Luxury groups use movies, dinners to boost image

Wed Jun 10, 2009 12:49pm EDT
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By Jo Winterbottom

PARIS (Reuters) - Luxury groups are turning to films, the Internet and private dinners to attract customers as they search for more cost-effective ways to advertise to fight falling sales, executives told the Reuters Global Luxury Summit.

Hermes is increasing its overall marketing budget by just under 10 percent this year to a touch above 100 million euros ($141.1 million), but only a third will be on advertising, Chief Executive Patrick Thomas said this week.

"The rest of the budget goes on shop windows, exhibitions, private public relations operations," he said, including invitations to 10-15 customers to themed store openings.

Thomas said the world's second-biggest luxury goods group after LVMH wanted "to communicate one-to-one and not mass communication."

"We don't believe so much in advertising to explain the particularity of Hermes," he added.

Hermes is using the Internet to push sales with merchant sites in the United States and most European countries. Web-based sales account for only about 1 percent of the total currently but are growing at 40-50 percent annually.

LVMH Chief Executive Bernard Arnault said in May it planned to invest more on Internet ads and better targeted publicity.

Luxury groups are also using the Internet in innovative ways to draw attention to their brands.   Continued...

<p>Patrick Thomas, Chief Executive of luxury goods firm Hermes, attends the Reuters Global Luxury Summit in Paris, June 8, 2009. REUTERS/Pascal Rossignol</p>