The Long Haul by Nelson Davis Enterprises that succeed over an extended period of time fascinate me. For example, we know that second generation owners of a family business have a smaller shot at succeeding than the founder and that third generation ownership is basically condemned from the first day. Several of my friends are recording artists and I’ve often mused with them on what makes the difference between simply having a hit record versus creating a long term career as a performing artist.
Recently the story of a business owner in Los Angeles who had a custom briefcase made by the French luxury goods retailer Hermès caught my attention. Because fine leather goods also have a fascination for me, I wanted to know more about the company which has been near the top of their category for over two hundred years! I’d say that two centuries qualifies as long term success.
The story began with Thierry Hermès, born the sixth child of an innkeeper in 1801. Having lost all of his family to disease and war, the orphaned Mr. Hermès went to Paris where he proved gifted in leatherwork, and opened a shop in 1837, the same year that Charles Lewis Tiffany opened his doors in New York. You probably know that these two mega successes have the most distinctive color signatures in retail—Hermès orange and Tiffany robin's-egg blue. Where Tiffany began in stationery and costume jewelry, Hermès specialized in the horse harnesses required by calèches, and carriages. It was a business built on the strength of a certain stitch (saddle stitch) that can only be done by hand, which has two needles working two waxed linen threads in tensile opposition. It looks great, and done properly it will never come loose.
The clients of Thierry Hermès were rich: the Parisian elite and European royalty, including the emperor Napoléon III. But remember that his true client was the horse. It was in leather and hardware that the Hermès allure took form. When Thierry's son, Émile-Charles, succeeded him, the family business moved to 24 Rue du Faubourg Saint-Honoré, where it has been a landmark ever since. In that same year of 1880, saddlery was added, a custom business that required measurements from both horse and rider. Today a Hermès saddle costs about $5,000. In the 19th century, another Hermès enduring institution was born, the long customer wait. Because hand stitched perfection cannot be rushed, even several royal coronations were delayed until Hermès gear for the carriage had arrived. Now in the 21st century, the waiting list for items such as the hyper scarce Birkin, a handbag created in 1984 for the actress Jane Birkin, can stretch to five years. One Birkin takes 18 to 25 hours to make, and the Paris workrooms produce only five or so each week that must supply Hermès stores worldwide at about $7500 each. Company wide, about 15% of their $1.5 billion in sales comes from the United States.
Wouldn’t we all love to have a business where customers line up, tolerate a long wait and gratefully pay our asking price? If prospering over the long haul is your goal there are several business lessons I see here.
#1 From raw materials to training to customer handling, only aspire to the highest levels.
#2 Carve out an identifiable niche and stick to it.
#3 Hold a clear vision of your ideal customer and build your thinking around that person. Remember that they will become your most important promotional tool.
#4 Resist the temptation to make most decisions solely based on price.
#5 Even though it seems that fewer people today can truly recognize quality, it is a durable long term value that can sustain and grow a business. An overall success philosophy from Jean Louis Dumas the CEO of Hermès is “We don’t have a policy of image; we have a policy of product.”
I don’t know of any discount or bargain store that has a 200 year history and that may be the key lesson. By the way, that custom Hermès briefcase I mentioned earlier cost its proud owner over $11,000 and will probably last his lifetime. I’d say that Hermès is an example of the business owner’s dream---making money bags!
How to Obtain Business Success Over the Long Haul - By Executive Producer, Nelson Davis - To learn more about this author, visit Amber Wright's Website.
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