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Balenciaga’s Breakdown: What Went Wrong and What Comes Next

Late Friday, the brand issued further apologies and abandoned its plan to sue a production company amid continued outrage in response to its recent holiday campaign.
Demna.
Late Friday, Balenciaga designer Demna and CEO Cédric Charbit issued personal apologies and abandoned the brand's plan to sue a production company amid continued outrage over a recent holiday campaign. (Getty)

Spray paint on stores. Slashed and burned products on social media. Accusations of promoting pedophilia on cable news.

This week, the risks of Balenciaga’s edgy approach to marketing became painfully clear — as did the errors of the company’s initial response to the crisis — as public outrage and confusion in response to the brand’s ads featuring children posing with BDSM-inspired teddy bears reached a scale not seen in the fashion industry since Dolce & Gabbana’s 2018 meltdown in China.

Late Friday, Balenciaga’s leadership issued personal apologies and said the company would drop a planned lawsuit against two external partners who had worked on its campaigns.

“I want to personally apologise for the wrong artistic choice of concept for the gifting campaign with the kids,” the brand’s creative director Demna said on Instagram. “I want to personally reiterate my sincere apologies for the offence caused and take my responsibility,” chief executive Cédric Charbit added.

The moves came after previous statements apologising for the campaigns had failed to quell the outcry. Though no major retailers have pulled Balenciaga products, by the end of the week, at least two Balenciaga stores — in key locations including LA’s Rodeo Drive and London’s Bond Street — had been vandalised and videos featuring people destroying the brand’s products circulated on TikTok.

What went wrong, and can Balenciaga get back on track?

What happened?

On Nov. 16, Balenciaga posted a holiday gifting campaign shot by Gabriele Galimberti, a photographer known for having subjects pose alongside collections of personal objects such as toys, guns and medicines. Balenciaga’s campaign featured children posing in bedrooms alongside spreads of the brand’s products spread out like toys. After a short period of positive buzz, the ads began to draw angry criticism for accessorising the children with the brand’s S&M inspired teddy bears in the intimate set-up, sparking accusations that Balenciaga was sexualising children.

The backlash grew as some social media users claimed to have found pedophilic messages embedded in another, separate campaign for Spring/Summer 2023 published weeks before, which featured Isabelle Huppert in an office scene. A legal brief spilling out of the actress’s bag turned out to be a Supreme Court decision regarding child pornography. A name on a fake diploma appeared to match that of a convicted abuser, and a book on the desk was about Michael Borremans, an artist whose works have depicted mutilated children’s bodies.

Balenciaga Spring/Summer 2023

A Tweet slamming the campaign went viral, particularly in right-wing social media circles where QAnon conspiracy theories are popular. On Nov. 22, the story was picked up by Fox News commentator Tucker Carlson, who accused the brand of openly promoting child pornography and sex with children. (Balenciaga says it condemns all abuse of children). Meanwhile, on the other side of the political spectrum, fashion news Instagrammers Diet Prada, known for its left-leaning callouts, condemned the holiday gifting shoot.

On Nov. 23, engulfed by a backlash on both sides of America’s political divide, Balenciaga apologised and pulled the campaigns, acknowledging in a brief statement that the teddy bears should not have been featured with children, and saying the company would “take legal action against the parties responsible for creating the set and including unapproved items.”

On Nov. 26 the brand offered a more detailed apology, after key brand ambassador Kim Kardashian addressed the scandal, saying she would “review” her relationship with the house. The brand cited “grievous errors for which Balenciaga takes responsibility” and took “accountability for our lack of oversight and control.” The brand condemned child abuse, promised to review its approval processes and said it was exploring plans to support children’s rights organisations.

Still, regarding the campaign featuring Huppert, Balenciaga said it would continue with its legal action alleging “reckless negligence” by third-parties involved with creating the images, which a complaint seeking $25 million in damages later revealed to be production company North Six and set designer Nicholas Des Jardins.

The apologies failed to calm the fury. Instead, online outrage boiled over into real world acts as stores were vandalised, though no retailers have said they would drop the brand.

Could things have gone differently?

Balenciaga’s response to the crisis was less than ideal in terms of speed and messaging, communications experts said. First Balenciaga was slow to provide a substantial response: a more complete apology, explanation and action plan than the brand’s initial statement would have been more effective on the first day of the crisis. By waiting days to more fully address the issue, the brand risked appearing like it wasn’t taking the campaign backlash seriously.

To be fair, the backlash was complex and unfolded in stages, making it harder to craft a stronger response. But Balenciaga’s multi-part apology only gave the crisis more oxygen, extending its newsworthiness. So did the brand’s legal action, which many in the industry saw as deflection.

Indeed, the legal complaint became a key blunder in the brand’s response: Balenciaga appeared to try and avoid taking full accountability for its central mistake — posing children with sexual objects — by defending itself from what it saw as unjustified attacks inspired by its more easily forgivable slip-up with the Huppert campaign: its failure to do exhaustive sensitivity checks on every object in a complex set design. In short, portraying itself as a victim of its contractors’ negligence detracted from the brand’s credibility when saying it was taking responsibility for the incident. “The brand appeared to be saying “not our fault,” crisis communications expert Mory Fontanez said.

Balenciaga also failed to sufficiently explain the intention behind its gifting campaign — and what, specifically, went wrong. “There’s a lot of fear around admitting with vulnerability the truth about the process,” Fontanez said. But being seen as incompetent may have been preferable to being seen as a proponent of child pornography. By explaining more fully its creative brief and process, Balenciaga might have reassured more consumers who were willing to see the issue as a misstep rather than something more malicious.

Where does Balenciaga go from here?

Apart from the apologies issued by Demna and Charbit, Balenciaga appears to be keeping a low-profile while it waits for the news to die down. The brand has abandoned plans to appear at several events, including BoF VOICES 2022 gathering and the upcoming Fashion Awards, while it says it is “closely revising its organisation.”

In Charbit’s statement Friday, the CEO said it had nominated an “Image Board” responsible for evaluating content including “legal, sustainability and diversity expertise” as well as hiring an external agency. No personnel exits were announced, but the company said it had “reorganised [its] image department to ensure full alignment with our corporate guidelines.”

But putting in place a culture that better takes public sensitivities into account, all while keeping up the volume and velocity of marketing that social media demands, could be challenging for Balenciaga, which has staked its success under creative director Demna on sparking controversy with designs and marketing that willfully push the limits of acceptability. The brand has sold destroyed sneakers and bedazzled platform Crocs, fuelling the kind of debate that drives social media algorithms. The brand has waded into riskier waters, too, marketing leather trash bags on models that appeared to reference refugees and casting rapper Ye to open its spring-summer 2023 runway show even as the entertainer was facing criticism for incendiary statements.

It’s still unclear how much of a hit Balenciaga’s sales will take from the crisis, or how long it will take for the uproar to subside. Backlashes previously faced by brands like Gucci and H&M over insensitive products and campaigns were relatively short-lived, although Dolce & Gabbana faced a longer road to recovery after issuing advertisements that appeared to mock Chinese people, spending millions on marketing before sales recovered. (As of 2021, revenues in China were still below 2018-2019 levels, despite growing 20 percent year-on-year, the privately-held company said).

Shares in Balenciaga-owner Kering closed the week up 4 percent compared to a 1 percent increase in the Stoxx 600 index. Investors don’t appear to be pricing in any severe or lengthy damage to fast-growing Balenciaga’s desirability following the incident (Analysts said shares were also supported this week by increased optimism about China loosening Covid-19 restrictions, which could lift sales for all Kering’s brands, including the larger and more profitable Gucci.)

At stores in London and New York on Thursday, Balenciaga stores indeed appeared to be operating normally, with similarly-sized queues as seen at neighbouring boutiques. Multi-brand retail sources, however, said demand for the brand has declined sharply, with some sellers receiving angry messages from customers and requests for reimbursement. That the scandal has coincided with the key holiday shopping season only makes matters worse. Even consumers who choose to forgive the brand may see its products as awkward Christmas presents.

“This is the nth example of how potentially dangerous this new era of frequent and two-way communication has become for fashion and luxury goods brands…[which] need to introduce safeguards and controls to make sure their messages are well received,” luxury analyst Luca Solca said. However, Balenciaga’s apologies “should produce good damage limitation,” Solca added.

Additional reporting by Malique Morris and Rachel Deeley.

THE NEWS IN BRIEF

FASHION, BUSINESS AND THE ECONOMY

A close-up shot of the H&M logo on a storefront.

H&M cuts 1,500 jobs as inflation hits demand. The Swedish fast fashion giant is the first big European retailer to announce layoffs in response to the current economic headwinds.

As Intermix changes hands again, brands seek payment. The contemporary retailer, which was sold by Gap to private equity firm Altamont Capital Partners in 2021, has signed a deal to be acquired by Regent, another private equity firm, after failing to pay vendors for fall orders.

Lanvin Group prepares for IPO. The Shanghai-based company is preparing to list on the New York Stock Exchange before the end of the year via a SPAC deal, in a bid to build a financial war chest that will support efforts to turn around its existing brands and fund future acquisitions.

Everlane secures $25 million loan from Gordon brothers. The investment firm historically specialised in liquidating the assets of bankrupt retailers, but has expanded into financial services and brand management in recent years. The moves comes after Everlane secured $90 million in financing in September.

Primark to invest €100 million in Spain, hire 1,000 employees. The clothes retailer will open eight new stores throughout the country. Last week, it announced plans to invest a similar amount in its store footprint in the UK.

Fear of God to open next chapter with large-scale fashion show for fans. The move is part of a growth push that includes opening the brand’s first flagship and expansion into women’s footwear and accessories, founder Jerry Lorenzo said at BoF VOICES.

THE BUSINESS OF BEAUTY

Aesop

Report: Natura working with Bank of America, Morgan Stanley on stake sale for Aesop Unit. Natura had earlier preferred an initial public offering for Aesop, but is now leaning toward a minority stake sale because of the unfavourable equity markets, according to people familiar to the matter.

Playa Hair Care founder sues Morphe and General Atlantic. Shelby Wild alleges plans to grow her line were sidelined soon after it was acquired as General Atlantic’s beauty incubator ambitions faltered.

PEOPLE

Ludovic de Saint Sernin To Design Ann Demeulemeester.

Ludovic de Saint Sernin to design Ann Demeulemeester. The brand is targeting a turnaround under owner Claudio Antonioli, who acquired the label in 2020.

Sidney Toledano named as president of the Chambre Syndicale de la Haute Couture. The chief executive and chairman of LVMH Fashion Group was elected to lead the Fédération de la Haute Couture et de la Mode’s haute couture body for a two-year term.

Report: Prada turns to ex-Luxottica CEO Andrea Guerra to ease succession. Prada is putting the final touches to a deal to hire the 57-year-old manager, who earlier this year stepped down as head of the hotels division at luxury goods giant LVMH, according to someone familiar with the matter.

Supreme creative director Tremaine Emory to guest design for Dior. The luxury brand will reveal a new capsule collection guest designed with Denim Tears, the label founded by Emory in 2019, during a show at the Grand Egyptian Museum in Cairo on Dec. 3.

Asos continues with finance chief search, interim CFO to leave. The group had already been searching for a new CFO after Mat Dunn stepped down on Oct. 31. It said on Friday that Interim CFO Katy Mecklenburgh will work out her notice period of six months after she was named CFO of Softcat.

BoF wraps up VOICES 2022 with celebratory gala. After three days of inspiring talks, guests closed out BoF’s gathering for big thinkers with a star-studded gala inspired by the underground art scene parties of 1960s New York.

MEDIA AND TECHNOLOGY

A shot of the Farfetch logo on a white background with blurred images of models in the background.

Farfetch stock plunges following 2023 forecast. Shares ended at an all-time low Thursday as the online luxury marketplace outlined the cost of unlocking revenue from new retail partnerships.

Compiled by Rachel Deeley.

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