red flags to management/HQ that there's resale collusion going on.

and

2) In these stores compared to elsewhere, Hermes gives newer clients their first bag with a much lower average spend. They then pay out the nose to aquire bags 2, 3, and so on. Or, a customer doesn't come bag to pursue bag 2 because they're happy with the one. Either way, more bags go out, but there's still an expectation of a higher average prespend.

Still, it wouldn't surprise me if Hermes made some adjustments with its bag allocation system to align with the cost of living standards. In other words, if they said along hypothetical lines of, "NY stores, you have to get $25k in sales for a bag because a $100 twilly is nothing for a person making $200k a year, but in Denver where the average salary is $80k and that purchase is more impactful, they'll get a bag for every $20k in sales." While there are billionaires in every city, I don't think there are enough that the company foregoes catering to the middle-upper class, who still have a degree of price sensitivity towards luxury goods.

I think its because higher revenue stores have a long list of loyal clients and also high spenders who had been shopping there for years (hence the higher revenue store). Bigger stores have more stocks but is also a lot more competitive. If smaller stores have 50 bags per shipment and 500 clients, im assuming its 5 or 10x more for bigger stores so it doesnt change the wait time for bags as well unless you walk it under the right circumstances.

This is just my personal observation. We used to shop in a small store in Connecticut. On a “busy” Saturday, when we walked in, there may have been 20 customers total in the store at one time.

On a “busy” Saturday a few months ago, we stopped into Madison Avenue. There must have been at least 300-400 people in the store. Every floor was packed.

So now let’s say Greenwich store receives one bag for every 10 that Madison does, you’re still not blowing away the demand with supply. Also, folks travel to visit Madison as a part of destination travel to NYC, while Greenwich serves local clients.

So we're suspecting that high-traffic stores get more bag allocations, but not directly proportional to their revenue. As in, Madison can bring in 10x the revenue of Connecticut but doesn't get 10x more bags... Which (if true) is an ... interesting choice from Hermes corporate

Cost of living could be a factor in the US, but internationally, we know that's not the case since some smaller countries (like Vietnam) have astronomical spend requirements.

 

[kbluebutterfly]

So we're suspecting that high-traffic stores get more bag allocations, but not directly proportional to their revenue. As in, Madison can bring in 10x the revenue of Connecticut but doesn't get 10x more bags... Which (if true) is an ... interesting choice from Hermes corporate

Cost of living could be a factor in the US, but internationally, we know that's not the case since some smaller countries (like Vietnam) have astronomical spend requirements.

Let's assume smaller stores have 1000 clients and get in 10 bags per shipment, and bigger stores have 2,000 clients and get in 20 bags per shipment. Its still the same concept so i think supply and demand is still not affected.

 

[papertiger]

Let's back to the topic of the thread now please, TY

 

[Grand Style]

Update: https://www.reuters.com/legal/fashi...end-itself-against-birkin-lawsuit-2024-04-30/

 

[loh]

https://www.reuters.com/legal/government/hermes-asks-court-toss-far-fetched-birkin-bag-antitrust-case-2024-05-09/?utm_source=Sailthru&utm_medium=Newsletter&utm_campaign=Afternoon-Docket&utm_term=050924&user_email=9114ec1da95f25efb4934038786b275ee598e97e0f2509617df69d5023e6f165

It appears a motion to dismiss has been filed. As it should. Hope the judge kicks it out.

 

[ouicestmoi]

https://www.reuters.com/legal/government/hermes-asks-court-toss-far-fetched-birkin-bag-antitrust-case-2024-05-09/?utm_source=Sailthru&utm_medium=Newsletter&utm_campaign=Afternoon-Docket&utm_term=050924&user_email=9114ec1da95f25efb4934038786b275ee598e97e0f2509617df69d5023e6f165

It appears a motion to dismiss has been filed. As it should. Hope the judge kicks it out.

First sentence of the Intro: "Plaintiffs fundamentally misunderstand the antitrust laws." Why yes, yes they do.

 

[MacawGuy]

 

[MonsoonBirkin]

It appears from the filings that the plaintiffs stipulated to the defendant's extension only if they were in turn given a hearing before a judge prior to any ruling.

Checking the judge's calendar, it looks like an initial case management conference is set for Thurs, June 20th. The motion to dismiss will not be ruled upon at this time. So, the typical long road of litigation continues.

Stray thoughts on H's filing:

"Tying alone does not raise competitive concerns, as many “tying arrangements may well be procompetitive.”

Yeeeaaaah, proving H is anticompetitive with its alleged tying is what I see as the biggest hurdle, but claiming H's practices are, in any, way pro-competitive is farcical. I guess a good defense is a good offense but this is a stretch.

"“Each Birkin handbag is handcrafted from the finest leather by experienced artisans in France.” Id. ¶ 21. Thisis a deliberate process: “The manufacturing of a single Birkin handbag requires many hours of anartisan’s time,” and the “intensive labor and craftsmanship and high-quality leathers required. Because of these supply limitations, Hermès cannot produce sufficient Birkin or Kelly handbags to satisfy demand. Id. ¶¶ 21-23."

I hate this argument, too, namely because ANY product can satisfy demand by doing one simple thing that every other business does when there's this disparity. It's taught in every econ 101 class, so it's not a secret: RAISE THE PRICE. Hermes knows this. We all know it. It's one thing to feed this line as a marketing tactic.... but in a court of law? Come on.

"Plaintiffs’ Complaint does not identify any particular tied product that customers are required to purchase for access to Birkin Bags—nor even a total amount of money that customers are purportedly expected to spend."

🙄

Hermès does not require a customer to have purchased its many other products before purchasing a Birkin or Kelly handbag.

To start, Plaintiffs’ attempt to invoke a single-brand product market fails as a matter of law. As part of an effort to minimize the fierce competition across all segments of luxury goods,including handbags, Plaintiffs allege the tying market is a market consisting of the Birkin and Kelly handbags—and absolutely nothing else.2 Courts commonly reject such claims of a so called single-brand market, and this Court should do so as well.

Edit to add this point: one of the best argument in the filing, as I see it, and a winnable point. In other words, Hermes has a monopoly on its own product. Substitutes still exist. This isn't anti-competitive, the spillover effects aren't, and proving otherwise will be inordinately difficult.

For a tying claim, antitrust injury means harm to “competition in the market for the tied product”—namely, the foreclosure or threatened foreclosure of rivals, to the detriment of consumers... Here,Plaintiffs’ Complaint is utterly devoid of factual allegations regarding the potential or actualthreat of foreclosure of rivals in the tied market.

Also one of the best points. Having said that, initial filings are generally NOT the place to flesh out these allegations. In fact, it's unwise to do so, because it leaves the plaintiffs susceptible to a summary judgment against them. I don't know how far this lawsuit will get but I'd be interested in the details of these arguments given that they're the toughest ones to make.