Hermès just opened the first outpost of Shang-Xia, a new luxury lifestyle brand based in PRC for PRC consumers. The brand reflects Hermès' legacy of artfulness and fine craftsmanship. Products like cashmere sweaters and fine porcelain showcase Chinese craft traditions with a contemporary minimalist twist. The small store opened in Shanghai at the Hong Kong Plaza Mall, additional stores are planned for Paris and Beijing in due course.
The establishment of Shang-Xia is evidence Hermès has found its footing in China and has the confidence to experiment. It may also confirm that the PRC consumer is growing more sophisticated. David Tang's Shanghai Tang has an early lead as the original homegrown luxury brand. PRC Consumers are experimenting beyond European and American brands – and are prepared to embrace a distinctly Chinese take on luxury lifestyle.
Shang Xia is the second Asian brand to be launched by a western company. Last month Levi Strauss & Co established Denizen, a denim brand aimed at the PRC mass market.
Luxury goods firms are finally engaging in social media – some dive right in and experiment with lots of different tactics (LV), others are more cautious (Burberry), while others are just dipping their toe in the water. A couple weeks ago, Hermès launched a new perfume, Voyage d'Hermès, with splashy and expensive banner ads on some of the most trafficked websites, including the New York Times and Le Monde. The banners pointed to a site loaded with beautiful content that hit upon the Hermès' lofty brand theme of exotic travel. Customers can share their own dream travel-experiences… these varied from a candlelight picnic for two on the floor of Sistine Chapel to scaling mystical peaks in far off lands. A Facebook fan group was set up and viewers are encouraged to share the video with friends. It seemed all the key elements (content, networks and engagement) were set for a social media hit.
Two weeks and millions of dollars later, only 40 dreams have been shared on the site and the Facebook page boasts a whopping 70 fans. The video has views numbering in the tens of thousands on You Tube, a resounding flop by Web 2.0 standards. What went wrong? I have my theories:
The online community has never interacted with Hermès before. Hermès (the parent brand) has never engaged in social media, so there's no core audience with whom it can share the launch and drive traffic.
The level of customer engagement (thinking of a story, writing and editing it) is far higher and more complex than it should be. It also doesn't help that this area of site started with zero examples of content, making it socially risky for the first users to engage. Burberry's Art of the Trench requires only a photo and began with a stable of professional examples to which amateurs could add.
Perfume, especially a new one, isn't a product that lends itself well to digital fandom… the reason is obvious: you can't smell a perfume online. The strategy might work well-established scents, like Chanel No. 5, for which we have sensory memory to reference. It's far easier to become a fan of more tangible Hermès products such as scarves or leather goods.
What do you think Hermès could do to improve their social media strategy?
It seems a bit odd to be living in a servants' quarter studio and be writing about luxury goods, however everyone at school is positively obsessed with them. Job opportunities with brands like Chanel, LVMH, Hermès, etcetera are mentioned in the most hushed and reverent tones. Luxury goods are taken very seriously here – in fact, during my first class session at ESSEC we discussed the role of luxury goods in ancient rituals.
France is fortunate the business has held up through the credit crisis. Luxury firms dodged a bullet as consumers in the United States, Europe and Latin America tightened purse-strings over the last 24 months. Lucky for these firms that the brand message of prestige and exclusivity that ceased to drive sales in western markets still resonates with the emerging upper-middle class in China and India. If you're unclear on what I mean, think about prominently logoed products (big polo pony shirts) that created instant recognition and the "it bag" phenomenon that drove luxury handbag sales in the US from 2004-2007.
For western markets, brands are shifting to a message that emphasizes heritage and craft. Luxury products, from leather goods to timepieces, are sold with the promise of becoming heirlooms – timelessly tasteful and durable enough to withstand generations of use. Brands are reaching for history, even Jimmy Choo is reviving a "greatest hits" line of footwear from its relatively young 14 year-old portfolio. Recent Louis Vuitton campaigns hit on travel themes and connect with the house's legacy as a luggage maker. Hermès reminds customers of its origins as a saddle maker by including horses in their imagery. Ads for Patek Philippe feature multiple generations of beautiful and aristocratic-looking Europeans.
If this doesn't sound all that new, it's really not – the pendulum is just swinging back. The same game-plan was used during a pullback in demand in the early 1990s, brands have shifted gears into a battle-tested communications strategy. However, because luxury goods consumption was not near as high nor distribution as complicated as now, the stakes have never been higher.
My perfect world? One where experiences and products always exceed expectations and are (in a word) delightful. Here I share my thoughts about my never-ending quest to discover and create memorable customer experiences.
