Saturday, November 28, 2015
Wednesday, November 25, 2015
New lovebirds Gigi Hadid and Zayn Malik desperately try to go incognito as they enjoy second date in a matter of days
They were pictured together for the first time as they left a Los Angeles party following the American Music Awards on Sunday.
Wednesday, November 11, 2015
MIAMI, United States — The pristine sidewalks of the Miami Design District are illuminated by glowing streetlights. Tonight, a champagne flute-clasping crowd gathers around the front of the neighbourhood’s brand-new Hermès flagship. The whitewashed building, wedged on the corner of NE 39th Street and 2nd Avenue, across the street from Louis Vuitton and around the way from the popular restaurant Michael's Genuine Food & Drink, is set to open to the public the next day.
Hermès’ new Miami store is its third flagship in the US, which emerged from the global financial crisis and ensuing downturn much faster and stronger than most markets. It is widely seen as a major opportunity for fashion and luxury businesses, especially as growth continues to slow in a troubled China. The store is also strategically positioned to capture spend from wealthy Latin Americans, who come to Miami to shop. “Miami is cosmopolitan, very American, but also very open to Latin America. We really wanted to have a store that reflects what is Hermès in term of a Parisian house, but also in terms of a house that respects the local culture,” says Axel Dumas, the sixth generation member of the family that founded the brand, who became its sole chief executive in 2014 after sharing the title for a year with Patrick Thomas.
Outside the store, there are velvet ropes keeping top-tier clients, Miami socialites and press close to the entrance as a parade of flamenco dancers marches past. It’s about 7pm and the sky is already pitch black. The interiors of the three-floor, RDAI-designed space beckon them with promises of exclusive product (and relief from the humidity). Unlike in most Hermès stores, the company’s home — or maison — collection sits on the main floor alongside men’s and a Saint-Louis crystal shop-in-shop, the first of its kind in the United States. Jewellery and scarves sit on the second floor. For women’s clothing, shoes and, most importantly, handbags — the company’s largest revenue driver — one must venture all the way to the third floor. It’s not a terrible strategy. One of the reasons Hermès chose the location — trumpeted by local developer Craig Robins — was that it allowed the company to build a space from the ground up, rather than adapt to something already in place.
Later in the evening, guests will head to an even grander spectacle at Soho Studios in the city’s artsy Wynwood neighborhood. The party — which was inspired by 1950s Havana and featured a salsa band, a pop-up restaurant, a game room and several interactive stations where guests could play dress up and have their photo taken — reportedly cost the company upwards of $1 million, according to sources.
For Hermès, the extravaganza is reflective of the investment the publicly held, privately controlled French luxury goods purveyor is making in both Miami and the United States overall. Indeed, in the past three years, the company has expanded or remodelled eight of its 28 standalone US stores — Beverly Hills in 2013, Atlanta in 2014, and Seattle, Washington D.C., Houston, Dallas and Miami in 2015 — and opened a standalone parfumerie in the downtown Manhattan’s new shopping center Brookfield Place earlier this year. “If you look at the macro business in the US, it’s a very solid base,” says Hermès’ US chief executive, Robert Chavez. “The whole idea that less is more is really something that is catching on in a major way. People want what they’re buying to last for a very long time. It’s not the throwaway culture that existed for so many decades.”
But retail expansion in the US is just one piece of the puzzle for Hermès as the company seeks new sources of growth. “We always try to have a balanced way of investing,” Dumas explains, sitting in the corner of the store that houses the saddlery. “I think it can explain a little bit of the resilience of Hermès in a difficult time.”
To be sure, Hermès has plenty of resilience. As the luxury industry takes a beating globally — according to a recent report by Bain & Company, real growth in leather accessories, fashion, hard luxury and fragrance and cosmetics has slowed to 1 to 2 percent — the company has managed to maintain business momentum. In the first half of 2015, the company reported a net turnover of €2.3 billion, a 21 percent increase at current exchange rates, and a 9 percent increase at constant exchange rates. Every category — or métier, as they are referred to more elegantly within the company — saw an increase in sales, except for watches, which declined by 1 percent. Leather goods and saddlery was up 14 percent. Ready-to-wear and accessories: 8 percent. Silk and textiles: 5 percent. Perfumes: 4 percent. The “other” category, which includes jewellery, tableware and home, was up 12 percent.
However, as the company prepares to report its third-quarter earnings on November 12, it’s clear that there are challenges ahead. For instance, gross margins for the first of half of 2015 were 66.5 percent, down from 68.1 percent during the same period in 2014. The company has also projected that its 2015 turnover — at constant exchange rates — will be up 8 percent for the year, compared to the double-digit growth it typically reports. Operational profitability is also projected to decrease from 2014’s 31.5 percent. “Over the past twenty years, Hermès has achieved both high organic growth and very significant margin expansion,” wrote analyst Luca Solca in a recent note. “Going forward, neither of the two is likely to continue, as the company seems to be set on a course of mid to high single-digit organic growth and is probably close to peak margins.”
So, where will the growth come from? “When you are so successful, how do you maintain that?” Dumas asks rhetorically. “I’m happy for Hermès to have this kind of recognition? Unfortunately, for me, my job is not to relish this good news, but to see what can be done better.”
When Dumas thinks about the future of the firm, he often thinks 10, 20, 30 years ahead. He also uses the word “balance” frequently in conversation. The importance of maintaining a balance, he says, is why the company has continued to invest in mature markets like the US, Europe and Japan. “We are not proposing a new country where we invest a lot and discount the other one,” he says. In Japan, for instance, the company opened or expanded stores in Kobe, Nagoya, and Tokyo long before the weak yen brought in an influx of tourists. “There is the groundwork that has been done, which is to become relevant and very different to the Japanese clientele. When people weren’t investing, we were there,” Dumas continues. “We made a statement to the Japanese community. At the same time, the decrease in the yen has created an opportunity for tourists in Japan. But even without tourists, we would have some good growth.” In the first half of the year, the company saw an 20 f percent increase in the country’s sales.
Wherever Hermès focuses its efforts, it aims to tightly tailor the product assortment to the local market. Twice a year, store directors from each boutique visit Paris to buy inventory for their outpost. In Miami, for instance, there are more exotic skin bags on offer than any other location in the world, in response to local demand. “It’s important to be relevant to your local clientele,” Dumas says. “You will have the tourist flow, but that is dependent on many things you cannot control.”
This dialogue with the customer extends to overall product assortment. The idea is to let the customer guide what the brand should make next. “We don’t have a marketing department. There is this profusion of offer, and we let the customer decide and then we see where the traction is coming from. Obviously, we’ve seen a very strong result in our fashion business. The shoe business has been very strong. We really believe that maison has a strong potential,” Dumas explains. “I’ve talked to you about geography, but it’s also one of our specialties to be balanced in our product offering. Those two pillars — geographical balance and métier balance — are what is important. Now is the time for me to invest in each of them, at our own pace. If you take a 20- or 30-year perspective, you don’t know what is going to seduce your client.”
Dumas is also proud to note that the brand is popular with both sexes. “Maybe it’s because of our equestrian roots, but we are also balanced between men and women,” he says. “That’s something we’ve been enjoying a lot.”
One category that is not performing as well is watches, which saw a 1 percent dip in the first half of the year. Again, Dumas’ strategy is to invest in the métier, rather than ignore the problem. At Baselworld in the spring of 2015, the company introduced a new range — the Slim d'Hermès — which was recently recognised at the prestigious Grand Prix d’Horlogerie de Geneve. “For us, it’s creation first, so I’m glad that we won this award,” Dumas says. He also believes the watch industry’s transition from a primarily wholesale business to a retail business will play in the company’s favor. “I think that will help propel the watch category into growth again,” he says.
To be sure, the introduction of the Apple Watch Hermès in September 2015 is also a part of that growth plan. “We had an incredible talk with Jonathan Ive, and there was a lot of mutual admiration and common values. From that, we said, wouldn’t it be nice to have something combining our craftsmanship, our vision? It was about trying to make a contemporary, elegant object. It was not a master plan of global domination,” Dumas says of the drivers behind the partnership. Yet, as Solca recently wrote: “For Hermès, it attracts attention back to a category with which the brand has been struggling and offers an easier entry point for aspirational consumers. It sells a little piece of the brand — a Hermès leather band — at a very significant premium and, I assume, a considerable margin.”
Hermès is also making investments in its digital presence. Currently, the company’s brand website is divorced from its e-commerce platform. In mid-2016, the company will integrate the two. “E-commerce is important, but also it’s about communication, telling your value,” Dumas says. “That’s why we are really thinking hard on re-launching the new website in 2016. I view digital as a great opportunity and something that is going to become more and more important.” Indeed, according to Solca, digital is expected to drive, on average, 40 percent of projected luxury sales growth from 2013 to 2020. “[E-commerce] is one of very few ways luxury goods companies can now grow,” he says.
When Dumas was named co-chief executive three years ago, he spent a lot of time looking at the archives, and quickly drew a correlation between the international expansion that happened in the 1970s and the digital expansion that is happening today. “There was a discussion in the 1970s, should we go international or should we not? People were saying, you don’t need to go international because everyone is coming to Paris. Going international will be risky and costly. Fortunately for us, we took the step to go international. I think it’s the same subject about digital now.”
There is another lesson learned from the 1970s, Dumas says: brand control is more important than ever. “If you believe that digital is strategic, then you should do it yourself,” he says. “In the 1970s, some did licensing, which was quicker than expanding international by opening your own stores, which was longer, slower, harder. But then, 15 years later they all tried to buy back their licenses.”
In the end, it’s clear that Dumas believes long-term prosperity will come from the brand’s belief in creativity. “Part of Hermès is resistance. It’s about keeping your value alive, protecting yourself in the future and believing in creativity,” he says. “There is no magical recipe. When you are a house that is 180 years old, there are good times and bad times. We have been able to reinvent ourselves many times. If we were just doing saddle making,” he continues, gesturing over to the horse-y goods stationed next to him, “that would be the size of the store.”
Tuesday, November 10, 2015
Smuggled Hermes, Prada bags worth HK$440 million seized
Mainland customs officials seized about 6,000 Hermes, Prada and other luxury-brand goods worth about HK$440 million from suspected members of syndicates who used Hong Kong as their transshipment point.
The groups bought the luxury handbags overseas and asked the sellers to deliver them to Hong Kong warehouses through courier services, according to a Metro Daily report.
From there, the groups employed young and pretty ladies to take the luxury items across the border, each time carrying only one or two items so as not to arouse the suspicion of customs inspectors.
The goods were then sold in shops in Shenzhen’s Futain district as well as on online platforms.
Due to the high tax rates imposed on luxury items on the mainland, smuggling has become a lucrative business, the report said.
One shop in Shenzhen selling smuggled luxury items has raked in 270 million yuan (US$42.5 million) in just three years, a Shenzhen customs official said.
At least 32 suspects were arrested on Oct. 16, when customs and other law enforcement units raided several stores and warehouses in a number of key cities including Beijing, Shanghai and Shenzhen. The operation was codenamed Justice 14.
Friday, November 6, 2015
13K sf boutique is among brand's largest in the U.S. and the only one with Saint-Louis crystal
More than two years in the making, Hermès of Paris’ flagship store in the Miami’s Design District is set to open on Friday.
With three stories and an undulating staircase, the 13,000-square-foot boutique at 163 Northeast 39th Street represents one of the French brand’s largest stores in the United States, said Robert Chavez, president and CEO of Hermès U.S., who was at the boutique’s unveiling on Thursday
“It really started with Craig Robins’ vision,” Chavez told The Real Deal, recalling how Robins, president and CEO of Dacra, came to see him three-and-a-half years ago, and told him of his plans to transform the Design District into a luxury shopping destination. “Let’s do it,” Chavez recalls saying after learning more and witnessing what could be created. Once Hermès lease expired at Bal Harbour Shops, Hermès opened a temporary store in the Design District, and began designing and building the new flagship.
“We felt it was definitely a market where we wanted to make a significant investment,” Chavez said.
The goal was to create an inviting setting for visitors to experience the full Hermès collection, amid floor-t0-ceiling glass and an abundance of natural light. The building’s facade has two layers: a glazed glass box, covered with a white-coated steel grid, broken up by hundreds of vertical steel tubes of varying thickness.
“It’s the perfect expression of what the Design District is all about,” Robins told TRD of the new store. “It’s a neighborhood where brands can get out of the more boring context and be creative, and create flagship stores that are different, because it it’s a place where they can experiment and do things that are more exciting,”
As part of Hermès’ new store concept, the Hermès men’s collection is at the front of the space on the first level. The Miami boutique also is the first store in the United States to have a “shop-in-shop” of Saint-Louis crystal, which has its own entrance on the first floor.
The store’s second floor showcases Hermès’ silk scarves, fashion jewelry, accessories, and the brand’s watch and fine jewelry collection. The third floor offers handbags, apparel, shoes, saddles and perfumes. The array of products reflects the Florida market, like flamingo print scarves and brightly colored items, said Peter Malachi, Hermès’ senior vice president of communications.
At the top of store’s rooftop sits the Hermès symbol of a horse, one of just six stores in the world to have it . “The fact that they chose Miami as one of six cities in the world is a huge statement for us,” Robins said.
In the Design District, commercial rents are now about $150 per square foot, blended, for three stories, Robins told TRD. Other brands with three-story boutiques include Louis Vuitton, Tom Ford and Valentino. Dior, which will open its flagship in March, will also have a three-story building.
Amid the transformation of the district, Dacra now has 50 retail businesses open and other property owners — including Thor Equities and TriStar Capital — have an additional 12 stores open, Robins said. By March, Dacra’s figure will rise to 60. Construction on another 20 stores has begun, and those stores will start to open in late 2016, he said.
By the end of 2017, Dacra will have 120 stores open on its own property, and other property owners will have another 40. Ten new restaurants are also planned.
“This is a major step in what is still a long process of new opportunities and new offerings that are going to transform the Design District over time,” Robins said.
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