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Hermès is heading to college — or at least a college town.
Today, the brand’s Princeton, New Jersey store opens, making it the first luxury house to establish a physical footprint in the Ivy League town. It’s the brand’s 36th US store (third in New Jersey), and part of a new strategy to enter less-trodden, less (traditionally) affluent areas.
US president Diane Mahady credits this strategy to a trend shift during Covid: people stopped going into the office five days a week, moved to the suburbs with money to spend, and pined for luxury offerings in smaller suburban communities.
“Princeton is the first,” she says, but Hermès has been planting seeds for this beyond-metropolitan strategy. Mahady references the June 2023 Aspen opening as an example of a smaller location, though it differs from Princeton in that the Colorado town has long been a luxury destination, replete with luxury brand offerings. (There, Hermès joins the likes of Gucci, Prada and Dior.)
Also in summer 2023, Hermès opened its second Los Angeles store — on the outskirts of the city, in Topanga. In 2022, it set up shop in Austin — not in luxury shopping complex The Domain, but on bar and restaurant-filled Congress Avenue. In Princeton, Ralph Lauren is nearby, also in Palmer Square, but Hermès is the first of luxury’s upper echelons to descend on the town.
“[Our clients] like the fact that we do things that they don’t necessarily expect,” Mahady says. This singularity is a communications tool, she adds, a guarantee of granular personalisation, from product to space.
“We still believe in small stores,” Mahady says. The Princeton store is about 3,600 square feet. Hermès’s Madison Avenue store, by comparison, is about 20,050 square feet. An Hermès mecca of sorts. One of the brand’s largest spaces, it offers a generous product assortment (by Hermès standards) and extensive hospitality services. But it’s not for everyone. Princeton offers a foil to this grandeur. “For everyone who loves an amazing space like that with so much to choose from, you have a client who likes something smaller, something more intimate.”
Mahady credits the success of Hermès’s physical spaces to their tailoring of the stores to the environment they’re operating in. For Princeton, this meant a scholastic undertone, Mahady says. The carpets are striped, emulating libraries and books, with the artwork curated to lean into this aesthetic. It’s a smaller space, she adds, so the store is curated to feel homey and residential.
“We believe in a neighbourhood. The genesis of our brand is based on relationships. So we don’t always seek highly-trafficked locations.” Princeton is a safe bet for a lower-trafficked suburban outpost, given its median household income of $176,695 — more than double the national average — making it one of the wealthiest towns in the country.
It’s down to an influx of biotech and pharmaceutical companies, bankers and international students by way of Princeton University. “There are so many lucrative industries in that area,” Mahady says. “An international university is always very interesting for us.” She points to Boston — “a big college town” — where the brand sees success with both wealthy students and their visiting families.
It’s a strategy luxury has leaned into post-pandemic. In 2021, Dior opened in Scottsdale, Arizona, while Louis Vuitton set up shop in not in Austin, Dallas or even Houston — but Plano, Texas. That same year, Gucci opened in Oak Brook, Illinois, and Detroit, Michigan (joining Hermès, which opened there the year prior).
It’s about meeting consumers where they are, says Globaldata retail analyst Neil Saunders; and, post-pandemic, where they are is in the suburbs. Though the way the suburbs shop is also changing, he flags. “Malls are no longer the shopping destination of choice, as investment in open-air centres and downtown areas grows. These newer retail spaces are often upscale and attract higher spending shoppers with a mix of brands and leisure and dining options,” he says. “The spaces feel less sterile and more authentic than some traditional malls.”
It’s this granularity that has enabled Hermès to outperform its competitors as luxury spend has fluctuated. Yesterday, the brand reported 12 per cent growth for first-quarter US revenues. Last quarter, Hermès’s US revenues were up 21 per cent year-on-year — a similar increase to past quarters. “Hermès is yet another company to confirm reviving momentum of the American consumers on the back of resurgent confidence and lower inflation,” Bernstein senior analyst Luca Solca noted last quarter. The brand’s proximity to clients gives it a competitive advantage, Mahady says. Princeton marks a new direct thread to a wealthy client base.
Slow and steady
Announced in 2021, Princeton shouldn’t come as a surprise. (It came as a surprise then, however, says Mahady.) An Hermès store opening is a deliberately slow process that requires intensive market research, product production and architectural resource coordination — plus, any location-specific hurdles. In the case of Princeton, this was navigating the rules and regulations of a historic building.
Don’t expect too many new store openings like Princeton. While the brand will continue to open in select locations, quantity is never the driver, Mahady says. Instead, the focus for the next five years is on renovating existing stores to ensure client experience is up to par.
Amid these sparse updates, where will Hermès look to grow its presence?
“As we look three to four years out, we’ll continue to look at diversity,” Mahady says. “We look at locations that are surprising. We have a couple of projects in the pipeline that people will be surprised by.” She doesn’t give specifics, but hints that there’s an industrial location to be announced, where Hermès will again be the first luxury player setting up shop.
They’re also looking south. “People are moving south, so we obviously follow that,” she says. “Some of our strategy will certainly follow that population growth and population change.” Hermès currently has three stores in Texas. Its most recent, Austin, opened in 2022.
But, like all things with Hermès, this continued US expansion won’t happen tomorrow. “One thing you learn when you start to work with us is that everything takes time,” Mahady says. “We’re in it for the long haul.”
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