Last year, antiquated brand Balenciaga made a sudden return to relevancy as a luxury brand, earning the unofficial label of “hottest brand in the world” and making serious headway to a billion in revenue. The reason for the sudden change in fortune? Head designer Demna Gvasalia (also founder of fashion label Vetements) and his knack for leveraging attention into sales in the digital age. OMR took a closer look at how Balenciaga has achieved their recent successes, the strategies Demna employs to increase brand awareness via digital channels and what hip-hop in Germany, Puerto Rico and the US has to do with it.
The Renaissance of an 80-year-old brand
It’s no secret that hip-hop has long been a driver of fashion. Rappers oftentimes flaunt their status as ballers by paying homage to fast cars, expensive booze and hot threads. Dating all the way back to hip-hop godfathers Run DMC, whose trademark Kangol hats and Adidas were on fire, and still in practice by Yeezy hisself (more on Kayne in a bit), it’s a essential part of standing out in hip-hop culture.
In Germany and Puerto Rico, UFO361 and San Juan’s Ozuna have been spearheading Balenciaga return to relevance, plastering company bling everywhere—from cars to the crib, in videos and Instagram stories. For an 80-year-old brand once synonymous with crotchety threads and snooty wealth to be paid homage to in hit rap tracks on opposite sides of the Earth, it begs the question: how did we get here?
Founded in 1937 by Spanish fashion designer Cristóbal Balenciaga, the brand is finally undergoing a birth, after decades of stagnation. And it’s not just a sudden boost in perceived awareness, but quantitative as well, to which a host of KPIs attest. Google Trends, for example, says that search queries for the brand have recently dwarfed those of perennial heavy hitter and epitome of luxury, Dolce and Gabbana.
Did Balenciaga steal Gucci’s crown?
Analytics tool SimilarWeb, puts the number of visitors to Balenciaga.com from 750K monthly views to over 2 million. And according to Lyst.co, Balenciaga topped Gucci in Q3 2017 as hottest luxury brand on the planet. The online luxury marketplace evaluates some 65 million uniques per year according to its own figures and tracks which brands and articles they most frequently search for. In Q4 2017 and Q1 2018 Balenciaga snagged the top spot as well.
The latest business figures by luxury goods firm Kering, proprietor of Balenciaga and Gucci, reflect this trend in its revenue. According to Kering, Balenciaga was the fastest growing Kering brand in the second half of 2017 regarding revenue—putting it ahead of Gucci. Currently, Gucci is in another league of its own in total revenue and operative profit: In the past business year, the Italian fashion behemoth grew revenue from USD 4.4 billion to 6.2 billion, while increasing profit from USD 1.3 to 2.1 billion according to internal company figures. Balenciaga revenues are much more modest in comparison, but are increasing rapidly. At the annual presentation of company balance sheets this past February, Kering CEO François-Henri Pinault stated that moving forward Balenciaga is setting up to be the next brand to crack a billion US in revenue.
Revenue driver clothes?
According to Pinault’s presentation Balenciaga’s growth was primarily propelled by the ready-to-wear and footwear segments. The revenue growth in ready-to-wear has been incredible, especially given the fact that a study by Exane BNP Paribas indicates that the majority of luxury brands not only don’t turn a profit on clothing but sell their articles at a loss. Basically, brands tend to generate profit on perfumes, handbags, shoes and accessories, while fashion shows and clothing are written off as purely marketing costs.
If Kering is right that the case is different at Balenciaga, the catalyst figures to be Demnia Gvasalia. Demnia joined Balenciaga as creative director in 2015. He studied fashion in Antwerp, had stints as a designer at Maison Margiela and Louis Vuitton, but really made a name for himself in 2014, when he, his brother Guram and five friends launched popular clothing label Vetements (French for clothing). At Vetements, they were “sick of working in a system that was kind of derailing itself—and we wanted a creative outlet,” Gvasalia told Style.com. When Vetements announced that they were abandoning runway shows, Demna explained the unprecedented move by saying “Shows are there merely to sell a dream that at the end of the day will sell a perfume or a wallet in a duty-free store [is] neither smart, nor cost-efficient.” “We are not selling a fashion dream; we are selling a reality.”
Successful rebellion against industry standards
Back when Vetements was still showing on the catwalk, they only showed twice a year and not four times—and did so earlier than the competition. According to an industry analysis by consulting company Loose Threads the practice led to several advantages over the competition. As merchants spend about 80% of their budgets earlier in the year according to Gvasalia the possibility increases that Vetements funnel that money into its collections.
And because Vetements’ cycles are longer, their goods are displayed in shops longer. This fact leads to merchants taking a more active role in selling these articles, according to Loose Threads. Simultaneously, the probability that the brand’s articles land in the bargain bin sinks so that margins for both merchant and label increase. With an intentional supply shortage, Vetements is able to boost the exclusivity of its items: ” We always supply less than the demand, so we’re always sold out,” said Guram. In 2014, Vetements leverages the strategy into gains of 27 and then 84 exclusive luxury boutique stockists. Today, that figure is said to be at over 200.
Kanye West fuels the fire
In September 2014, Vogue publishes the first report on the latest Vetements collection—but the biggest boost comes in March of the following year. Kanye West turns up to two fashion shows during the Paris Fashion Week in an oversized Vetements hoodie. For hip-hop star West, Vetements was a perfect fashion fit: a high-end, young and exclusive fashion brand that positions itself as a destroyer of conventional industry standards, which makes it a bit of an outside and leads it to be oft misunderstood. The pub from West vaults Vetements into a new arena of awareness. “Wholesale was the kindling; Kanye poured gasoline on the fire,” wrote Loose Threads.
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And Vetements played its part in dousing the hype with gasoline. In the ensuing months, the brothers Gvasalia generate unprecedented buzz for Vetements with a strategy uncommon for the fashion industry: Gvasalia is credited for introducing the meme into fashion.
The originality of a copy
Kanye sporting a hoodie in Paris is classic meme material. The Vetement’s logo looks like a metal brand’s logo and the oversized optic gives Kayne the air of an insecure teen seeking shelter and escape in their clothes. In this image of him next to Icelandic singer Lorde, the pair were given the full meme treatment and were dubbed “Goth Prom:” (here’s a Google search with several results).
And here Vetements is playing the meta game to the extreme, co-opting popular trends and brands for itself. For example, in 2016 Vetements released Hoodies with a logo strongly reminiscent of the seminal logo of US sportswear firm Champion— selling them for a cool USD 800. Skater brand “Thrasher” also got a similar treatment early on.
Raised awareness from meme-baiting
But the largest attention booster figures to have been with its line that looked like the uniform of global courier DHL, available for GBP 185 (EUR 245). The ploy certainly made headlines and there were numerous reports and articles published by mainstream media outlets, including the Guardian, who called it the “biggest fashion story of 2016” and said Vetements brought anti-fashion back to fashion.”
Soon after, the term meme-bait becomes commonplace for describing Vetements. Essentially, meme-baiting is when something is created, a piece of artwork or other such striking visual, which is used as bait to get others to co-opt it and publish their version, and thus give the original a boost in reach and attention. A 23-year old even went as far as creating and selling his collection of Vetement parodies Vetememes .
Crazy or genius?
For Balenciaga, Demna Gvasalia continues the meme-bait strategy at an even higher level. His biggest hit: the iconic Ikea bag, Frakta—the formless, blue plastic bag available for fifty cents at any Ikea shop around the world. Take a piece of leather and add the Balenciaga logo, however, and the label cashes in EUR 2000 per sale. Demna’s idea generates reactions ranging from incredulity to lampooning. A Reddit thread on the topic has over 28,000 upvotes and over 2000 comments. Ikea responds to the Balenciaga copy with a tongue-in-cheek campaign. With the amount of resonance the stunt generated, there’s a very good chance that it made its way into user feeds around the world.
With the hype surrounding the Ikea move, Gvasalia landed his masterpiece as it elicits a global wave of ironic excitement at the prospect of owning an authentic Balenciaga. Hardly a stronger form of flattery exists that the barrage of bustiers, sneakers, facial masks and g-strings that some released in homage, evincing the potential that meme-baiting has for generating publicity. And if you’re exercising a healthy dose of skepticism that it was intentional, Demna did, however, state that he“used the blue Ikea bag during my four years as a student in Antwerp, due to its size and its price. I meant it as an ironic gesture in part, taking something really cheap and moving it into the luxury realm. But it’s authentic too, and that’s why it’s been all over the internet by now. People can relate.”
Cheap knock-off marketing
With this open relationship to irony and authenticity, Gvasalia has been able to grow his target group. Consumers can interpret the garments as either ironic, authentic—or as the ultimate form of decadence. For certain clientele, paying top-dollar to wear a symbol of the “lower class” figures to made the items especially attractive. And there’s been enough of a selection to choose from with Gvasalia applying the Ikea-bag model to heaps of articles for Balenciaga. There are two bags, a cheap Thai shopping bag and a see through blanket bag . Then there is a leather bag that looks like a paper bag from a Balenciaga boutique.
Meme-bait shoes are all the rage
When Gvasalia released a pair of Balenciaga platform crocs last summer, 9Gag seriously asked if Balenciaga was intentionally trying to become a meme. And an opinion piece on Highsnobiety was titled “Let’s Stop Pretending Balenciaga’s Meme-Bait Is Cool.”
Gvasalia doesn’t figure to have been all that bothered as the strategy has brought Balenciaga a massive plus—including the fact that this catapult effect has been particularly effective on exactly those products that are ideal for mass sales: shoes. When Balenciaga released its Speed Trainers in November 2016, one sneaker blog pointed out ” It’s virtually $500+ sock,” while a Reddit user posted his own, self-made version, consisting of a sock and a couple of tissues. And yet, just about a year later, Quartz reported that the Speed Trainers were”the hottest Sneakers in Fashion.” On Lyst, Speed Trainer were among the top-10 in search for the past 3 quarters.
The beauty of being hideous
Similar story with the Triple S: a monstrosity of a pair of sneakers with three soles. Once again, the disbelief at the design vaults it into the public consciousness. In the Triple S, some see shoes their fathers bought at Walmart in the 90s. On sneaker blog Hypebeast a video entitled “What People Actually Think of the Balenciaga Triple S Trainer” notched over 1 million views on Youtube. And the shoes are sold out all over the place; Instagram is full of them. High Snobiety says the Triple S dominated the luxury sneaker market in 2017.
There is another factor at play that Balenciaga is profiting from: ugliness. In contrast to his predecessor Alexander Wang, who was known for his tasteful and elegant designs, Gvasalia stands out through loud colors, atypical patterns and designs, as well as in-your-face placement of logos. For people seeking social prestige through their luxury brands, it is essential to stand out through items that jump out at you, and thus give the owner the much-coveted “profit of distinction” of high-culture like French sociologist Pierre Bourdieu identified in the 80s.
“I want to feel special”
Demna sees an unfortunate change in the luxury market where the focus has gone from quality and craftsmanship to a product’s uniqueness. “The younger generation are looking for something that stands out and makes them special rather than necessarily an amazing finish that you would find with some traditional brands.”
Compared to others on the luxury market, where a major challenge is coping with an aging target group, Balenciaga succeeds in reaching a younger generation. 65 percent of buyers are Millenials, according to CEO Cédric Charbit, the majority of which figure to reached on Instagram. When Gvasalia was hired, the #balenciaga hashtag on Instagram shot through the roof, as Instagram analytics tool InfluencerDB told OMR. In September 2017, there were roughly 3000 Instagram posts using #balenciaga, within eight months the number was 14,000.
High-profile influencers add the final push
A-list influencers like Kim Kardashian (famously married to first-generation Gvasalia fan Kanye West) and Kylie Jenner generate a massive boost in awareness and street cred. Figures from InfluencerDB put Balenciaga’s total media value in the past four months at over USD 1 million from the regular weekly posts on Instagram.
With a target group that keeps getting younger, pricing has also changed, CEO Charbit told the Financial Times. “They’re maybe not the generation who’d invest in a $3,000 jacket. But they might buy a $450 T-shirt.” The next Balenciaga product aimed at the target group is about to hit the market: a heretofore completely unknown pair of sneakers, whose design is reminiscent of hiking kicks.