Emphasis on service builds a strong organizational culture and strengthens the bond between employees and the organization's brand.
Angelia Herrin： Welcome to the Idea from the HBR Channel. I’m Angelia Herrin, and with me today is Bob Chaves, president of Hermès US. Bob, thanks so much for joining us.
Bob Chaves：My pleasure. Thank you.
Angelia Herrin： Bob, Hermès is such a powerful brand, but with it come such powerful expectations. So how do you ensure that when a customer walks into a store, they get that very high level of engaged, personal service every time?
Bob Chaves：It’s really about the culture that one establishes in the company, in any company. And at Hermès, we have a very, very strong service-oriented culture, one that is geared towards quality and craftsmanship. And the quality that we talk about in our products is something that we are dedicated to extending all the way through the total customer experience, meaning that the minute somebody walks in the front door, they’re warmly welcomed, they’re warmly greeted, and they’re serviced as best as we possibly can.
Angelia Herrin： Talk a little bit about how you strengthen that culture and build that bond between the employees and the brand.
Bob Chaves：It’s really about communication. And I know this sounds so simple and so easy, but yet it’s so very, very important. And one of the things that we’ve really committed ourselves to is really having a very, very open and communicative company. And it starts with the senior management team and how they’re communicating with their directors, and then how the directors are communicating with all of their individual staff members, but also the way that I communicate with the whole company in general.
And I can tell you one of the ways that we do that is we have what I call the “State of the Company.” It’s an annual address that I do in each and every location all across the country, where we do a review of what happened at Hermès in the US from the previous year. And then we talk about our goals and objectives for the existing year. That way, everybody’s on the same wavelength. Everybody’s on the same track. Everybody knows what the goals of the company are.
And it’s something that we’ve shared with our team for years and years now. And it’s very, very effective. So that really was one of the ways that we continue to strengthen our bond and to strengthen the relationships that are developed amongst all of our employees.
Angelia Herrin： You recently closed all 24 Hermès stores in the US and took the employees on offsite. What was your thinking behind that?
Bob Chaves：Well, we called it a “family reunion.” The idea was born because some of us are fortunate—and I, being the most fortunate that I get to travel to every location, I know every employee in the company. And I would hear stories at a training session that somebody from Beverly Hills met somebody from Palm Beach for the first time, or somebody from Boston met somebody from San Diego for the first time. And I could see in their faces, I could see their animation and their excitement about actually putting a face to a name.
And I thought, wouldn’t it be wonderful if all of the people from Hawaii could finally meet all of the people from logistics center, and all the people from Seattle could meet all the people from Miami? It was a little bit of a crazy idea, but the more we thought about it, the more we were committed to making it happen. And we did, and it was a wonderful moment for us to bring everybody together. And the bonding and the motivation that have resulted from that has just been astounding.
Angelia Herrin： We’ve talked a little bit about the store experience. Can you tell us about how you think about how the store experience interacts with the online experience for an Hermès customer?
Bob Chaves：Well, it’s very much—I think what online does for Hermès is it gives people a comfort level. Many, many people are intimidated by walking into an Hermès boutique for the first time, especially if they’ve been in. Or they’re intimidated about asking a question like a price or about a material.
And I think when a client can go online and discover something initially, it gives them a much bigger comfort factor about already knowing what the price of a scarf is, already looking at some of the colors, or looking at a particular design. And so many times we see people walk in with copies of a scarf, and they could walk in and say, “Do you have this scarf in red?’ Or “Do you have a design that’s very similar to this in another color or another pattern?”
And they don’t have to ask the price. So it immediately gives them a much greater comfort level, and then we can begin the dialogue. And it really does help bring in a lot of new clients to our boutiques.
Angelia Herrin： You joined Hermès in 2000 and there were only 13 stores at that time. And the very special nature of Hermès is an idea of sort of a boutique personal experience. So how have you thought about growth as you have grown to now have 24 stores, and probably more are in the offing?
Bob Chaves：Yes. Well, first of all, at 13 stores, when I started, I knew that Hermès was very under-penetrated in the US market, so there were a lot of opportunities that were in front of us. But today, we’re reaching a point where there probably won’t be that many more new boutiques in the US market. But the way we look at growth now is to look at organic growth, to look at the existing shops.
Do we take a very successful boutique right now and move to a larger location so that we can expand our assortment? And our growth now is coming from all of the different product categories. So that’s how we look to exploit growth is just focus on every category, whether it’s watches, or shoes, or men's ready-to-wear. So, looking for every last opportunity that we can find.
Angelia Herrin： You’ve been in retail since 1977, so you’re familiar with this idea that you lower prices and get more customers. But a lot of people say that that could be a false dichotomy. Where do you come down?
Bob Chaves：I don’t think it’s all about lower prices. I think it’s just about the experience. It’s about the experience that a customer has, whether you’re selling low-price goods or high-price goods. And I also think it’s again, I go back to this culture of a company.
I worked at Etienne Aigner for eight years. We sold shoes for $50 a pair. Today, I work for a company that sells handbags that are thousand of dollars. To me, it’s all about the experience that the client has. If you’re in front of a happy, knowledgeable, well-trained salesperson who really knows their product and really can help you and will give you a satisfying experience, it really doesn’t matter what the price is. Whatever the price is, if you have a great experience, you’re wanna come back to that particular store, and even to that particular person.
Angelia Herrin： Bob, this has been a great discussion. Thanks so much for joining us today.
Bob Chaves：My pleasure.