Increase Prices in US: Hermès, the French luxury goods company, has announced plans to increase prices for its bags and scarves in the US market due to tariffs imposed by the Trump administration. This decision will affect the company’s affluent customer base, who will bear the brunt of the additional costs.
Pricing Strategy
Hermès’s price hike will be in addition to its planned increase of 6% to 7% this year. The company’s bags typically cost over $10,000, with rare ones selling for more than $85,000. According to Eric du Halgouët, Hermès’s CFO, the company will “fully offset the impact of these new duties by increasing our selling prices in the United States from May 1, across all our business lines.”
Impact of Tariffs
The Trump administration’s tariffs have forced Hermès to reconsider its pricing strategy. The company had previously warned that it might pass on the additional costs to customers, and it has now confirmed that it will do so. Axel Dumas, executive chair of Hermès, emphasized the company’s attachment to its current production locations, stating that “we’re very attached to our production where it is.”
Still on Increase Prices in US
Luxury Market Trends
The luxury market has been experiencing a slowdown, driven in part by economic pressures and price increases. According to a McKinsey report, prices have risen by 61% since 2019, with growth driven more by price than volume. The report also notes that “several of the industry’s growth-driving engines have stalled” and that “price increases have reached a ceiling, and higher prices are negatively affecting demand from aspirational luxury consumers.”
Industry Implications
Hermès’s decision to increase prices in response to tariffs may set a precedent for other luxury brands. Many luxury companies, including Gucci owner Kering, lack a manufacturing presence in the US and may be forced to pass on additional costs to customers. As the global economic landscape continues to evolve, luxury brands may need to adapt their pricing strategies to remain competitive.
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