#195 Hermès & the Price of Exclusivity
Luxury brands thrive on exclusivity, but when does a company’s sales strategy become legally problematic? French fashion house Hermès recently found itself facing a class-action antitrust lawsuit in California over its “pay-to-play” policy for the coveted Birkin bag – one of the most sought-after status symbols in the world. If you’re not familiar with it, Birkin prices range from $10,000 to $16,000 for a standard leather Birkin to $50,000 to $100,000 for rare leather materials, and some even sell for more than $500,000 in auctions such as the Diamond Himalaya Birkin.
Due to Hermès’ strict sales policies and the high demand, most buyers cannot walk into a store and purchase a Birkin off the shelf. Instead, customers are often expected to develop a purchase history with the brand, and it is exactly this that triggered a legal complaint in the US. A lawsuit, filed in California federal court in January 2024 by plaintiff Shirley Xu, alleges that Hermès forces customers to buy other, less desirable items such as scarves, belts, shoes, and jewelry before granting them access to purchase a Birkin. This practice, known as tying, is a potential violation of U.S. antitrust law, which prohibits companies from conditioning the sale of one product on the purchase of another.
Xu, a California resident, claims that Hermès’ practice artificially inflates demand, unfairly pressures consumers into spending more money than they originally intended, and ultimately stifles competition. The lawsuit argues that customers are not merely paying for a bag, but for the privilege of being “allowed” to buy one, creating a coercive, anti-competitive sales model. While this kind of scarcity marketing is a well-established tactic in the luxury industry, what works in one country may be illegal in another. In Europe, bundling practices as Hermes’s are often tolerated, but in the U.S., they can trigger legal scrutiny.
The Hermès lawsuit highlights a fundamental challenge for global brands—striking the right balance between exclusivity and compliance. What is considered exclusivity in Paris may be seen as anti-competitive in California. As luxury brands continue to expand across international markets, they must carefully navigate not just cultural preferences but also legal frameworks to avoid costly litigation and damage to their image.
March 9, 2025 @ 6:29 pm
“You want, what you can’t have” – based on that principle, exclusivity is used by various brands. Hermes however, does not state, that it is a requirement to purchase other products in order to be able to buy a Kelly or Birkin. Because Hermès bags are sold in a selective manner, it is close to impossible to prove that tying is enforced as a strict policy. The article has made me think, which other brands are operating in the grey- area of exclusivity vs. tying. Similarily, luxury items such as Rolex and Ferraris follow those strategies through dealerships for limited editions. Furthermore, video games and consoles have an exclusive, partly questionable issue.Tying strategies—whether implicit or explicit—are common across multiple industries, especially in luxury, technology, and entertainment. Apple- best works when combined with Apple. Nevertheless, those lawsuits are hardly found. While Apple designs its ecosystem to work best when all products are used together, it does not explicitly require consumers to purchase additional Apple products. In the Hermes case, the requirement is implicit.
Secondly, the comparison is different, as Hermes as luxury brand is close to a monopoly (hence anti- competitive relevant), while Apple has a significant market share, however, not monopoly-status under US law.
March 11, 2025 @ 7:46 pm
The Hermès case is an important one, for it raises the issue of balance between exclusivity and ethical commerce. Strategically, Hermès has managed to utilize scarcity to maintain its prestige brand, an example taken from luxury car producers like Ferrari, which restricts sales in an effort to maintain desirability.The issue is when exclusivity turns into a coercive buying system that could be trampling on the rights of consumers. Unlike other luxury houses that use waiting lists or VIP memberships, Hermès’ so-called “pay-to-play” approach can be described as manipulative.
If so, that practice would suggest an uneven balance of power, with consumers strong-armed rather than seduced. Other industries, such as technology, offer exclusivity in the sense of limited drops (ex : Apple first-edition drops) but without compulsory bundled purchases. A better strategy for Hermès would be an open rewards program that offers interaction rather than demanding unrelated purchases. This case is a good example of how brand power must be treated gingerly to work within ethical business models.
March 22, 2025 @ 1:36 pm
Scarcity isn’t illegal—it’s strategic. Just look at limited sneaker releases or exclusive concert tickets: brands like Supreme and artists like Taylor Swift expertly build excitement and demand without forcing fans into unrelated purchases.
I’m absolutely convinced that luxury brands like Hermès cannot succeed globally by adapting their core sales strategies to local market habits. Sure, a brand like McDonald’s can modify its menu based on regional tastes, but the fundamental approach to selling luxury items like a Birkin bag isn’t as flexible.
Imagine Hermès suddenly ignoring a customer’s purchase history in Florida and simply selling Birkin bags to anyone who walks in with enough money. Currently, the Birkin bag’s value instantly appreciates after purchase because obtaining one involves significant prior spending—those upfront investments are precisely why the bag commands such high prices on the secondary market.
This principle is similar to the famous Casino de Monte-Carlo. There’s the main casino open to the general public, but within it, there’s an exclusive area accessible only to select club members. It’s about exclusivity and status, which naturally comes at a cost. It might be frustrating not knowing the exact price tag upfront, but that’s precisely what defines luxury.
March 30, 2025 @ 3:01 pm
The Hermès Birkin bag originated from a chance encounter between actress Jane Birkin and Hermès chief executive Jean-Louis Dumas in 1983. During a flight from Paris to London, Birkin expressed difficulty finding a suitable leather weekend bag, prompting Dumas to create the now-iconic Birkin bag tailored specifically for her practical needs, including carrying her groceries and even vegetables. While the craftsmanship of the Birkin bag is undeniably commendable, I personally find the exorbitant pricing difficult to justify. There are numerous handbags made from comparable high-quality leather available at much more accessible prices, and spending such an extraordinary amount on a single accessory feels excessively decadent.
Hermès already employs strategies such as limited editions, personalized customizations through exclusive “Special Orders,” and selective memberships for VIP clients. However, these practices are typically accessible only to a very restricted customer base, raising questions about transparency, fairness, and ethical considerations.
This intriguing case highlights the delicate balance luxury brands must maintain between exclusivity, legality, and ethical considerations in international markets. Especially when entering foreign markets, like the U.S., Hermès must carefully evaluate local legal frameworks and market expectations to ensure its strategies comply fully, minimizing the risks associated with international expansion. Specifically, Hermès’ practice of requiring customers to purchase additional, less-desired products before allowing access to Birkin bags could violate U.S. antitrust laws, highlighting the critical importance of aligning exclusivity strategies with local regulations. Hermès’ exclusivity approach illustrates how strategies perceived as desirable in one cultural context can clash with legal standards elsewhere, especially in markets with stringent antitrust regulations like the U.S. From my perspective, Hermès should reconsider its exclusivity strategy to become more transparent and accessible, thus maintaining brand integrity without compromising its exclusive appeal.
Ultimately, the Hermès scenario serves as a valuable lesson: global brands must understand and adapt to differing international legal and cultural environments to avoid damaging their brand equity and customer trust.