BALENCIAGA BUSINESS REPORT

Emilie Kelly

EXECUTIVE SUMMARY

The brand Balenciaga was established after the death of Cristóbal Balenciaga to bring back to life his talent, iconic designs and input into the fashion industry. Cristóbal was born in Northern Spain in 1895 and lived with his mother who was a seamstress within a boutique. Cristóbal Balenciaga opened his first Boutique in 1917 named Eisa. Balenciaga expanded his boutiques within Barcelona, Madrid and then Paris. Balenciaga was believed to have evolved women’s fashion with his Spanish heritage designs such as the ‘sack dress’ in 1957 (Victoria and Albert Museum, 2022). In 1968 Cristóbal Balenciaga closed his stores and he passed away in 1972. However, in 1986 the Balenciaga Label re-launched with the creative director being Michel Goma until 1992. At the end of Goma’s creative director’s role there were a series of people who took the role such as Josephus Thimister, Nicolas Ghesquière and Alexander Wang until Demna Gvasalia took the role in 2015 (Gladman, 2020). Demna Gvasalia “turned the house upside down” continuing to “respect its long-standing values and Cristóbal’s aesthetic” as well as “using fashion to comment on politics, social issues and apocalyptic world, all in an ironic tone” (Culted, 2020).

This case study will explore Balenciaga’s strategic direction covering what the brand wants to achieve and how they are planning to achieve these goals. It will also look at the Key functions of Balenciaga and what they entail, their current performance within the fashion industry which will discuss their introduction to the Metaverse. Finally, the future plans for Balenciaga will be covered and how they can expand with the development of the Metaverse.

Figure 2: Balenciaga- Isabelle Huppert

Figure 3: Cristóbal Balenciaga

strategic direction

Cristóbal Balenciaga’s brand was first established in 1917. The brand image was high end luxury and ex clusive couture where his iconic designs were inspired by his Spanish heritage (V&A, 2022). After Balencia ga’s death in 1972 the brand was re-established with a variety of names taking the creative director role of the brand ‘Balenciaga’. With many successful readyto-wear collections, current creative director, Demna Gvasalia reintroduced Haute Couture to Balenciaga in 2020 (Phelps, 2022). “Haute couture is the very foun dation of this house... couture is an unexplored mode of creative freedom and a platform for innovation... it brings the modern vision of Balenciaga back to its sources of origin” (Gvaslia, 2022).

Balenciaga has seen an increase and consistent de mand for blue-chip items, products seen “as never going out of style”. Therefore, as well as releasing new Haute Couture garments it is important that Balenciaga “build a greater awareness of their classic products and iconic codes of the house.” The creative director said, “you need a balance between creativi ty and timelessness” (Williams, 2022). Balenciaga’s iconic products are seen as a token into the brand for new customers as an investment and sense of com munity. Whereas the new innovative designs correlate with Balenciaga’s loyal customer and their disposable income. Balenciaga’s collaboration with “The Simp sons” for Spring Summer 2022 corresponds with the proposal of being iconic and innovation. “The Simpsons collaboration… aimed to challenge the typical conven tions of fashion shows.”

Figure 4: Balenciaga- Kim Kardashian

Figure 5: Balenciaga- Simpsons Collection

Since the start of the pandemic, “luxury groups who don’t rely on third party retailers have become more resilient.” With figures to show this The Kering Group have announced they want to sell only on its brand’s own websites or through “e-concessions” on mul ti-brand sites (Williams, 2022). This will allow Balen ciaga to become more exclusive and the price of the garments to be more stable.

Balenciaga also propose to open more stores in eco nomically boosted “Sun Belt” hubs in the US as with “these cities who have changed structurally, not just a spike” (Williams, 2022). It is important that Balencia ga has their stores in places with economic strength to increase sales with their plans to solely sell their products on their platforms and stores. This should increase sales in stores with the affluent individual’s footfall increasing leading to a higher frequency of spontaneous purchases compared to planned purchas es from aspiring customers in lower income areas.

In terms of the strategy pyramid’s ‘corporate strate gy’, The Kering Group who own Balenciaga, follow the ideology of “empowering imagination is much more than a signature. It is our promise, our commitment, and our mindset” (Kering, 2022). Kering are creating an ideology that excites customers to explore their houses, new designs and expect innovation with in the concepts. The business strategy of the pyra mid reinforces Kering’s ideologies with Balenciaga’s mission “to promote creativity by supporting talents from everywhere and it is the reason why we want to collaborate with people from diverse locations, experiences, and backgrounds” (Balenciaga, 2022). Their mission is supported by the functional strategy. Balenciaga’s recent campaign has brought Kim Kardashian to the “front and centre” (Okwodu,2022). Kim is a highly influential female with commendable fash ion styles and statements on the red carpet. With the collection including new designs and iconic pieces, it reaches those who are loyal to the brand and those who will shop the iconic products with the influence of Kim Kardashian.

KEY FUNCTIONS

Figure 6: Levels of Strategy Pyramid

Figure 7: Kim for Balenciaga

Figure 8: Balenciaga- Marie Agnes

Figure

Balenciaga’s Key Functions

According to The Kering Group’s report their group have surged in revenue in the past three years despite the Covid-19 pan demic (Statisa, 2022). “Overall, Kering’s 2021 sales grew 35 percent year-on-year to €17.65 billion, up 13 percent over 2019. Fourth-quarter sales growth beat estimates by 12 percent” (Williams, 2022). Balencia ga’s ideologies and progression has led to an increase in development according to Statis ta (2022). Their marketing strategy creates opposing views with fascination and criticism as they are described as “bold” and are a brand that thrives off creating attention and talk about the concepts and ideas. Their strategy has resulted in Balenciaga becom ing “the most popular brand in the latest Lyst report on the top trends and brands in the third quarter of 2021” (Forbes, 2021).

Current Performance

Balenciaga is a progressive and innovative brand that are known to adapt and experi ment with controversial concepts therefore their introduction into the future concept of the Metaverse aligns with their brand. “The metaverse is becoming more real, and real ity, echoing the aesthetics and fantastical values of video games, less so” (Tashjuan, 2021). The pandemic allowed a rapid pro gression in technology leaving companies, especially fashion brands, with no choice but to revolutionise their brand to keep up with the new way of life (The Fashion Law, 2021). The fashion industry has emerged into the metaverse as an alternate way in which to sell, without selling their physical products. This involves merging the virtual and physical world to create video game skins, virtual clothing and stores. The Metaverse provides support for fashion re tailers as a new way to reach customers in an innovative way, appealing to a new con sumer audience through the technological world and provide a new way in which to market their brand (Tashjian, 2021).

Figure 10: Balenciaga- Tommy Blue

Figure 11: Development of the Balenciaga brand worldwide from April 2016 to May 2021

Figure 12: Global revenue of the Kering Group from 2012 to 2021, by brand (in million euros)

Balenciaga have been one of the first fashion designers and retailers to emerge into the Metaverse with their collabora tion with the video game, Fortnite. Within the game you can access Balenciaga’s virtual store and purchase products you can buy in real life, but virtually. The creators of Fortnite have described the collaboration as a ‘living look book’ for Balen ciaga. It is an alternate and progressive way to enhance their brand image by keeping up with the development of tech nology and evolving fashion industry (Tashjuan, 2021). As part of the collaboration advertisement campaign for Fornite X Balenciaga, real-world immersive 3D billboard-experiences were cretaed in London, New York, Tokyo and Seoul (Conta gious, 2021). The advertisement was made into an attrac tion and experience with people coming to see it and take pictures and videos, creating not only paid media but also shared media. The billboard was clearly produced to adver tise the collaboration, however with an abstract concept, it also sparked conversation about Balenciaga and their aim to fit into the Metaverse.

Wait! Fashion (2022) reported on Balenciaga extending their relationship and image with technology with their recent in vitations for FW22 Paris Fashion Week show. The brand sent out a damaged iPhone 6 with the invitation engraved on the back. Balenciaga seems to be using methods of advertise ment that are innovative and controversial to news story and conversation. With the show named “360-degree Show” and the type of invitation, the industry would be led to think that Balenciaga is wanting to push the social concept on entering the Metaverse.

Future plans

Figure 14: Balenciaga- Justin Bieber

Figure 13: Balenciaga X Fortnite

Michie (2022) from Fashion Magazine said that “in the age of the influencer, many people are buying clothes for the sole purpose of posting styled photos to social media”. This is resulting in a minimal number of times wearing this gar ment, impacting the environment in a negative way. The in crease in development within the Metaverse and Balencia ga’s success with their virtual clothing via Fortnite could create an opportunity to submerge physical purchasing of Balenciaga products with the virtual world. With Balenciaga already creating a virtual store on the video game Fort nite, this could be replicated within the physical store with the use of VR headsets. This would be launched once the Metaverse is intergrated with day to day life. Balenciaga have been praised and spoken about for their premature in troduction into the Metaverse, creating a virtual world be fore their competitors, therefore they could continue with the first virtual store in the physical world. This would al low customers to walk around the store trying clothing on their avatar self. The virtual clothing would allow social media influencers to take photos in the clothing for styling posts virtually. Digital fashion would appeal to the young and future consumer due to the low environment impact and positivity towards sustainability,W as fashion brands such as Balenciaga can reduce waste while continuing to make a profit (Sola-Santiaga, 2022).

References

Balenciaga. (2022) Balenciaga. [online] [Accessed 4 March 2022] https://www.balenciaga.com/en-gb

Chan, E. (2020) 7 Sustainability Moments That Actually Mean Something For SS21. [online] British Vogue. [Accessed 22 February 2022] https://www.vogue.co.uk/fashion/article/sustainability-moments-ss21

CULTED. (2020) A HISTORY OF BALENCIAGA THROUGH THE LENS - CULTED. [online] [Accessed 4 March 2022] https://culted.com/a-history-of-balenciaga-through-the-lens/ Explainer: What is the ‘metaverse’? 2021. [video] Youtube: Reuters.

Forbes. (2021) Balenciaga: The Story Of A Brand Destined For Success. [online] [Accessed 8 March 2022] https:// www.forbesindia.com/article/forbes-lifes/balenciaga-the-story-of-a-brand-destined-for-success/71119/1

GLADMAN, B. (2020) Cristóbal Balenciaga’s Legacy: His Creative Directors. [online] Showstudio. [Accessed 4 March 2022] https://www.showstudio.com/news/crist%C3%B3bal-balenciagas-legacy-his-creative-directors

Li, J. (2021) Balenciaga Drops Pride 2021 Capsule Collection. [online] HYPEBEAST. [Accessed 22 February 2022] https://hypebeast.com/2021/6/balenciaga-pride-2021-capsule-collection-lookbook

Michie, N. (2021) What The Metaverse Will Mean For The Fashion Industry. [online] FASHION Magazine. [Ac cessed 4 March 2022] https://fashionmagazine.com/style/fashion-metaverse/>

Okwodu, J. (2022) Kim Kardashian Is Balenciaga’s Latest Campaign Star. [online] British Vogue. [Accessed 19 February 2022] https://www.vogue.co.uk/news/gallery/kim-kardashian-balenciaga-campaign>

Parkes, J. (2022) Balenciaga collaborates with Simpsons to launch Spring Summer collection. [online] Dezeen. [Accessed 18 February 2022] https://www.dezeen.com/2021/10/07/balenciaga-spring-summer-2022-thesimpsons-fashion/

PHELPS, N. (2022) Exclusive: Balenciaga Is Returning to Haute Couture. [online] Vogue. [Accessed 15 February 2022] https://www.vogue.com/article/balenciaga-returns-to-haute-couture

SOLÁ-SANTIAGO, F. (2022) Designers Are Holding Fashion Shows In The Metaverse. Will It Take Off? [online] Refinery29. [Accessed 4 March 2022] https://www.refinery29.com/en-gb/2022/02/10884293/virtual-fash ion-shows-metaverse

Statista. (2022) Balenciaga brand development worldwide 2016-2021 [online] [Accessed 4 March 2022] https://www.statista.com/statistics/1202603/balenciaga-brand-development-worldwide/

Statista. (2022) Global revenue of the Kering Group, by brand 2021. [online] [Accessed 8 March 2022] https:// www.statista.com/statistics/267476/global-revenue-of-the-kering-group-by-brand/

Figure 15: Balenciaga virtual store within video game, Fortnite

Tashjuan, R. (2021) Balenciaga Joins Fortnite in the Metaverse [online] GQ. [Accessed 25 February 2022]

https://www.gq.com/story/balenciaga-fortnite-collaboration

Tashjian, R. (2021) Why Is Fashion So Obsessed with the Metaverse?. [online] GQ. [Accessed 8 March 2022] https://www.gq.com/story/metaverse-fashion-explainer

The Fashion Law. (2021) Balenciaga Launches a New Division to Spearhead Metaverse Push - The Fashion Law. [online] [Accessed 25 February 2022] https://www.thefashionlaw.com/balenciaga-launches-a-new-division-to-spearhead-metaverse-push/

The Kering Group. (2022) Diversity and Inclusion. [online] [Accessed 22 February 2022] https://www.kering. com/en/houses/couture-and-leather-goods/balenciaga/diversity-and-inclusion/

Victoria and Albert Museum. (2022) Introducing Cristóbal Balenciaga. [online] [Accessed 1 February 2022] https://www.vam.ac.uk/articles/introducing-cristobal-balenciaga>

Wait! Fashion. (2022) Balenciaga invites to its next show with an Iphone 6. [online] [Accessed 4 March 2022] https://www.waitfashion.com/en/balenciaga-invites-to-its-next-show-with-an-iphone-6/

Williams, R. (2022) Kering’s Game Plan for 2022. [online] The Business of Fashion. [Accessed 18 February 2022] https://www.businessoffashion.com/articles/luxury/kerings-game-plan-for-2022/

Wiliams, R. (2022) Kering Sales Beat Estimates on Gucci Turnaround, Surging YSL and Balenciaga. [online] The Business of Fashion. [Accessed 8 March 2022] https://www.businessoffashion.com/news/luxury/kering-salesbeat-estimates-on-gucci-turnaround-surging-ysl-and-balenciaga/

Images:

Figure 1: Balenciaga Fall 2021 Campaign (Source: Les Falcons, 2021)

https://lesfacons.com/2021/07/26/balenciaga-fall-2021-ad-campaign-featuring-justin-bieber/

Figure 2: Balenciaga- Isabelle Huppert (Source: Balenciaga, 2022)

https://www.balenciaga.com/en-gb

Figure 3: Cristóbal Balenciaga (Source: Marie Claire, 2020)

https://www.marie-claire.es/moda/disenadores/articulo/balenciaga-el-misterioso

Figure 4: Balenciaga- Kim Kardashian (Source: Balenciaga, 2022)

https://www.balenciaga.com/en-gb

Figure 5: Balenciaga- Simpsons Collection (Source: Dezeen, 2021)

https://www.dezeen.com/2021/10/07/balenciaga-spring-summer-2022-the-simpsons-fashion/

Figure 6: Levels of Strategy Pyramid (Emilie Kelly, 2022)

Figure 7: Kim for Balenciaga (Source: Balenciaga, 2022)

https://www.balenciaga.com/en-gb

Figure 8: Balenciaga- Marie Agnes (Source: Balenciaga, 2022) https://www.balenciaga.com/en-gb

Figure 9: Balenciaga’s Key Functions Infographic (Emilie Kelly, 2022)

Figure 10: Balenciaga- Tommy Blue (Source: Balenciaga, 2022) https://www.balenciaga.com/en-gb

Figure 11: Development of the Balenciaga brand worldwide from April 2016 to May 2021

https://www.statista.com/statistics/1202603/balenciaga-brand-development-worldwide/

Figure 12: Figure 12: Global revenue of the Kering Group from 2012 to 2021, by brand (in million euros) https://www.statista.com/statistics/267476/global-revenue-of-the-kering-group-by-brand/

Figure 13: Balenciaga X Fortnite (Source: Vogue, 2021)

https://www.vogue.com/article/balenciaga-fortnite-partnership

Figure 14: Balenciaga- Justin Bieber (Source: Balenciaga, 2022) https://www.balenciaga.com/en-gb

Figure 15: Balenciaga virtual store within video game, Fortnite (Source: Polygon, 2021) https://www.polygon.com/2020/12/8/22163302/balenciaga-afterworld-video-game-fashion-show-fall-2021