This is a wonderful story about how Hermès controls their brand, and creates a pull factor, a synthetic demand, a craving, if you will. They had all the means to push for more and more growth, but they didn’t. Why?
This goes back about 15 years or so. In Japan. Hermès was selling a type of luxury canvas bag. The ones that would normally be say 10$, but this one sold for maybe 15 times that at 150$. It’s a Hermès after all, and a relatively more accessible one. And so these were flying off the shelves.
99.99% of company managements and Boards would have seen this and said, “Hey, double down, triple down, do whatever it takes, just sell more bags!”
But what did Hermès do? They pulled the bags. Completely took them off the shelves and stopped selling them. Why? Because they knew what they stood for. Ultra Luxury. They didn’t want everyone to own a Hermès and alter their perception of the brand.
The CEO and his team at the time apparently went to get the approval of the Hermès Board at the time to de-authorize selling this incredibly lucrative product, and guess what the Board did? Gave them a standing ovation! Imagine someone doing that today if they are told they will shut down their best selling product…