This article is adapted from the business magazine Capital and is available here for ten days. Afterwards it will only be available to read at www.capital.de. Like stern, Capital belongs to RTL Deutschland.
The French luxury company Hermès is threatened with trouble: two customers are suing the fashion brand for anti-competitive behavior. In the antitrust lawsuit, they accuse Hermès of tying the sale of one item to the purchase of another and thereby exploiting its market power. The fashion company only offers particularly popular bags to regular customers who have already spent enormous sums on other Hermès products and can demonstrate a corresponding “purchase history”.
Specifically, it’s about the Birkin Bag, the luxury manufacturer’s most exclusive product. The limited edition, handcrafted leather handbags cost thousands of dollars and can even fetch prices over a hundred thousand dollars. The coveted status symbol adorns the arms of the rich, celebrities and fashion experts. Anyone interested in buying can only purchase the rarity in Hermès stores, not in the company’s online shop.
According to the class action lawsuit filed in California, this is a problem: even in Hermès stores, normal customers couldn’t simply choose and buy a Birkin bag. These would never be displayed and offered. Birkin Bags only presents Hermès in private sales rooms and only to selected customers who the company considers “worthy”. Specifically, the lawsuit states that most consumers “will never see a Birkin handbag in a Hermès store.” In addition, customers could only purchase the Birkin handbag shown. There is no way to order a bag in an individually desired style, size, color, leather and fittings.
The lawsuit states that Hermès sellers are instructed to only show the rare handbags to interested parties with a sufficient “purchase history” or a corresponding “purchase profile”. Only those who have already purchased additional products such as shoes, silk scarves, belts, jewelry and household goods are given the privilege of purchasing a handbag.
Plaintiff Tina Cavalleri says she was forced to buy additional products from the company and spent tens of thousands of dollars at Hermès to earn access to the handbags. But when she wanted to buy a Birkin bag in September 2022, Hermès informed her that they would only go to “customers who have always supported our business.” Co-plaintiff Mark Glinoga tried several times to buy a Birkin bag in 2023. However, the salespeople always told him that he still had to buy more products and accessories.
According to the lawsuit, sales employees receive no commission for Birkin bags, but do receive a three percent commission for additional products sold. This creates an incentive to make the purchase of bags dependent on the purchase of other Hermès products.
The two plaintiffs claim that Hermès is violating American antitrust law with this shortage practice. Their demand: unspecified damages and a court order prohibiting Hermès from carrying out its allegedly anti-competitive activities.
Even if there is some truth to the allegations, this does not seem to be affecting the popularity of Hermès. In the fourth quarter of 2023, the French luxury bag manufacturer achieved a jump in sales of 17.5 percent – even though Hermès had raised its prices worldwide by seven percent. The company announced in February that it wanted to increase prices by eight to nine percent in 2024. Hermès shares recently reached a record high of 2,410.50 euros.
Other luxury houses are likely to follow the proceedings against Hermès closely. Although the business conduct complained about would not officially give rise to a trademark, the preference for regular customers can certainly be described as customary in the industry. Whether it’s for sought-after handbags or particularly rare timepieces – it doesn’t hurt to have a good relationship with the boutique owner and jeweler and a certain purchasing history in the store. For example, to be informed in advance about the availability of new designs or models or to move up a few positions on the internal waiting list.
The fact that even wealthy people sometimes have to have a lot of patience is almost the only surprising thing about the “Causa Hermès”. Manufacturers of luxury products always deny that vitamin B makes you an object of desire more quickly. Instead, they cite large global demand and limited capacities with the highest quality standards as reasons for limited product icons. In addition, they want to ensure that only true lovers get a new treasure in the logo bag, and that no one immediately resells their “Daytona”, “Royal Oak” or “Kelly” on the Internet and makes a business of themselves.
Hermès is also trying to curb the rapidly increasing resale activities, Hermès boss Axel Dumas told the trade publication “Business of Fashion” last year. That’s why Hermès encourages its boutiques to vet buyers and only sell limited-edition handbags to “real” customers. However, the luxury manufacturer strictly prohibits the sale of certain products as a condition for the purchase of others.
