Hermes’ Eric Festy is optimistic about the Asian market, including Indonesia.
Last March, Hermes opened its newly renovated store in Pacific Place in Jakarta and Hermes’ Managing Director of Middle East and South Asia Eric Festy visited the city for the renovated store’s opening ceremony. Forbes Indonesia got an exclusive opportunity to interview Eric, who shared his vision for the Indonesian market and the future of this iconic luxury brand. Eric has worked for the company for over 25 years and has been in charge of Middle East and South Asia markets since 2016.
Forbes Indonesia (FI): Can you share more about the Heritage touring exhibitions?
Eric Festy (EF): Along with reopening the store in Pacific Place mall, Jakarta, we also held a Hermes Heritage exhibition titled “Rouges Hermes” from March 22 to April 22 in the mall, where visitors can explore the history of the brand with its iconic themes, colors and patterns. We borrowed pieces from the Émile Hermès collection, from our house’s archives, along with a full range of recent designs. The exhibition was divided into five zones, connected by a chronological thread that allowed visitors to discover the emergence of new variants of red over time. It was curated by Bruno Gaudichon, the curator of “La Piscine” museum of art and industry in Roubaix, France.
FI: Leather goods, especially bags, contribute a major part of Hermes’ group revenue. Can you tell us more about this segment?
EF: We are happy to experience strong demand, especially for both the iconic Birkin bags and other models such as Constance, Halzan, Lindy and Verrou bags. Interestingly, now we are much less dependent on our signature model than we were a few years ago. However, we still cannot produce enough bags as we would like to, because of the fine craftsmanship we are pursuing.
FI: Are you increasing production to meet the higher demand?
EF: Given the demand of our products, we regularly increase our production capacity. It’s a long and slow process because we are talking about craftsmen, we are talking about skilled-human beings with an investment of between two to five years to acquire such skills. In early April, we inaugurated the Maroquinerie de l’Allan factory that is located in Allenjoie, in the northeast part of France. It employs 260 leather goods artisans with know-how in the stitching tradition. The next step will be in 2020, when we will open two other factories, one in Montreau and the other one in Guyenne, close to Bordeaux.
FI: The watch business is also growing, what are the plans for this segment?
EF: The watch division is a quite interesting contributor. It’s a growing market. The watch industry suffered a lot three years ago, but now the business is recovering. We are quite happy. We sell the watches either in our stores or outside through specialized distribution. We have a lot of models that people don’t know about much. For example, last year we had the 25 year anniversary of the Cape Cod model, which is an iconic and traditional design at Hermes. We did plenty of events for this model and it sold really well. We have the Arceau, which is also an iconic model of Hermes that very few know about. We have two exceptional pieces displayed here in Jakarta. So it’s very nice. We still have some capacity to develop because our range is very wide.
FI: Can you share more about the Asian region?
EF: The charm of this area is that it’s a diverse area. South Korea has a very strong presence in Hermes. On the other side we also have India, where we only have two stores—we are talking about 1.3 billion people and very low awareness of the brand. Between those extremes, we have a lot of countries. We have Australia and Singapore that are doing well, and countries like Thailand, Malaysia and Indonesia that are going to grow. There’s a lot of countries where we haven’t made any presence, for example Cambodia and Vietnam. We also would like to open more stores in Indonesia, since currently we only have two stores in Jakarta—maybe Surabaya or Bali. There is a lot of room for growth and we are very confident about this.
French harness-maker Thierry Hermès set up the business in Paris in 1837 and his descendants continue to run the Hermès group, known formally as Hermès International S.A., which is publicly traded on the Paris stock exchange (with the family holding a controlling interest). Today, Hermès offers a wide range of products, from leather goods and saddlery, men’s and women’s ready-to-wear, footwear, belts, gloves, hats, silks and textiles, jewelry, furniture, furnishing fabrics, wallpaper, tableware, perfumes, and watches. Hermes now has 304 exclusive stores, 212 of which are directly operated. Based on Hermes’ annual report, last year the company had consolidated revenue of $6.6 billion, up 9% from the previous year, and its net profit increased 11% to $1.45 billion. The Asia market contributed significantly to Hermes’ positive growth last year, with an 11% revenue increase, excluding Japan.