Product scarcity strategy suits Hermès
Analyst at Citigroup and seasoned commentator on the luxury sector Thomas Chauvet has said that Hermès is on course to take its annual revenues from €13.4 billion in 2023 to more than €20 billion in 2027.
He pointed out in a note that the Louis Vuitton brand, the flagship brand of larger group LVMH, had gone past the €20 billion milestone in 2022. But he said that Hermès could even overtake Louis Vuitton in the years ahead.
His analysis of share-price increases so far this year reveals an average for the luxury sector of 6.8%. The increase at LVMH is ahead of this at 8%, but over the same period Hermès’s share price has gained 20%.
He said that Hermès’s business model was driven by scarcity and that this helped set the group apart.
Image shows business management students visiting an Hermès store in Cannes.
