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How Hermès Built Its Billion-Dollar Fortune

Image via Getty
Image via Getty

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In a recent Forbes profile by Susan Adams, it was revealed that the Hermès family fortune is estimated at more than $25 billion, which, according to the article, is more than the Rockefellers, the Mellons, and the Fords combined. But that was only a side note compared to the rest of the article, which attempted to pull back the curtain a little on the storied company that has built a business around its famed bags, typically priced from $8,300 to $150,000. "Our business is about creating desire," Axel Dumas, CEO and sixth-generation Hermés family member, told Adams. "It can be fickle because desire is fickle, but we try to have creativity to suspend the momentum."

One surefire way to create desire? Maintain exclusivity. The article detailed a Hermés event called "Podium" which is where the fashion house divvies up its one-of-a-kind pieces amongst 1,000+ store representatives to house them in retail locations around the world. "The family has decreed that each flagship store must pick at least one item from each of the 11 métiers—thus pushing them beyond handbags, scarves and ties to perfume, jewelry, watches, home accessories," reported Adams. "In giving these managers an elaborate menu to choose from, each store boasts merchandise unique to itself. The moneyed globe-trotters who constitute the Hermès customer base constantly find themselves on a worldwide treasure hunt."

That's why there's a $12,900 basketball only at the Beverly Hills location and a $112,000 orange leather bookcase only at the Costa Mesa location. The company's website isn't a huge help either—it only carries a small sampling of the brand's total offerings.

But the one item that the brand has built a legacy on, the Hermès Birkin bag, remains nearly impossible to buy aside from at auction. Celebrities seem to be the only ones who can get their hands on a Birkin (the article reports that Victoria Beckham's Birkin collection totals over $2 million).

The process for owning a Birkin purposefully remains difficult and vague. "There's no specific rule about it," Dumas told Adams. But the best bet to find one for sale, according to the article, is at auction, where the record for the highest selling Birkin stands at $203,150. For further proof, Adams tried to inquire about purchasing a Birkin at the brand's NYC flagship and got nowhere:

I was told there were none in the store.

"When will you get one in?" I asked innocently.

"I couldn't say."

"Could you take my information and let me know when one comes in?"

"We don't do that here."

"I've heard there is a waiting list."

"We don't do that here."

"When was the last time you had a Birkin for sale in the store?"

"I couldn't say."

"I've heard that if I'm a good customer and spend a lot of money, I have a better chance of getting a Birkin."

"We don't do that here."

Moral of the story is, unless you happen to be a celebrity or marry a prince, it's going to be a long, uphill battle to own a Birkin. And that's the business model they're banking on.

· Inside Hermès: Luxury's Secret Empire [Forbes]
· Intensive Study Reveals Hermès Is Losing the Internet [Racked]
· NeNe Leakes Did the Most Horrific Things to a Birkin [Racked]