Hermès Opens A Younger, Hipper Store In NYC’s Meatpacking District (The Employees Even Wear Sneakers)

Hermès has “crossed the line,” the 182-year-old French luxury house declares with its new store, set to open Friday in New York’s hip Meatpacking District.

Indeed, it has.

The company’s fifth physical location in New York, and its 36th in the U.S., marks the first time Hermès’ Manhattan footprint has expanded outside the traditional luxury enclave on Madison Avenue or downtown on Wall Street in the Financial District.

The cobblestone-lined Meatpacking District is known for attractions including the Whitney Museum of American Art and the High Line, an elevated park, that drive a steady flow of traffic of both locals and tourists. Other high-end shops, including a Tesla showroom and a Restoration Hardware flagship, are in the neighborhood while tech companies including Google are within walking distance.

“The difference here is we’ll attract the next generation of Hermès clients,” Bob Chavez, president and CEO of Hermès USA, said in an interview, adding that the 2015 opening of the Whitney Museum was the real game changer for the neighborhood and was a big catalyst behind Hermès’ decision to open a permanent shop. “We’ll attract a lot of first-time buyers—people who are discovering Hermès for the first time. … It’s another opportunity for Hermès to portray itself in a more modern and updated way. … We expect the traffic to be high.”

Appealing to the next crop of customers is crucial for Hermès and its luxury labels: Generation Y (widely known as millennials) and Gen Z contributed 100% to total global luxury market growth last year, compared with 85% in 2017, according to a Bain & Co. study in November.

At the two-story, 5,330-square-foot Hermès emporium, where a skylight streams in natural light, visitors can find many firsts of their kind for the luxury label. A communal sitting area with bar stools—where you can hang out and order free coffee, sparkling water or wine while charging your phone—is just one example. There is also a bigger open display of what Chavez described as “recruitment categories”—including such items as perfume that costs about $100, a bargain next to the brand’s famous Birkin and other bags, which can easily cost tens of thousands of dollars—for first-time customers to try and touch.

The product assortment also signals young and active to match the vibe of the neighborhood: a skateboard bag, a bicycle, a snorkeling imprint design, sneakers and casual apparel are featured alongside the company’s signature silk scarves, ties and women’s handbags.

Employees for the first time will have a different uniform, sporting “a much more causal look,” and male employees don’t have to wear ties, Chavez said, adding that the employees will don Hermès sneakers.

“That’s a big departure for us,” he said. “Part of it is to relate to the whole concept of the store, which is much more comfortable, much warmer, much more casual and very welcoming in this neighborhood.”

That’s important because of one challenge that Chavez acknowledges: “Sometimes Hermès can have a reputation for maybe being a little standoffish. People may be a little bit intimidated when they walk into the store.”

He added:“We spend a lot of time training our staff to make sure they are welcoming everybody and anybody who come into the store. What you are seeing here is the next evolution of having a little café and bar area where people can just come in and sit down. You don’t have to shop. … You notice the openness. There’s a real casual feel here.”

Hermès is “crossing the line” in a bid to attract younger shoppers as the French label continues to outperform in an industry that Bain expects to see a “positive growth trend” of 3% to 5% each year through 2025. The company recently reported that its 2018 sales, excluding currency impact, jumped 10.4% to nearly 6 billion euros, or $6.73 billion, as net profit jumped 15%. Higher demand was seen across all regions, including double-digit gains in both Asia and the Americas.

Hermès has about 310 stores in over 49 countries. In the U.S., it has also opened a store in Orlando this year. Last year, it opened a store in Palo Alto in Silicon Valley.

The U.S. market is “pretty significant” for Hermès, Chavez told me, adding that the U.S. represents about a fifth of the company’s business. “The demand in the U.S. continues to be very strong and healthy. The business in New York has been very good. We are off to a very strong start.”

Demand for Hermès’ leather goods and apparel, among other categories, has also been healthy, with the company recording its “best year ever” with the Apple Watch Hermès collection, Chavez said. The silk and textiles category was the weakest performer, with a 2018 constant-currency growth rate of 3.2%, thanks to slowing demand for ties.

“You have more and more companies that are saying, ‘You don’t have to wear a tie or suit to work,’” Chavez said. “It’s just a general trend of how people are dressed today.”

Even though tie sales have “slowed down quite a bit,” Hermès has seen outsized demand for its “tie-free” collection, including men’s scarves and pocket squares, he said. Guys “are looking for alternative to ties.”

In a positive sign for the athleisure trend, Hermès sees continued strong demand for its sneakers and other casual assortment and plans to expand those categories, he said.

Chavez echoed many other rivals and described online as the company’s fastest-growing “store,” with customers showing little to no hesitation in how much they are willing to spend.

“At the same time, it’s still a recruitment tool for us,” he said, adding that brick-and-mortar stores remain relevant for many first-time customers who want to visit to touch and feel a scarf, tie or bracelet they want to buy. “We’ve done a great job capturing a lot of them online. Now the next step is to bring them into stores. … The (new Meatpacking District store) really portrays Hermès in a whole different light to reach the next generation of customers.”

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