TRAUB & Threadstone invite you to the First T.TALK |Thursday, Feb 2nd, NYC

"WHICH FASHION HOUSES HAVE THE 'HOTTEST' BRANDS?"

Discussion led by the founders of the Worldwide Barometer Exclusivity & Desirabil| ity of Luxury Brands Index

Luca Solca, Head of luxury goods research of financial services firm Exane BNP Paribas. Luca is the #1 ranked analyst for luxury coverage.

&

Philippe Jourdan, Partner at Promise Consulting, the premier luxury marketing research firm in Europe focused on measuring brand equity.

Thursday, February 2nd, 2017, 6:30 PM

Le Skyroom | 22 E 60th Street, NY 10022

PLEASE RSVP TO ahafkin@marvintraub.com by January 27th

Space is limited so a prompt RSVP is appreciated.

JANUARY 2017 | LUCA SOLCA | EXANE BNP

HERMES INTERNATIONAL: HERMES MORPHING INTO A MEGA- BRAND

[TO CONTACT US]

The Hermès paradigm (as we saw it)
Over time, Hermès has built a most enviable position in the luxury goods industry (The Epitome of Modern Luxury). This - in our view - was built on four pillars: 1) frustrating demand for its iconic leather models; 2) using adjacent product categories to provide accessible entry price points (Entry Price Points and the real Nature of Luxury Goods), while keeping the core leather products expensive and out of reach (Category Segregation); 3) sticking to organic growth and avoiding acquisitions; and 4) maximising retail space productivity and ROIC.

Hermès is changing ...
Hermès seems to be moving away from its tried-and-tested formula of frustrating demand for its iconic products. It has, in fact, increased leather goods manufacturing capacity over the past few years. The principle of 'category segregation' also seems to have been discarded, as consumers can buy Hermès handbags at significantly lower prices and just north of EUR1,000. These are not Birkin or Kelly, obviously, but they are still Hermès handbags: Evelyne, Garden Party, Picotin, etc.

... and morphing into a Mega-Brand
We think that 'demand frustration' and 'category segregation' were the two traits that set Hermès apart from mega-brand peers. With these gone, the 'genetic difference' between Hermès and - say - Louis Vuitton is more difficult to identify. Hermès is still more desirable in the eyes of some consumer nationalities (Measuring Brand Exclusivity and Desirability - China), but this seems more a difference in 'intensity' than in 'nature' as other consumers seem to have the opposite perception (Measuring Brand Exclusivity and Desirability - France).