Hermes SWOT Analysis 2022

Hermes SWOT Analysis 2022

Hermes International SA (Hermes), a French designer, manufacturer, and marketer for consumer goods, is Hermes International SA. 

The company’s strengths include its distribution network, geographical presence, liquidity, and liquidity. However, financial performance is still a concern. 

The company is likely to grow through the global jewelry, watches, and accessories market, as well as store expansion. 

Its business operations could be affected by intense competition, changing consumer preferences, and a growing counterfeit goods market.

hermes swot analysis

Strengths In The Swot Analysis Of Hermes

  • Strong brand image: Hermes Birkin bags are a high-end luxury item that women can own. They range in price from $12,000 to over $200,000. Interbrand, a global brand valuation firm, listed Hermes on the 32 nd spot in the Best Global Brands. The brand’s products include leather goods, lifestyle, and ready-to-wear. With a rich history, exceptional quality, and impeccable craftsmanship, the company has managed to keep its brand distinct and valuable. Hermes is a luxury fashion house that exudes elegance and innovation.
  • Global presence: Hermes, a global brand that has 307 stores around the world, has its flagship store on Madison Avenue. There are more than 13,000 employees and the stores can be found in America, Russia, Asia, and Europe. It has revenues exceeding USD 7 billion and profits exceeding 2.5 billion as of 2018. It has a strong 181-year history. This can be attributed to its drive for creativity, consistency across all global markets, and unwavering commitment to long-term results rather than short-term gains.
  • Large product selection: There are many categories of products available by the brand, including furniture, jewelry, and leather goods, as well as wallpaper, tableware, and petit, and fragrances. The strategy to diversify has created a strong brand and the brand strategy is consistent in each of its product categories.
  • Brand strategy: Hermes doesn’t encourage celebrity endorsements to build its brand image. In fact, it has avoided this type of marketing. Only celebrities who are A-listed and wealthy have access to the most exclusive and high-end products. Hermes doesn’t launch products or collections that are specific to a particular region. All products are uniform across the globe, giving it a consistent look. Their products are not available for sale or at discounted prices.

Weaknesses In The Swot Analysis Of Hermes

  • Competition: Louis Vuitton, the main competitor to Hermes, has been focusing its attention on its heritage and has been able to retain any customers. LV charges a lot for its bags and keeps strict control over who can sell them. Chanel has also increased its market share by offering classic, quilted cosmetics, bags, and fragrances. Christian Dior and Hugo Boss are also competitors. H&M, a fast-fashion company like ZARA has also taken over its market shares. Hermes must continue to evolve and differentiate their products in order to be in a better position in the luxury segment.
  • Imitation: Design pirates can now create fake products faster and more accurately online. Detail shots of products are uploaded within minutes of their launch. Half-billion dollars worth of counterfeit luxury goods were seized by the New York federal government. Hermes could combat counterfeit products by using on-demand manufacturing. The blockchain network allows machines to create designs in a specific number of units.

Opportunities In The Swot Analysis Of Hermes

  • Global expansion: Hermes’ strategy of global expansion is important to address the cyclical turndowns in some categories, wider economic, fluctuating consumer preferences, and changing demand. Although Hermes products such as jewelry and perfumes are increasing in sales and volume and contributing to the company’s revenue, they still have to match the success of its leather and saddlery divisions. The exclusivity-marketing model of Hermes could be a challenge in the global expansion of the various product ranges.
  • Increase brand equity: The brand is well-known for its expertise in the field of silk and ultra-luxury products made from leather. Hermes has expanded its product offerings into different categories, but the brand equity for those products is not as high as leather and silk. Watches are experiencing a slow growth process and only 3 percent of Hermes’ 5.2 billion annual revenue in 2016. Hermes must improve its brand equity and broad product lines.

Threats In The Swot Analysis Of Hermes

  • Brand Takeover: LVMH holds 22.3% of Hermes, and the company is taking every step to stop that percentage from increasing. In 2010, LVMH purchased a large stake in Hermes. Since then, the brand has been worried about a hostile takeover of LVMH. Hermes views this as more of a cultural battle than a financial one. Hermes created a separate family holding corporation that holds 50% of the shares to prevent LVMH from taking over.
  • Economic instability: Although the effects of the protectionist measures taken by the largest economies in the world have had a dampening effect, the brand is doing relatively well, with global trade rising by 5%. Trade was an important factor. Now, a lot depends on countries’ ability to withstand uncertainty and global liquidity shocks that are originating from the United States. However, the chief economist of the brand said that the company could be subject to payment risks if the trend continues.

Leave a Comment