It’s been nearly three weeks since Balenciaga got embroiled in a public relations crisis involving ads many accused of explicitly and implicitly conveying messages about the exploitation of children. It threatens the very future of the 100+-year-old brand.

Public outrage was swift and brutal, while Balenciaga’s was slow and feeble. And as of this posting and after a request for comment, Kering, the $19 billion conglomerate that owns the brand, has silently stayed behind the scenes.

For a company that states its strategy is “uniting audacity, authenticity and responsibility,” Kering’s lived up to its audacity promise. Yet, it has ignored its responsibility, reminiscent of Nero fiddling while Rome burned.

Balenciaga has been a rising star in Kering’s portfolio of six legacy fashion brands, including Gucci, Saint Laurent, Bottega Veneta, Alexander McQueen and Brioni. In addition, the company also owns Boucheron and three other prestige jewelry and nearly 20 luxury eyewear brands.

It is also one of the three multi-national conglomerates that control about one-third of the $300 billion personal luxury market. LVMH is the largest, generating $68 billion in its last fiscal year, with 75 brands or houses, including 14 fashion brands, notably Louis Vuitton, Christian Dior, Givenchy, Celine, Fendi and Marc Jacobs. Richemont, most heavily invested in jewelry, is the other with 26 maisons and $20 billion in revenues.

Here’s a timeline of the crisis:

A Long Two+ Weeks

On November 16, a little over two weeks ago, Balenciaga opened its gift shop featuring products from its Spring/Summer 2023 collection. Several images in the campaign unleashed a media firestorm.

One showed children posed with bags featuring teddy-bears dressed in S&M bondage gear; the other a handbag in an office sitting on a pile of papers with a page from a Supreme Court ruling related to child pornography on top. Two different photographers shot the images.

Accusations of child exploitation resulted, and it took the company a week to respond. On November 22 the company took down the teddy-bear images and issued a brief apology.

A few hours later, it issued another apology for displaying “unsettling” documents in the other ad and threatened legal action against the “parties responsible for creating the set” that featured “unapproved items.” That image was also removed.

The public outcry continued, and then the industry began to turn on Balenciaga. Kim Kardashian, its most celebrated celebrity influencer, issued a statement on November 27 that she was “reevaluating” her relationship with the brand. The next day the Business of Fashion revoked its Global Voices 2022 Award to Demna, Balenciaga’s creative director.

Another longer apology followed on Instagram the same day, November 28, this time signed by Balenciaga president and CEO Cédric Charbit, claiming the company takes responsibility for the series of “grievous errors” and said the company is taking steps “to prevent this from happening again.”

Then Charbit took to Instagram again on Friday, December 2, with more specifics about future actions to ensure its content aligns with “corporate guidelines” and promised the company will learn from its mistakes. He also rescinded the decision to pursue legal actions and instead said the company had set aside a “significant fund” to donate to organizations in the name of protecting children.

Also, that day, Demna broke his silence and issued an apology, starting with a most peculiar statement, “It was inappropriate to have kids promote objects that had nothing to do with them.” His mistake was making the “wrong artistic choice of concept for the gifting campaign with kids.”

Even more peculiar is that the company’s and Demna’s Instagram posts have restricted comments, challenging their claims they want to “listen” and “learn.”

And most peculiar of all is that Kering has let its Balenciaga brand crash and burn without lifting a hand.

Too Much Creative License

Having worked inside the luxury industry for years and as a strategic advisor most recently, though with no personal experience with Balenciaga, Susanna Nicoletti believes the problems stem from the high regard placed on creatives within the luxury corporate culture who largely operate without effective management oversight. Nicoletti is also author of the book, Luxury Unlocked.

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“It seems like the luxury brand creative directors live in an ivory tower where they develop their own vision of the world that is totally separated from that of the real world,” she said. This applies especially to Demna, who lives and works in Switzerland and reportedly only commutes to Balenciaga’s Paris offices once a month.

“There needs to be more internal controls. Creative directors must be part of the team and reflect the values of the brand. They need to be managed,” she continued. “They are not owners of the brand or the company.”

Nicoletti doesn’t dispute the value of being provocative in one’s creative expression, but corporate management needs to put guardrails in place to prevent their provocation from becoming too extreme, insensitive and tasteless. “Creative directors have to follow brand strategy, not the other way around,” she said.

And she further questions other creative choices Demna has made recently, such as Kim Kardashian wearing the Balenciaga yellow caution tape bodysuit and appearing at the Met 2021 ball covered head to toe in a faceless black outfit.

“Balenciaga has been disturbing even before the teddy bear ad. It’s been full of negativity and darkness, almost post-apocalyptic,” she said, adding, “Fashion should entertain. It can be an incredible strategic tool to leverage to make the world a better place. But it should be uplifting, beautiful, a work of art.”

As bad as the lack of corporate management on the front end has been, the conspicuous lack of management of the controversy on the back end is more so.

“The parties involved have been tone-deaf, and considering the size of the parties involved, it cannot take two weeks. These are very serious charges that demanded immediate, appropriate action, including someone taking charge from Kering. This is going to go down as one of the worst examples of corporate crisis communication in history. It’s inexcusable,” she stated.

Brand Value And Reputation Are At Stake

Reflecting on what Kering, Balenciaga and other luxury brands need to learn from this experience, Dr. Martina Olbert, founder of Meaning.Global and a leading authority on brand meaning, sees two important takeaways:

“The first thing is how fragile your reputation and perception are as a brand – especially for a luxury brand – and how volatile they can be due to cultural missteps. No brand how ever celebrated, with heritage and legacy, is immune to the drastic shifts in consumer sentiment when it makes a misstep of gargantuan proportions like this.

“The second thing is how interconnected the perception is between Balenciaga as a portfolio brand and Kering as its holding company. You cannot be a pioneer of sustainability and lofty social and environmental ideas for future generations and then do the complete opposite and disrupt these social values by targeting children who represent the future generations we want to protect,” she said.

Noting that responsibility and sustainability are key words in luxury today, she concluded:

“Kering’s CEO François-Henri Pinault said: ‘luxury and sustainability are one and the same’. The individual brand strategies need to reflect that. Sustainability is about respect. Luxury brands and their parent companies need to be managed holistically as connected ecosystems of cultural value, or their whole sustainable strategy simply doesn’t make sense.”

Taking The Heat Off

While prevention is the best cure for a PR crisis, corporations have learned the hard way how to manage them. Guidelines are available widely in the literature and numerous firms specialize in guiding companies through them.

Inexplicably, Kering has failed to intercede appropriately to protect one of its prized legacy brands, though maybe that was by intention. The Balenciaga controversy has taken the spotlight away from what would have been equally challenging news for Gucci, Kering’s most prized legacy brand, which accounts for 57% of revenues.

On November 23, the company announced that its famed creative director Alessandro Michele was stepping down.

“There are times when paths part ways because of the different perspectives each of one of us may have,” Michele said in the company statement. That leaves more questions about why his “extraordinary journey” with Gucci ended on that day.

And it leaves even bigger questions about the future sustainability of Gucci brand under new creative direction. But nobody is talking about that.

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