MKT3063 AS1 E-PORTFOLIO
A STEEPLE analysis table (Appendix 3) identifies the current macro-environmental trends impacting Balenciaga and evaluates the influence of external forces (CIPD, 2023) to discover opportunities and threats (PR Smith, 2022), and anticipate implications for the luxury brand.
SOCIAL FACTORS
The socio-cultural forces that are presently affecting Balenciaga include the lifestyle trends of: return to business attire (Lambert, 2023), ‘frictionless’ buy now pay later (BNPL) solutions (Butler-Young, 2022) and ‘quiet luxury’ (Archer, 2023). However, the most impactful social factor influencing the luxury fashion sector is the demand for ‘diversity, equity and inclusion (DEI)’ (WARC, 2022). In particular, luxury consumers support brands that align with the ‘people’ pillar of sustainability, especially in relation to authentic representation of body positivity, gender and ethnicity (Euromonitor, 2022). Therefore, it is advised that Balenciaga prioritises DEI efforts externally and internally (Onwuzulike et al, 2022) in order to re-invigorate the brand and create value for stakeholders (Moriarty, 2022); with a focus on size-inclusive (Sender Ceron, 2022) fashion campaigns.
TECHNOLOGICAL FACTORS
The most prominent technological advancements that are shaping luxury fashion involve: the metaverse, VR, AR, and AI (Brooke, 2022). A study by GWI (2021) highlights that 78% of fashion and jewellery buyers demonstrate interest in participating in the metaverse (Connell, 2022). In addition to this, AI and AR also present exciting opportunities for luxury retailers to capitalise on digital fashion through 360° visualisation (Balchandani et al, 2022) and virtual try-on technology (Douglass, 2023). Therefore, Balenciaga should integrate both Web3 systems and AR into future brand communication across multiple converging channels (Pangarkar, 2022) in order to enhance consumer experience (Joy et al, 2022).
ECONOMIC FACTORS
The most influential macroeconomic forces that are currently impacting Balenciaga consist of: rising inflation (Hamdan et al, 2022) and the cost of living crisis (Shepherd, 2023). Vogue Business (2023) reports that 30% of luxury consumers expect to shop less for designer purchases. Furthermore, a study conducted by KPMG (2022) states that ‘entry-level’ products should not outprice aspirational consumers. Contrastingly, wealthier luxury consumers prove to be relatively unaffected by the soaring prices of premium fashion products (Naidu et al, 2022). Therefore, it is important for Balenciaga to consider an appropriate pricing strategy to reflect the effects of economic instability on different consumers (Arden et al, 2022).
ENVIRONMENTAL FACTORS
The environmental factors effecting Balenciaga’s operations and ESG policies are sustainable textile innovation (Rese et al, 2022), the rise of resale and rental markets (Deeley, 2022; Smith, 2022) and greenwashing (Feldwick, 2022). In particular, the popularity of circular fashion presents an opportunity for brands to support sustainability objectives (Beauloye, 2023), as millennials and Gen Z adopt second-hand luxury 2.5x faster than other demographic segments (ThredUp, 2023). Therefore, Balenciaga could adopt a ‘slow’ fashion business model with a transparent supply chain network in order to build brand trust (Sheterline and Blackbourne, 2023).
POLITICAL FACTORS
The primary political factor impacting Balenciaga is geo-political instability (Grant and Haider, 2023), especially as a result of Russia’s military invasion of Ukraine (Rydzek, 2022). Luxury market analysts state that the direct impact of the conflict on global luxury sales will be limited (Williams, 2022). However, certain retail experts believe that the war could have a negative effect on consumer sentiment and industry recovery (Pusz, 2022).
LEGAL FACTORS
Legal forces that are influencing the luxury fashion sector involve advertising laws (ASA, 2022) and legislation surrounding sustainability (GOV.UK, 2021). In November 2022, Balenciaga filed a lawsuit accusing the North Six production company of ‘inexplicable acts and omissions’ over the controversial advertising campaign that involved Supreme Court case documents relating to child pornography (Clark, 2022). However, in December 2022 Balenciaga released a statement revealing that the luxury brand would ‘not pursue litigation’ (Diaz and Schwartz, 2022)
ETHICAL FACTORS
The most important ethical factors for Balenciaga to acknowledge are corporate social responsibility (Vock, 2022), equal pay (Dirvanauskas, 2023), and animal welfare (Achabou et al, 2020). In particular, Balenciaga should continue to enhance CSR communications with ethical messages relating to both human and environmental sustainability (UN, 2023) in order to encourage positive eWOM associations (Youn and Cho, 2022).