The recent exposure of Chinese suppliers responsible for manufacturing products for major luxury brands has not shaken the prestige of the market’s most traditional labels. Despite revelations about the origin of their goods, names like Hermès and Louis Vuitton continue to preserve the symbolic value they’ve carried for decades. The central reason lies in the positioning built over time, long before social media shaped value perception.
The debate gained new proportions in recent weeks after the Hermès group, founded in 1837, surpassed the LVMH conglomerate in market value for the first time, becoming the world’s largest luxury group. According to the Business of Fashion, Hermès’ market value reached $247 billion after LVMH reported results below expectations for the first quarter of 2025. A 5% drop in leather goods and accessories sales and an 11% contraction in Asia (excluding Japan) contributed to the decline in performance of the French giant.
The power of belonging
For branding experts, luxury brand consumers are not essentially interested in production costs or factory locations. ‘Hermès customers don’t buy a bag for its material or where it was made, but for the meaning it carries,’ says Carolina Lara, strategic communication and branding expert and founder of Lara Visibilidade Estratégica. ‘It’s a matter of belonging, of narrative. These brands sell cultural symbols, not just products.’
This perception is not the result of social media strategies or paid traffic. The positioning of established brands was built on consistent narratives, reinforced in renowned publications like The New York Times, Financial Times and Le Monde. Decades of presence in reports, special features, and business sections, beyond fashion, have solidified their image with the public.
Meanwhile, emerging or lesser-known brands try to compensate for their lack of history with aggressive paid traffic campaigns on social media. ‘There’s a clear difference between brands that appear in outlets like CNN, Exame or Veja, where journalistic coverage requires credibility, and those that limit their presence to sponsored ads,’ Lara compares. ‘The former build reputation; the latter depend on constant investment to maintain relevance.’
On-demand business model
Hermès, in particular, adopts a strategy that further reinforces its symbolic value: on-demand production. Unlike conglomerates that need to scale their operations across various market segments, the French label keeps its offering restricted, creating deliberate scarcity to sustain its aura of exclusivity. This practice allows the company to operate with high-profit margins while avoiding issues like excess inventory or clearance sales, common in other brands.
‘When you have a model based on high demand and low supply, you not only maintain desire for the brand but also control the consumption cycle,’ explains Lara. ‘There’s no need for discounts or promotions, which preserves perceived value.’
The geopolitics of luxury
The current scenario also reflects a peculiar geopolitical dynamic. Luxury consumption in Asia, excluding Japan, showed double-digit contraction, while markets like the US and Europe demonstrate greater resilience. Still, Hermès’ target audience remains relatively immune to economic fluctuations. This stability contributes to the brand’s consistent appreciation in times of uncertainty.
On the other hand, LVMH, with its diversified portfolio of 75 brands across six distinct segments—fashion, beauty, jewelry, wines, among others—feels the impact of global crises more acutely. Exposure to international markets, while offering revenue diversification, also amplifies risk in times of economic volatility.
Despite Hermès’ current leadership, industry analysts highlight that the competition remains fierce. Bernard Arnault, CEO of LVMH, maintains a stake in Hermès, with 2% of the share capital under the Arnault family’s control. This shows that, even off the momentary podium, the LVMH group closely follows its competitor’s moves.
In the age of social media, where image-building often boils down to boosts and paid traffic, traditional luxury brands demonstrate that reputation and symbolic value remain irreplaceable assets. Decades of strategic positioning, well-crafted narratives, and presence in credible editorial spaces sustain their leadership.
The competition between Hermès and LVMH remains open, but one thing is certain: luxury, more than ever, is beyond the product—it is, above all, a well-told story.
