Can Balenciaga Become A New Big Money Tree In The Open Cloud?

On a Sunday morning in autumn, during the Paris fashion week, Stella Bugbee, editor in chief of fashion and culture column of New York guest, is comfortably in Broolyn's home and looks at the Balenciaga 2020 spring and summer fashion show in the New York fashion week. Is everything so exciting or interesting in the show? Attractive? To this end, she called fashion director Rebecca Ramsay and famous critic Cathy Horyn, orchestrated a three party talks. Horyn is the first person to witness the Demna Gvasalia's trumpet dress slipping down from the blue velvet scenery. This dress reminds people of the assembly hall of the European Parliament.
She is not the only one who is passionate about this series. "Cathy wants to write it down, Rebecca and I want to take it down," Bugbee said. "It's funny that the type of clothing alone is very funny. Those clothes are too ridiculous. ... those strange cowboy shapes... After watching this show, I think all the shapes I saw before did not seem so surprising.
"It almost feels like a monster in Nordic mythology," she added. "But it's more refined."
Now, the founder of Balenciaga has started his own studio for more than 100 years, and its profile design has no influence on the contemporary fashion industry. Gvasalia has been working in Balenciaga for four years and has always been attracted by the fashion industry. Similarly, luxury consumers are attracted by his unique concept, which is both a fashion and a medium, ranging from those gleaming thick bottomed shoes to the drum shaped triangular bags.
This year, the brand's sales exceeded $1 billion. But can Balenciaga continue its growth trajectory and become a multi billion dollar brand of Kering?
In the past 10 years, the success path of high-end fashion brands has changed dramatically. Gucci's Alessandro Michele has contributed the most authentic example to this new path. Under the premise of not abandoning the brand gene, the Italy fashion house, which is a group of Kai Yun group, has successfully innovated brand aesthetics. Michele has been given the freedom to completely redefine the appearance and tonal nature of Gucci, while brands can continue to rely on and reshape the iconic products and core products, which have been driving the continued profitability of brands.
Gvasalia had previously worked in Louis Vuitton, and his appointment in Balenciaga was less than a year later than Michele, following the same trajectory as above. His works in Vetements prove that Margiela's disciples are well versed in the way to tailor the fashion of "anti fashion" for the digital age.
Vetements joins Levis's cooperation series, with a ruffle as its iconic feature, even if it sells for more than 1000 US dollars, it has been out of stock. Gvasalia, together with Virgil Abloh, represents the transformation of street clothes to luxury goods. Although Abloh, who has studied architecture, has been designing fashion from an industrial designer's perspective, he has used his menswear designed in Louis Vuitton to expand a well funded version of his previous works. By contrast, the background of Gvasalia is more traditional, and the task he receives is even more difficult. He needs to integrate everyday clothes with the advanced customization concept originally put forward by the brand founder.
His challenge is more than that. Balenciaga is not Gucci. It may have the same deep and striking history, but ordinary luxury consumers are not so familiar with it. They may not be able to identify the essence of Balenciaga's brand -- volume, sculpture and logo profile, and do not know any iconic products, so they will not consume it naturally.
When Gvasalia was recruited at the end of 2015, analysts estimated that the brand's revenue was about 350 million euros. At that time, Balenciaga was also recovered from the departure of former creative director Nicolas Ghesquiere, who joined Louis Vuitton in 2013.
In the 15 years of Ghesquiere, Balenciaga is the darling of critics and the darling of fashion industry. The most successful commercial product of Ghesquiere is locomotive bag. This bag becomes a classic, and its influence is comparable to that of Fendi's Baguette or Celine Box. But even under his leadership, the size of Balenciaga is still inferior to that of the group's main money making machine.
The early Gvasalia series is very promising. In addition to launching a series of coats and costumes, cynicizing the elegance of Thatcher's fashion and integrating Balenciaga's revolutionary sculpt and skills, he has launched one after another explosion, including the imitation of the Balenciaga sportswear and sports shoes designed by the former US presidential candidate Bernie Sanders in 2016. Triple S sneakers, which helped Balenciaga open the men's clothing business, debuted in T in January 2017, and became the leader of "Daddy shoes" in the hands of many competitors. Like today's Speed socks, Triple S has become a brand dependent and vital driving force for sales.
Although these simple items are easy to be accepted by the picky audience, they are also very expensive. The price of the hat is more than 750 dollars, and the price of some sneakers is close to about 1000 dollars.
But these explosions are not enough to raise the brand to a new level, because it lacks a retail network and promotional strategy that can stimulate competitors.
C e dric Charbit photo source: Ezra Petronio
Cedric Charbit, a senior executive at Kai Yun group, served as the director of commodity Department of Saint Laurent. He joined Balenciaga at the end of 2016. According to previous reports, sales at that time amounted to about 400 million euros. (Kai Yun group has not announced the sale of Balenciaga and any of its small brands. Instead, it chose to report them as a group in every quarter. )
"The vision of Gvasalia is very clear," Charbit said. But there is a "dislocation" between business and creativity, which means that the enterprise and creative team are not working together.
He embarked on a new adjustment. Kai Yun group said that by 2019, sales of Balenciaga will exceed 1 billion dollars, and its scale will more than double in three years.
In order to achieve this lofty goal, Charbit has greatly expanded the retail network. During his three years leading the brand, the number of global stores increased from 110 to 180, an increase of 63%. Although he did not want to disclose the wholesale and retail business of the brand, he said that in general, he thought 25% to 30% wholesale business was healthy for a luxury brand. For wholesalers, Charbit says it will not prepare special limited money or anything like that, but every arrangement needs a sense of collaboration, just like the early projects of Colette or the recent projects of Farfetch. "At present, demand is greater than supply," he said.
He also renoted men's clothing business such as footwear, bags and ready-made clothes, which now account for over 30% of the company's business and are especially popular in Asia. Sales in the region account for a large proportion of the company's total sales, but he declined to disclose the exact amount. In addition, he vigorously exerts the ability of Gvasalia to capture the spirit of the times. The brand currently has more than 10 million 700 thousand fans on Instagram, up from 2 million 600 thousand in the same period. Today, 60% of Balenciaga customers are millennials, and 70% of sales are from the millennial generation.
Balenciaga's low pixel style in social media helps to increase the participation of the audience.
Danya Klein, vice president of Preen.Me, a brand collaboration social analysis company, said: "in terms of luxury fashion brands, Balenciaga's content strategy can be said to be consistent or even weird, which is different from the" perfect "Instagram page you planned in the past. There are no words in the picture, and brands rarely add labels to other users in the accounts, and these posts do not have links to purchase online. However, from the point of view of commentaries and commentaries, the high participation of each post in Balenciaga proves that this method is effective.
Unlike Gucci, Balenciaga does not have a lot of iconic products that can be redesigned quarterly and sold to audiences. But Gucci's Lok shoes, Burberry's windbreaker or Chanel's 2.55 handbags are unique. Locomotive bags may be considered the classic of handbag collectors and fashion industry, but it has not yet reflected the true resale value. In addition, Gvasalia is not a supplier of basic products. He does not advocate separating the main products. This means building a core series like Saint Laurent, full of evergreen Chelsea boots, tight jeans and jeans jacket.
"We are going to challenge the status quo," Charbit said.
This means creating a new pattern, giving full play to the ability of Gvasalia to produce big heat products. Charbit said that so far, Balenciaga has launched 7 major red products, including Triple S old shoes and Speed socks boots, Hourglass bags and a sweater for Sanders. Charbit believes that some of these items obviously can't become meaningful products.
"After the three season, we should say goodbye to him," he said. "Our mission is to provide new things."
Let's talk about their handbag strategy. Commodity groups no longer rely on familiar and popular styles, but focus on selling Gvasalia oriented concept shows.
Today, the best selling two Balenciaga handbags are Gvasalia designs, not the classic motorcycle bags, which currently account for less than 5% of total sales. "We don't play cards according to common sense," Charbit said.
But letting Gvasalia lead a product, not just a concept, is just one element of the equation. To expand the scale, it is also necessary to reconfigure the supply chain so as to be able to focus on entering the market quickly, which is never the first meaning for Balenciaga, a small former. Since joining Charbit, the team responsible for supply chain has been growing fastest and the delivery time has been reduced by 30%.
"People want to own it when they see it," Charbit said. "We need to shorten the time between" you see a commodity "and" you can get it "in two states.
The hardest part is maintaining. Gvasalia has an incredible ability to create products that are emotionally unique, but no one can guarantee that he can consistently do so. The trend such as "Daddy shoes" has come and gone, though the life span of fist products tends to be longer than that of the observers. But in some parts of the world, the rate of acceptance of products is actually slower than that of other regions, but innovation is still essential. According to data from visual data company Heuritech, the popularity of the brand's Speed hosiery boots among celebrities and consumers is declining. The number of posts with 500 thousand followers dropped by 5%, and the number of posts with fewer than 1000 followers dropped by 11%. However, in 2019, the attention of triangular package on Instagram increased by 58%.
"Balenciaga has been one of the most important growth trends in recent years. I believe that although consumers will no longer buy heavy sports shoes, the brand will continue to grow at a two digit rate, "said luxury analyst Luca Solca." the key to maintaining the momentum of Balenciaga development is to continue to incubate its product innovation channels and create more short-term success in the future.
With the expansion of brands, discounts are also increasing, at least in the US. According to data from e-commerce tracking company Edited, the number of price cuts on Balenciaga official website in the United States in May 2019 was higher than in the past two years. However, the price reduction is not as big as it used to be.
As fashion grows away from Logo design and other street apparel, the key to brand is to keep innovation leading and diversify enough in categories and regions to ensure that Gvasalia has room to do what he wants to do. The CEO said, "I will not interfere with Demna, nor will I ask him about his next best seller."
However, maintaining such a relaxation is not easy. Even if Gvasalia's fashionable products evolve into a landmark design, they will take several years to occupy a permanent place. Before that, everything will revolve around "innovation".
Just a few weeks after Gvasalia announced the withdrawal from Vetements, the 2020 spring and summer fashion show brought him the opportunity to focus on Balenciaga, which might keep him at a high speed. Now, there is only one place for his original content to be placed.
"The brand may have been 103 years old," Charbit said. "But it represents what we have never seen before."