Gucci’s Balenciaga Hack Cements Streetwear in the Luxury Category – Sourcing Journal
A “hacking lab” may be the spark that helps reignite the Gucci fandom that dominated the luxury category for the majority of the 2010s. The Kering-owned label captured the fashion industry’s attention last week when it released the digital presentation for its Fall/Winter 21-22 collection called “Aria” that included pieces inspired by its conglomerate sister brand Balenciaga.
Not a collaboration—a point stressed in Gucci’s press release—the collection featured dual logo suiting and accessories as well as Gucci-fied Balenciaga silhouettes coined by the latter’s creative director Demna Gvasalia, who gave his blessing to the venture. Rather, Gucci creative director Alessandro Michele described the mashup of creative styles as a “hacking” that is “made of incursions and metamorphoses.”
While it remains to be seen if Gucci’s hacking will lead to a rebound in sales, there’s definitely market share to regain. After years of leading the luxury category in both sales and with its eclectic genderless aesthetic forged by Michele and manifested by celebrities like Jared Leto, Harry Styles and Gucci Mane, the Italian fashion house’s pace of sales began to wane prior to the pandemic. The decline sharpened in 2020, with revenue down 23 percent on the year due to store closures and missed tourism spending.
But given Gucci’s seal of approval, “hacking” may be the next buzzword to watch in the luxury category. Following the release of Aria, the New York Times called the term a “provocative idea to reframe what until recently was being called appropriation” and questioned if fashion hacking is the future. And just days later, Gvasalia bowed his hacking of Gap’s iconic logo in Balenciaga’s Winter ’21 collection. Bright pink and navy blue hoodies, T-shirts and caps featured the word “Gay” in the retailer’s signature collegiate lettering.
Balenciaga Winter 2021
Authorized and unauthorized hacking (like the “Satan Shoe” debacle between Nike and MSCHF), however, has been a part of streetwear for some time now and represents another way luxury is appropriating the category.
New data from retail analytics firm Edited underscores streetwear’s increasing presence in designer collections.
The category’s relaxed and comfortable styling posed an opportunity for luxury brands to cash in on quarantine fashion trends. With demand for suiting and dresses down, Edited said major areas of growth in luxury includes hoodies, “up a significant 70 percent in the number of styles stocked since 2019,” and women’s sneakers, which are up 35 percent.
In fact, sneakers are the top stocked women’s footwear style for luxury brands and continue to be the “breadwinning category” in men’s. On retailers’ standalone sites, Edited reported that sneakers make up 29 percent of shoes stocked over the past three months, with a 35 percent increase since 2019 when it was the third top-stocked shape.
Other notable categories to watch include luxury sweatpants and T-shirts, which make up the majority of products that are positioned as an entry buy-in to the brand. Edited reported that 64 percent of the tops currently priced at $500 and under are T-shirts and 63 percent of footwear in this threshold are sneakers.
“Streetwear is now fully integrated within luxury and is showing no signs of slowing down,” Edited stated.
Digitally native future
This casual influence on the luxury category is being driven by millennials and Gen Z, who will collectively account for about 60 percent of global luxury sales by 2026, according to Boston Consulting Group. Edited noted that U.S. Gen Z-ers, who currently wield the spending power of over $75 billion, are the “consumer group retailers of all sectors need to be talking to.”
As a result, luxury brands must be immersed in the values of these politically, environmentally and socially aware consumers. “They have grown up around digital and social technology, celebrate diversity and authenticity, alongside an unmatched geographic mobility,” Edited stated.
Luxury brands also need to accelerate their omnichannel strategies to win over younger cohorts, not to mention reconsider their selling strategies based on exclusivity—a quality counter to Gen Z’s insistence on inclusivity. “Brands with an ecommerce presence are able to extend their reach and grow their audience, helping nurture a future consumer who may not have felt comfortable shopping in a traditionally stuffy brick-and-mortar store,” Edited stated.
By establishing a digital footprint, brands can seize opportunities to experiment with non-fungible tokens (NFTs), or “unique digital assets” such as GIFs, virtual clothing and art, that are minted using blockchain technology. Though NFTs are most used by millennials, Gen Z is poised to be the next customer.
Brands, Edited reported, can create a “phygital” experience by offering an NFT as a digital twin to an actual garment, or create one-of-a-kind collectibles for the luxury consumer that couldn’t exist in the real world. “This can appeal to consumers at both ends of the pricing scale, serving as an entry-level buy to reach a new audience, such as Gucci introducing digital sneakers for $12,” Edited stated.
Price rebound
Despite the presence of more accessible streetwear items and the economic uncertainties forced by the pandemic, prices in the luxury market are increasing. “The $500 and under threshold is seeing its lowest investment compared to the previous two years,” Edited stated. “Retailers also aren’t operating in the $1,500-$2,000 bucket as much as they did in 2019.”
Instead, data shows a greater uptake in price points between $3,000-$4,000, and more products stocked at $5,000 and higher.
The higher prices stem from designers such as Gucci and Louis Vuitton making pricing amendments for handbags to offset raw material costs and combat first-half losses due to the coronavirus outbreak, as well as anticipating for post-pandemic splurges or revenge shopping.
Edited reported that the majority of handbags stocked online over the past three months were advertised between $2,000-$2,500, an upwards swing compared to the same period in pre-pandemic 2019 where $1,500-$2,000 was the dominant threshold.
“Luxury brands are also pushing deeper price brackets than previously seen,” Edited stated. In addition to there being more bags retailing between $2,500-$3,5000, handbags priced at $5,000 and higher make up 5 percent of products in stock compared to 3 percent in 2020 and 2019.
Higher prices may queue up the return of the “It” bag. Louis Vuitton’s Coussin PM handbag has been spotted by tastemakers, including Dua Lipa and Selena Gomez, Edited reported. Meanwhile, celebrities like Kendall Jenner have warmed up to the minimalist aesthetic of Prada’s Cleo bag—a theme that is on track to gain momentum into the fall.