David Rosenthal: belief

Transcript context

…It's so interesting. But one way to look at this is, oh, it's lost revenue. Their prices aren't high enough because they can only make so many of them, and they're selling them below the price people are willing to pay, so there's money left on the table. Another way to look at it is that it's an investment in the brand. There's a very good Substack writer, 310 value, that will link to in the show notes, who observed the supply demand mismatch creates scarcity in these two bags That scarcity likely creates more demand for the bags, elevates the overall status of Hermes, and creates demand for Hermes' other products, as customers buy Hermes's other goods to build a relationship with the company in hopes of being allocated a bag at the below market retail price. Yes. This is the same dynamic with I think a very different set of motivations as we talked about on the Nike episode. I very firmly believe that Nike could sell many of their shoes for two, three, four, or five times the price that they do. They'll show up on Goat or StockX all the time regularly at higher prices than Nike releases them for. I believe that the reason that they do this is to maintain goodwill with their customer base and maintain Nike's image as a brand that is accessible to everyone. Hermes is doing the opposite. They want this to happen in order to maintain the image of Hermes, specifically the Birkins and the Kellys, as a brand and a product that is not accessible to everyone. Yes. It's not as simple as, well, they just keep raising the prices to make people keep wanting them more. You read that in The Luxury Strategy, and many luxury brands do that. In fact, Chanel has done it in record amounts the last couple of years. I think it's called the Chanel classic flap medium or something like that. That's had this crazy appreciation over the last few years where Chanel is just raising the price. Hermes doesn't do that.…

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