• by Sarah Mahoney , Staff Writer @mahoney_sarah, April 17, 2025

Hermès, the French company best known for $12,000 handbags, posted solid first-quarter sales gains — up 7% in constant currency overall and 11% in the U.S. — even as most direct competitors reported declines. It also addressed tariffs head-on, announcing a 10% U.S. price hike beginning in May to “fully offset” the impact of new tariffs from the Trump administration.

On the one hand, who cares? Hermès is a small brand in the $400 billion luxury sector. However, experts say the company’s first-mover honesty may offer direction for other marketers, both in luxury and mass categories.

Most brands are still dancing around the tariff issue. While many will simply raise prices and hope shoppers don’t notice, Hermès is being explicit — a move that may deepen trust at a time when greenwashing and "shrinkflation" have made consumers more skeptical.

“Brands have three choices,” says Neil Saunders, managing director at GlobalData, a retail analytics firm. “They can either take a hit on their margins, find ways to save costs elsewhere, or raise prices.”

Eventually, he tells Marketing Daily via email, “it is inevitable that part of the response will involve price increases.”

And like it or not, that will impact brand health. “It’s imperative for luxury retail brands to resource, discuss and consider their brand strategy as they consider their response to tariffs,” says Kassi Socha, director analyst for Gartner for Marketers. “CMOs that fortify their luxury brand positioning during this season will pull ahead, winning the wallet of the prestige consumer.”

She adds that CMOs at all brands — not just luxury — should be thinking price hikes through, defending marketing budgets, and striving for “consistent brand investment and its correlation to commercial growth or, at minimum, brand stability.”

Should more luxury brands follow? Maybe. “Under pressure to orchestrate profitable growth and realize cost optimizations, a luxury brand’s instinct during this moment may be to invest in short-term performance tactics,” Socha says in an email to Marketing Daily. But tactics like flash sales or aggressive lower-funnel marketing, while tempting, can’t replace long-term brand building.

Hermès is betting that wealthy customers aren’t overly concerned about price hikes -- and will simply accept them. It’s also true, says Saunders, that many of Hermès’ wealthiest shoppers are mobile enough to buy products overseas, in markets where prices may not rise as sharply.

Still, it’s too soon to tell what kind of emotional response tariffs -- global, political and messy -- might spark in shoppers. Customers happy to pay high prices for craftsmanship and quality might resent a political surcharge. Some brands may decide it’s smarter to market price increases as rational and fair, rather than pretending they’re invisible.

In a year when economic realities are colliding with brand dreams, the message may be this simple: Talk to your customers like they’re in on the plan, not like they’re in the dark.