HERMES’ strategy in India

“The business in India has been a bit low due to the high import duties levied on our products so it may take a bit longer in India but we are not worried as we are here for the next 50 years. Every day here is better than the previous one, every week better than the past one and so is the case for every month and every year. So the signs are encouraging,” Bertrand Michaud, HERMES regional Managing Director India, Middle East and South East Asia said.

After opening a 300 square feet store in the Ista hotel in Pune and a 1,500 square feet store in the Oberoi hotel in Delhi, the brand has decided to upsize its ambition in India and opened a flagship store in Mumbai that is more than thrice the size of its largest India store. “We decided not to be in a ghetto but be a part of the high street.” The 5,000 square feet Mumbai store spread over two levels in a heritage building.

The luxury brand known for its scarves, ties and leather bags is hoping that large stores will help attract customers who shop in Milan & Paris, to instead shop in India. “We are now able to offer the same kind of environment as our stores in London, Paris and New York to our Indian friends who are international citizens and travel all over the world. We can give our customers a full collection that they see elsewhere in the world and let them experience what Hèrmes is,” said Michaud.

Hermes strategy in India is based on another unusual learning of the Indian market. Unlike other developing markets, which see a high proportion of sales coming from its Birkin bags and Hermes scarves, Michaud said sales in India are well balanced between scarves, bags and accessories. “That shows that the consumer is well aware of the Hermes brand and its range,” he said.

“Unlike many of our peers in India who price their products around the same level as international markets by absorbing the import duty costs, by sacrificing their margins, we are responsible for higher prices. But we are not guilty as we are merely following the law and we hope that this unusual duty structure will come down over time. It is important for us to make a decent profit in order to pay our costs and to be able to reinvest in the business. Otherwise like our competitors we will end up having small size stores that are unable to offer the full complement of the brands offerings,” said Michaud.

He believes that the mistake other global brands made in India, was to not come in with their full collection in a country which has always had a strong tradition of craftsmanship and know how. “If you want to enter a market such as India you at least need to put yourself on the same level as that of the market and offer a collection that compares with the rich arts traditions in India,” he said.

Hèrmes also uses India as a sourcing destination for certain rich traditions such as fabrics found in Ahmedabad in Gujarat or jewellery work in silver or gold found in Rajasthan. “We do not source from any country because of cost. We will buy if we find know how or craftsmanship that’s superior to what we have in Paris. India is also an inspiration for design of several of our products which are however manufactured in our workshops in France,” said Michaud.

Hèrmes India, the 51:49 joint venture between France-based Hèrmes and Delhi-based Neelam Khanna and Ashok Khanna who own the Ista range of business hotels. Hèrmes has been operating in India for the past three years.

from The Financial Chronicle