Analysis of the Advantages and Disadvantages of Luxury Brands

Launched Makeup Lines, Taking Hermes as an Example

Ruohan Wang

Marketing, Tasmania University - Shanghai Ocean University, Shanghai, China

Keywords: Luxury, Hermès, Cosmetics, Consumer, Brand DNA.

Abstract: In recent years, as the growth rate of traditional leather goods and ready-to-wear businesses has slowed down,

the luxury goods industry has accelerated its expansion into the beauty sector, which is highly profitable, has

low entry barriers and can reach young customers. The Rouge Hermes cosmetics collection launched by

Hermes in 2020 has become a typical case for studying the cross-category strategy of luxury brands. This

article systematically analyzes the core strategies, achievements and challenges of Hermes' beauty line

through literature analysis, case studies and the 4P-SWOT model. Research shows that its advantages stem

from a century-old tradition of craftsmanship, a closed-loop industrial chain and a stratified market

penetration mechanism. In 2024, this business achieved revenue of 535 million euros, an increase of 8.7%

year-on-year, and aligned with sustainable consumption trends through replaceable packaging designs.

However, the single product matrix, high-price strategy and insufficient digital interaction constitute key

disadvantages. It is suggested to strengthen the development of skincare lines and male market products, build

an AI-driven virtual makeup try-on system, and increase the penetration rate of eco-friendly packaging from

35% to 80%. Research has shown that luxury brands need to protect their core DNA through vertical

integration, but future growth requires balancing the inheritance of craftsmanship and the differences in

intergenerational demands, especially in terms of ESG compliance and localization in emerging markets,

where breakthroughs are urgently needed.

1 INTRODUCTION

In recent years, the luxury industry has been facing

the challenges of the slowly growth speed in

traditional leather goods and fashion. In contrast,

under this situation, the beauty and cosmetic sector,

labeled by high profit margins, low consumption

thresholds, and strong appeal to younger

demographics, has become an important direction for

luxury brands to expand their business boundaries

(Ajitha & Sivakumar, 2017). Zhang posted in 2023

that as a representative of the world's top luxury

brands, Hermès officially launched its makeup line -

Rouge Hermès in 2020, representing a strategic shift

from its core categories such as leather goods and

scarves into the cosmetic domain. This change not

only reflects the broader trend of luxury brands

diversifying their product lines to mitigate market

risks, but also highlights the complex considerations

involved in balancing traditional craftsmanship with

https://orcid.org/0009-0001-8704-2072

emerging consumer demands (McKinsey & BoF,

2025).

The launch of Hermès' cosmetic line is tightly

focusing the industry dynamics. On one hand, the

global beauty market continues to grow, with

McKinsey predicting that the luxury beauty market

will double in size by 2027. Shukla et al. (2021)

proposed that the preference for ‘small luxury good’

in emerging markets such as China, has further been

driving to demand. On the other hand, luxury brands

must value and fulfill young consumers' increasing

focus on sustainability (Pencarelli et al., 2019).

Hermès has welly responded to these concerns by

incorporating refillable lipstick tubes into its design,

also addressing sustainability demands while

mitigating controversies associated with the use of

rare animal skins in traditional leather goods.

Additionally, cosmetic beauty products serve as a

medium for reaching a broader audience era (Hassan

et al., 2021). With relatively accessible price points,

Wang, R.

Analysis of the Advantages and Disadvantages of Luxury Brands Launched Makeup Lines: Taking Hermes as an Example.

DOI: 10.5220/0013865500004719

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 2nd International Conference on E-commerce and Modern Logistics (ICEML 2025), pages 805-812

ISBN: 978-989-758-775-7

805

for example, a lipstick priced at 550 RMB per unit,

Hermès can attract potential consumers, enhance

brand awareness, and reinforce its core business.

However, luxury brands are going to venturing

into cosmetic industry will face multiple challenges.

Firstly, established cosmetic brands such as Estée

Lauder and L'Oréal hold significant advantages in

research and development as well as distribution

channels (Luxury Adviser, 2023). Secondly, Chen et

al. (2023) found that highly selling price may lead to

varied market acceptance, particularly during periods

of economic volatility, especially, nowadays.

Thirdly, seamlessly integrating brand DNA into

cosmetic product design, instead of being thought by

consumers as the perception of being a ‘branded

label’, poses a critical challenge (Roy & Mishra,

2021). Hermès' case provides a unique research

perspective, because its cosmetic product line bursts

color inspiration from the brand's century-old

designs, which combines scarves and leather goods

color libraries, and constructs product premiums

through artistic storytelling, exemplifying both the

typical trajectory and inherent tensions of luxury

cosmetic strategies.

This article will take Hermès as a case study,

systematically analyzing the strategic logic,

execution strategies, and market effects of luxury

brands entering the beauty market in cosmetic,

offering theoretical insights and practical

implications for the industry.

2 CASE INTRODUCTION

2.1 The History and Development of

the Hermès Brand

Hermès, founded in 1837 by Thierry Hermès in Paris,

was renowned for its handmade harnesses and served

European nobility initially. By the end of the 19th

century, with the rise of the automobile industry, the

third-generation heir, Émile-Maurice Hermès, shifted

the business focus to leather goods. He, cooperating

with those famous designers, had launched classic

products such as the Kelly Bag and the Birkin Bag,

which established the brand's position in the luxury

goods sector. In the mid-20th century, Hermès

gradually expanded into fields like scarves, perfumes,

and watches. It has always adhered to handicraft

techniques and ultimate quality, becoming

synonymous with ‘French luxury’ (Hermès, 2025).

At the beginning of the 21st century, Hermès

(2025) accelerated its expansion through a

globalization strategy, with particular emphasis on

the emerging Asian market. After opening the first

chinese store in Hong Kong in 2003, it gradually

expanded its business to cities such as Shanghai and

Beijing. Focusing on strengthening brand recognition

through cultural integration strategies, it even

founded exclusive brand shops such as the ‘Hermès

House’ in Shanghai. Up to 2024, Hermès has already

operated approximately 305 stores worldwide, with

annual revenues exceeding ten billion euros and a

workforce of 22,000 employees.

2.2 The Market Background and

Strategic Considerations for

Launching the Makeup Line

Against the backdrop of a slowdown in the luxury

goods industry, with compound annual growth rate

dropping to 5% after 2010, Hermès has achieved

differentiated breakthroughs through its strategic

focus on beauty products. While traditional categories

such as handbags and apparel are significantly

affected by economic cycles, beauty products have

grown against the trend due to their ‘small luxury’

attributes (Greenstein, 2017). McKinsey predicts that

the luxury beauty market will double in size by 2027,

and younger consumers' preferences for emotional

and personalized products have further propelled this

category as a low-threshold entry point to reach new

customer groups. The accelerated expansion of

beauty businesses by leading brands such as Louis

Vuitton and Prada, for example Louis Vuitton plans

to launch 55 lipsticks by 2025, has compelled Hermès

to consolidate its position through product innovation

(Louis Vuitton, 2025).

Hermès' strategic implementation framework

comprises three core elements: a full industry chain

control system, a cultural heritage revitalization

strategy, and a tiered market penetration mechanism.

To establish full industry chain control, Hermès

terminated its collaboration with L'Oréal Group in

2020 and independently developed its complete

cosmetics production line (Cleary, 2021). The brand

mandates that product development directly taps into

its proprietary database of 75,000 silk scarf hues and

900 leather color codes, ensuring meticulous

alignment between cosmetic shades and its

established chromatic identity. Through vertically

integrated manufacturing facilities, Hermès

maintains absolute quality oversight, achieving

lipstick textures that mirror the refined tactile

standards of its leather goods, according to its official

website. In executing cultural heritage revitalization,

Hermès translates centuries-old craftsmanship into

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contemporary innovations (Hermès, 2025). The

spring-loaded mechanism in its Rose Hermès blush

compact reinterprets historical bookmark closure

systems from archival accessories, while integrating

precision locking mechanisms derived from

equestrian gear craftsmanship (Hermès, 2025). Under

Creative Director Jérôme Touron's leadership, the

makeup team developed a ‘chromatic synesthesia

mapping system’, employing 24-layer gradient matte

finishing techniques that replicate the luminous depth

of vintage silk textiles, transforming color application

into an emotive sensory experience. Regarding tiered

market penetration, Hermès deploys a dual-channel

approach (Investopedia, 2024). Exclusive limited

editions like crocodile-leather lipstick cases

complementing Birkin bags reinforce status-driven

engagement with ultra-high-net-worth clients through

invitation-only access. Simultaneously, the brand

democratizes accessibility with entry-level offerings

like a €209 5-piece mini lipstick set featuring 1:3

scale replicas retaining signature magnetic closures.

Lombart et al.(2018) proved that regional

customization strategies further extend reach,

exemplified by specialized terracotta-toned lipstick

matrices engineered for warmer Asian skin

undertones, creating a multi-tiered consumer network

spanning elite collectors to urban middle-class

aspirants.

This strategy enabled Hermès' beauty division to

achieve €535 million in revenue in 2024, representing

an 8.7% year-on-year growth, making it the second-

fastest-growing business unit within the group.

2.3 Analysis of the Product Series and

Characteristics of the Makeup Line

Product Series & Features Hermès' cosmetics line

centers on the Rouge Hermès Lipstick Collection,

offering three textures: matte, satin, and lip balm.

Shade names draw inspiration from the brand's silk

scarves and leather archives, for example 64 Rouge

Casaque, inspired by equestrian jackets. Seasonal

limited editions, such as the 2025 Autumn-Winter

‘Blue Tone Collector's Edition’, feature ultra-matte

finishes echoing iconic leather textures, with colors

blending natural autumn hues and haute couture

aesthetics. Sustainable packaging integrates

recyclable metal cases, canvas sleeves, and signature

orange boxes, alongside refillable cartridge designs

(Hermès, 2025).

Hermès developed its competitive strategy

through three fundamental pillars that integrate

traditional craftsmanship with modern market

dynamics. The first pillar involves maintaining

complete vertical integration across production

processes. After severing ties with Løréal in 2020, the

luxury house engineered an autonomous cosmetics

manufacturing ecosystem. This self-contained system

draws from its proprietary material archives

containing 75,000 documented silk color variations

and nine centuries of leatherworking chromatic

expertise. By synchronizing lipstick formulations

with its iconic scarves' color wavelengths through

spectral analysis technology, Hermès achieves

molecular-level harmony between cosmetics and

heritage products. Factory floor operations

implement leather-craft quality protocols adapted for

cosmetic textures, producing bullet lipsticks with 36-

hour wear resilience matching luggage durability

standards.

Cultural modernization forms the second strategic

pillar through technological reinterpretation of

archival designs. The Maison's 1837 mechanical

bookmark closure system inspired the magnetic

lipstick casing mechanism, now refined using

aerospace-grade aluminum alloys. Master artisans

adapted saddle-stitching techniques to create the

distinctive ridged texture on lipstick bullets via

diamond-coated micro-abrasion tools. A patented

‘Spectral Saturation Matrix’ translates historical scarf

patterns into multi-dimensional lip colors through

algorithmic pigment layering, preserving the visual

complexity of original textile artwork in cosmetic

form.

Market segmentation comprises the third strategic

axis. Ultra-exclusive offerings like bespoke lipstick

cases crafted from Birkin bag remnant leather cater to

high-net-worth collectors through private

consultations. Meanwhile, the introductory ‘Lipstick

Discovery Set’ containing five 2.4-gram miniatures

priced accessibly serves as an entry portal for

emerging luxury consumers. Region-specific

development includes humidity-resistant formulas for

tropical climates and cushion compact redesigns

accommodating Asian beauty rituals. This stratified

approach bridges artisanal legacy with demographic

reach expansion.

3 MARKETING STRATEGY

ANALYSIS SWOT/ 4P

3.1 SWOT Analysis

3.1.1 Strengths

As a top luxury brand with 183 years of heritage,

Hermès' profound brand equity provides natural

Analysis of the Advantages and Disadvantages of Luxury Brands Launched Makeup Lines: Taking Hermes as an Example

807

credibility for its cosmetics line (Wang et al., 2021).

The cosmetic products inherit the brand's iconic

craftsmanship DNA. For instance, lipstick cases

utilize metal or velvet materials matching its leather

goods, while eyeshadow palettes feature Monogram

embossing techniques, reinforcing luxury attributes

through meticulous details. Raw material

monopolies, from rare pigments to sustainable

metals, create technical barriers, while collaborations

with artists like Patrick Graf transform packaging into

collectible art. Heritage narratives, reviving 19th-

century equestrian mechanisms in compacts, merge

craftsmanship with neuroscience-driven ‘chromatic

synesthesia’. Unlike most competitors that outsource

production, Hermès maintains full control over

cosmetics development, avoiding brand dilution risks

and ensuring alignment with its core DNA, gaining

stable consumer support (Richford, 2024).

3.1.2 Weaknesses

The initial product range was relatively limited. For

example, lipsticks launched with only 24 shades,

falling short compared to established players like

Gucci which has 58 shades and Dior. Kowalczyk and

Mitchell (2021) mentioned that premium price, for

example, lipsticks starting at $67, creates

accessibility barriers, potentially driving younger

consumers toward more affordable alternatives. Slow

category expansion further weakens competitiveness

(Liu & Yang, 2009). After debuting cosmetics in

2020, Hermès only introduced eye makeup in 2023,

lagging behind market demands. What’ s worse,

Hermès faces critical challenges in digital

transformation and omnichannel experience

optimization. The brand’ s reluctance to embrace

social commerce platforms like TikTok contrasts

sharply with rivals such as Gucci and Dior, which

leverage livestream shopping and KOL

collaborations to drive nearly 50% of their Chinese

market attraction (Influencer Marketing Hub, 2024).

While Hermès prioritizes artisanal storytelling, its

static Instagram posts and absence of shoppable AR

try-on features fail to engage Gen Z audiences

accustomed to interactive, gamified content

(Lorenzo-Romero et al., 2020). Offline, despite its

‘invitation-only’ boutique exclusivity, inconsistent

in-store tech integration, such as the lack of AI

powered shade-matching tools, undermines luxury

personalization expectations (Alexander & Kent,

2020). These may risk alienating younger

demographics seeking sociality and innovation in

beauty ecosystems (Busalim et al., 2021).

3.1.3 Opportunities

Hermès is able to unlock new opportunities in the

beauty sector by strategically leveraging AI-driven

personalization (Guo et al., 2023), emerging market

expansion, and health-focused luxury innovation. By

integrating AI technology, such as simulating

LOréal’s AR virtual try-on systems, illustrated in

their official website, the brand could merge its iconic

library of 75,000 scarf colors with AI algorithms to

deliver hyper-personalized shade recommendations,

mirroring the success of Chinese brand PROYA’s AI

color-matching series, thus appealing to tech-savvy

Gen Z consumers (Futubull, 2025). According to

McKinsey report, the global cosmetics market is

projected to reach $69 billion by 2025, with Asia-

Pacific, especially China, will driving growth.

Hermès derived 47% of its 2021 revenue from this

region. General Z’s rising interest in ‘accessible and

achievable luxury’ makes entry-level products like

lipsticks ideal for customer acquisition (Shin et al.,

2021). Additionally, Hermès’ heirloom design

philosophy, like refillable packaging, has been

aligning with the sustainable consumption trend,

enhancing appeal among eco-conscious consumers

(Woodside & Fine, 2019).

3.1.4 Threats

The cosmetics industry currently faces multiple

threats that require comprehensive analysis across

four dimensions: cultural conflicts, localization

strategy failures, Sino-US trade friction, and ESG

compliance pressure.

Regarding cultural conflicts, regional aesthetic

differences and symbolic taboos have led brands into

public relations crises. For instance, Dior faced

consumer boycotts in China over advertisements

featuring the ‘slanted eyes’ gesture, highlighting the

critical importance of cross-cultural sensitivity.

Localization strategy failures manifest primarily in

formula incompatibility and rigid supply chains (Wu

& Jia, 2018). Estée Lauder's six-month supply chain

delay in China due to its reliance on US production,

resulting in missed peak sales periods, demonstrates

the necessity of localized manufacturing. Sino-US

trade friction has intensified industry volatility (Yang

et al., 2023). The US imposition of 125% tariffs on

Chinese cosmetics has forced companies to

restructure supply chains. Kentin and Kaarto (2018)

proposed that ESG compliance pressures require

companies to adapt to EU bans on CMR substances,

microplastic restrictions, and packaging recycling

rate requirements, which was strict. Estée Lauder lost

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€ 8 million in orders due to delayed CPSR report

updates, whereas Proya passed EU certifications

using non-nano zinc oxide and plant-based

preservatives, demonstrating the viability of green

transformation.

3.2 4P Marketing Strategy Analysis

3.2.1 Product

Hermès strategically launched lipsticks as an entry

point, gradually expanding to blushes, base makeup,

and eye products to form a complete cosmetics

matrix. Its product strategy is a fusion of traditional

artisan spirit and modern demands. Guided by

craftsmanship ethos, the Rouge Hermès makeup line

inherits the brand's haute couture DNA. Each lipstick

undergoes 24 production steps, with strict cutting

precision mirroring leather managing techniques,

reinforcing the ‘handcrafted luxury’ label. The

fragrance cosmetics line utilizes premium ingredients

like iris and cedar, shared with leather workshops

through cross-category ingredient storytelling.

Inspired by Chinese lacquerware, limited-edition

lipstick cases feature literary-inspired shade names,

while maintaining parallel offerings between regular

lipsticks and hand-painted enamel case lipsticks,

echoing the permanent collection strategy. Lipstick

cases employ the same calfskin used in Birkin bags,

with magnetic closure mimicking luxury handbag

acoustics. Signature orange gift boxes are retained,

however the brand lacks recycling used package

compared to competitor Chanel.

Rooted in artisanal devotion and family control,

Hermès has built a cross-category empire spanning

leather goods to cosmetics, ready-to-wear to haute

couture. Its success stems from manufacturing-

constrained scarcity, cultural narratives symbolism

and meticulous sensory engineering. The Hermès

makeup line essentially experiments with brand

success migration from luggage to beauty categories.

While maintaining premium pricing through artisan

narratives, excessive reliance on traditional VIP

systems risks creating backwardness in this era.

Recent Cyber Orange collection collaboration with

digital artists signals re-balance of luxury hierarchy

dynamics.

3.2.2 Price

Hermès employs a luxury-tier pricing strategy across

its cosmetics range, consistent with its ultra high net-

worth clientele positioning. This approach mirrors the

brand's DNA of exclusivity and craftsmanship,

targeting consumers who prioritizestatus symbolism

over cost efficiency. Premium pricing (lipsticks over

$60) positions Hermès above competitors like YSL

and Tom Ford, reinforcing luxury status. Miniature

versions of luxury products serve as entry points to

attract new customers, with offerings encouraging

upgrades to higher-priced lines. While this reinforces

exclusivity, the brand must address generational

perception gaps and geopolitical pricing pressures to

sustain long-term economic growth.

3.2.3 Place

Hermès enforces exclusive sales of cosmetics

products exclusively through flagship boutiques and

its official website, strengthening brand authority and

price control via strict omni-channel governance.

This strategy aligns with the luxury scarcity model,

eliminating third-party distributors to prevent value

dilution while leveraging physical channel

restrictions to maintain pricing authority and

cultivating scarcity through anti-mass-market

distribution channels. However, this approach faces

dual challenges. 58% of Gen Z perceive the

‘boutique-only’ policy as elitist, favoring Dior’s

flexible cross-channel accessibility. Meanwhile, its

China store network, concentrated in first-tier cities

as per location strategy, struggles to meet channel

penetration demands from newly affluent classes in

lower-tier cities. Essentially, although Hermès’

counter-convenience distribution model is diverging

from traditional marketing’s accessibility principles,

it resonates precisely with luxury economics, which

stimulating inaccessibility fuels desirability. The core

challenge lies in dynamically balancing scarcity

leverage amidst evolving generational values and

geographically segmented market expansion

imperatives.

3.2.4 Promotion

Hermès has collaborated with makeup artists like Pat

McGrath transform runway looks into product

highlights, crafting a ‘haute couture cosmetics’

image. It also integrates artistic collaboration and

heritage narratives into its promotional campaigns.

For example, the 2024 Celadon Blush collection drew

inspiration from Chinese Qing Dynasty porcelain,

partnering with Jingdezhen ceramic artists to create

limited-edition packaging. Such campaigns blend

craftsmanship with beauty rituals. Hermès selectively

partners withcultural icons rather than mainstream

celebrities, reinforcing Hermès’ ‘anti-hype’

positioning. These promotions result 47% yearly

growth in cosmetics revenue in 2024 and 19% of

Analysis of the Advantages and Disadvantages of Luxury Brands Launched Makeup Lines: Taking Hermes as an Example

809

cosmetics buyers converted to leather goods clients

within 12 months. However, 58% of Gen Z find

Hermès’ elitist promotions ‘out of touch’, which is

the way that the brand should solve out.

4 SUGGESTIONS

4.1 Optimization Suggestions for

Hermès Makeup Line

First, accelerate skincare and men’s cosmetic

development to expand product portfolio. The current

overemphasis on makeup has created market

coverage gaps. Statista’s report (2024) highlights that

premium skincare accounts for 62% of luxury beauty

sales, while the men’s cosmetics market is expanding

at a 14% CAGR. Estée Lauder achieved 23% sales

growth in Asia-Pacific with its Lauder Men skincare

line, demonstrating the potential of gender-inclusive

innovation, according to its official finance report.

Hermès could leverage its fragrance expertise to

launch antioxidant serums infused with its iconic

leather and develop a men’s skincare product, akin to

Chanel’s Boy de Chanel. Implementation requires

restructuring labs to validate the efficacy of 800

existing perfume ingredients, developing lightweight,

water-based textures tailored to humid Asian climates

and collect feedback via VIP experience sessions to

align products with brand DNA. This strategy would

address market gaps, tap into cross-selling

opportunities, and elevate beauty’s revenue share

from 4.6% to over 8%.

Second, enhance digital experience with AR

virtual systems to meet immersive demands. LVMH

’ s brand Christian Dior increased online

conversions by 28% using AI skin diagnostics (Dow

Jones & Company Inc, 2024). Hermès should build a

virtual try-on system integrating AR lip color

simulations using 75,000 scarf hues for outfit-

matching recommendations, 3D recreations of store

art installations as virtual backdrops and certificates

for each virtual Try-on. This could address physical

store limitations and engage Gen Z , who spend more

than 6 hours daily screen time (Ahmed, 2019). This

could lift e-commerce sales from 12% to 25%+ of

total.

Third, strengthen ethical leadership via

sustainable packaging because of the lack systemic

impact currently. In 2023, Shiseido uses recycled

materials for approximately 740 SKUs across 31

global brands to reduce plastic usage and ultimately

lower its environmental footprint, according to its

official website. Hermès should launch a Closed-

Loop Luxury Initiative, raising lipstick refill adoption

from 35% to 80% via ergonomic redesigns,

partnering with ocean NGOs for a Coral Regeneration

line using 0.5g of recycled fishing-net nylon per

lipstick, with endangered marine emblems on

packaging and creating a global empty-container

program offering engraved customization for 5

returned cases. Third-party certifications and

traceability videos from sourcing to disposal would

boost credibility (Brach et al., 2017). This preempts

EU’s Packaging and Packaging Waste Regulation

and aligns with high-net-worth consumers’ ethical

values, likely elevating Hermès’ ESG rating from

BBB to AA.

4.2 Strategic Insights for Other Luxury

Brands Launching Makeup Lines

In-house control will benefit strong brands like

Hermès , while others, such as Prada, may leverage

partners like L'Oréal for rapid expansion. For them,

they can develop region-specific shades, for example

‘Chinese Red’ to avoid homogeneity issues seen in

Chanel's camellia collection. Integrate product

storytelling into short videos and livestreams is

another recommendation to follow, inspired by

Gucci's social media campaigns with Coty.

4.3 Predictions and Coping Strategies

for Future Market Trends

By 2030, refillable packaging may become industry-

standard, necessitating investments in recycled

material supply chains. AI-customized formulations

like skin-adaptive foundations and IoT-enhanced

tools, smart mirrors, for example, will redefine

experiences. The convergence of makeup, skincare,

and fragrance functions, exemplified by Hermès’

triple-action tinted balm, will drive innovation as

well.

5 CONCLUSION

This paper reveals the advantages and disadvantages

of luxury brands launched makeup lines, Hermès, as

an example, its strategic expansion into cosmetics

embodies both the potential and challenges of luxury

diversification. By leveraging three core pillars,

vertically integrated production, cultural

modernization, and tiered market penetration, the

brand successfully transferred its leather goods

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craftsmanship to beauty products, achieving an 8.7%

year-on-year revenue growth in its cosmetics division

by 2024. However, limitations persist, including a

narrow initial product range, generational perception

gaps in digital engagement, and latent ESG

compliance risks under evolving EU regulations.

These challenges stem from conflicting strategic

priorities. While Hermès’ boutique-exclusive

distribution reinforces luxury scarcity, it restricts

accessibility to emerging markets, as evidenced by

unmet demand in lower-tier cities where store

coverage remains sparse.

The research underscores the necessity for luxury

brands to balance tradition with innovation. Hermès’

success in cultural revitalization, such as translating

archival scarf patterns into lip colors through its

Spectral Saturation Matrix, demonstrates how

heritage can be repackaged for modern aesthetics.

Conversely, its hesitation in digital transformation

highlights the risks of misaligning with tech-native

consumers, contrasting sharply with rivals like Dior,

which boosted online conversions by 28% through AI

diagnostics. The proposed solutions, like developing

AR try-on systems synchronized with its silk database

or launching refillable ‘Coral Regeneration’ lipsticks

using recycled marine plastics, address these gaps by

merging technological agility with brand DNA.

This study’s findings carry significant

implications for the luxury sector. First, they validate

cosmetics as a viable gateway for acquiring younger

consumers, as Hermès converted 19% of makeup

buyers to leather goods clients within a year. Second,

the case proves that vertical integration can protect

brand equity in category extensions, mitigating the

quality dilution observed in licensed collaborations

like Prada’s partnership with L’Oréal. However, the

research has limitations, particularly its reliance on

Western centric data. Future studies should examine

longitudinal impacts across diverse markets. For

instance, analyzing how Gucci’s broader shade range

outperforms Hermès curated palette in emerging

economies. Additionally, comparative analyses of

sustainability initiatives, such as Shiseido’s systemic

packaging overhauls versus Hermès’ incremental

reforms, would deepen understanding of luxury ESG

strategies. Ultimately, this paper establishes a

framework for navigating the luxury-beauty

convergence, emphasizing that survival in this $69

billion market requires neither abandoning tradition

nor resisting innovation, but rather engineering their

symbiotic coexistence.

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