Hermès to open new factories to meet increasing demand for Birkin and Kelly bags

Hermès announced last Friday (11 March) that it will open new leather goods factories in France in order to meet the increasing demand for its prized handbags. The luxury brand plans to open new factories in the French towns of Louviers, Sormonne and Riom before 2024 to boost production. 

This plan was made after staple bags like the Birkin and Kelly bags became harder to find in stores. According to Yahoo Finance, Hermès reported lower revenue in its key leather goods division - the source of almost half of the group's revenue - as it failed to keep up with demand.

“It takes 15 hours for a Hermes bag. Even if there’s a lot of demand, I am not going to start doing them in 13 hours to raise production,” said  Hermes Executive Chairman Axel Dumas. 

The Market Herald states that despite the pandemic, unlike other consumer brands, luxury brands face less restraint as affluent customers are still willing to pay higher prices for designer goods. 

However, despite the fact that Hermès has increased global prices by 3.5% on average this year, it has no plans to increase prices to boost its results. “There is no strategy at all to create growth through unnecessary price increases,” Dumas said. 

He further said the company’s hand-crafted production model means it is less exposed to inflationary pressures, such as increasing energy costs, than many of its rivals that have warned of price hikes.

“We have very limited inflation because our main tool to create our bags is hand stitching,” he said, stating that price hikes are largely driven by wage increases for the artisans. 

Hermès is known as a brand that always adheres to its authentic craftsmanship. Citing Madison Avenue Couture’s website, all Hermès bags are made from premium quality leathers and crafted entirely by hand. 

Each bag is cut, sewn and polished by an artisan with utmost care. All artisans need to be trained by the Hermès design house for a minimum of five years before being trusted to craft a Birkin or Kelly.

Back in September, Hermès opened a leatherworking school academy for its artisans in training.