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The Secret to Hermès’s Success

© Billy Surface

How has this 172-year-old French leather-goods company remained successful?

He didn’t want to jinx it. But when asked how Hermès was faring in the new economy, the company’s U.S. president and CEO, Robert Chavez, had to admit “things have been good. We are,” he was sure to point out, “very grateful.” Hermès, known for its iconic leather goods like the Birkin and Kelly bags and brightly colored silk ties and scarves—as well as its steep prices (a Birkin starts at $8,000)—posted a 3 percent increase in sales for the first quarter of 2009 and a 12 percent rise in the second quarter. Hermès continues to open stores throughout the country, most recently in San Diego, Seattle, Denver and East Hampton, and come February it will debut its first-ever boutique for men in a six-story townhouse across the street from its Madison Avenue flagship. On a recent Saturday afternoon at the Upper East Side store, the line to get near the enamel bangles (from $445) was three-deep, and there was a wait for the salespeople unfolding silk scarves (from $375). A woman was deciding between a tan or a black leather So Kelly bag, an update of the classic in a modern cylindrical shape ($6,100). She chose the black, turned to her friend, and asked, “Forever, right?” Let’s hope so.

Chavez, who has been with Hermès since 2000, says its secret lies in always staying the course. “We are consistent,” he says. “We don’t do drastic styles or make sudden changes. There are no markdowns. These are lasting effects.” The women’s fall 2009 collection, for example—one of Hermès’s best-reviewed in recent memory—made no concessions to the economy, featuring instead an homage to Amelia Earhart, with astrakhan dresses and gray crocodile bombers with beaver collars. The classics, however—the Birkin, the H belt, the Kelly—are what draw and maintain loyal clients, says Chavez: “This year the Kelly [introduced in the thirties and restyled in 1956] in particular is seeing a resurgence. It’s timeless. You don’t buy it and wonder what it will look like in fifty years.”

Enduring style, provenance, and authenticity seem to be a consumer’s new criteria for investing in upscale items, and Hermès, founded in 1837 and still largely family-owned (a small percentage of the company is traded on the French stock exchange), certainly fulfills them. Scarves are still hand-painted in Lyon and leather goods still handcrafted by artisans trained up to five years before they even touch a Birkin. In her 2007 book, Deluxe: How Luxury Lost Its Luster, journalist Dana Thomas called Hermès bags “the antithesis of an It bag: Most of the designs have been around for almost a century and are coveted not because they are in fashion but because they never go out of fashion.” Besides history and craftsmanship, the company also has what Erin Armendinger, director of the Jay H. Baker Retailing Initiative at the Wharton School of Business, calls “the luxury of the waiting list. They have a small capacity for most of their high-end leather products, so there is a pent-up demand—no one else has that. But the quality is there; it’s an authentic story.”

Speaking of stories, there was one making the rounds earlier this year about certain clients who requested anonymous brown paper bags for their purchases rather than Hermès’s signature orange ones, all in the name of retail modesty. Chavez heard the rumors but doubts their veracity: “It just doesn’t really make sense. It’s Hermès. If someone didn’t want to walk around with the shopping bag, we’d just have it delivered to them at home.”

Hermès is at 691 Madison Avenue (212-751-3181). For more locations, go to hermes.com.

How the Small Survive

Amid a retail atmosphere that has brought many giants to their knees, Merry Vose, owner of the tiny Dallas boutique Cabana (214-674-2298), says her business has never been better. Cabana is among a group of small women’s clothing stores whose highly customized services (closet consultations, travel and event wardrobe planning, exclusive hand-picked items) have helped them to stay afloat—and even excel—in the retail downturn. In fact, the U.S. Commerce Department reported gains for specialty retailers in July, while department store sales continued to fall in the same month.

Elyse Walker, owner of the eponymous Pacific Palisades, California, boutique (310-230-8882; elysewalker.com), sends her regular clients personalized e-mails with photos and updates of new items; at fashion shows, she snaps runway shots for them.

At Neapolitan (847-441-7784; neapolitanonline.com), in Winnetka, Illinois, owner Kelly Golden takes her top clients with her to fashion shows and has also put them in direct contact with designers; one client commissioned a custom-colored navy dress to match her son’s wedding party.

“We’re in our clients’ homes every week,” says Laura Vinroot Poole, owner of Capitol (704-366-0388; capitolcharlotte.com), in Charlotte, North Carolina, “either planning outfits for daily life or for a special trip. This is the rule rather than the exception.”

A pioneer of the small-boutique blueprint, Linda Dresner closed her 25-year-old New York outpost last December, at the onset of the retail downturn. “It was a natural end,” says Dresner. “There was so much negative retailing going on at the time.” But her Birmingham, Michigan, location (248-642-4999; lindadresner.com) remains open, and—to the delight of her cult-like clientele—Dresner now holds biannual trunk shows in New York. —Shannon Adducci