Chloé Fashion House’s Business Model Analysis

Executive Summary

Chloé’s business model is greatly effective. There is proof for its incorporation from the local to international phase with effective communication among different departments of the company. Successful brands continually strive to make high profits through the provision of innovative products and services to clients by upholding quality, discounts, and a variety of marketing approaches. This report discusses Chloé’s supply chain and recommends a menswear line. The company’s production line deals with the manufacturing of brands such as ready-to-wear clothes, accouterments, bags, and shoes. The retail approach is a highly valued channel of product distribution. With the intensified utilization of social media as a way of marketing communication for Chloé and other luxury brands, there has been the need to assess the impact empirically.

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Introduction

Chloé is a fashion house headquartered in Paris and it was founded in 1952 by Gaby Aghion. It is currently under luxury brands Holding Company and has been worn by numerous celebrities such as Madonna and Emma Stone to mention a few. Aghion believed that the then-existing fashion was extremely stiff and official thus opted for modifications and began to design clothes that she referred to as luxury and ready-to-wear (Mendes & Rees-Roberts 2015). This report elucidates and explores Chloé’s supply chain and proposes a menswear line. Chloé’s policy has turned out to be a great success in the market and has made other fashion houses follow suit.

Operations and Market

Chloé’s production line is concerned with the manufacturing of brands that include ready-to-wear clothes, shoes, accouterments, and bags. Under the value generation, the production line ensures that Chloé’s customers have a lifestyle marked by elegance, comfort, and luxury (Barthès 2006). Although Chloé has products for men, its major customers across the globe are extremely feminine, iconoclastic, well-traveled, and adventuresome. The age bracket of Chloé’s customers differs from one nation to the other although the company’s clients around the world are reasonably wealthy (Walker 2018).

Essential resources exist in different forms such as intellectual, monetary, physical, and human. Physical resources of the company encompass materials used in the creation of products in conjunction with showrooms, equipment, design places, and stores. Intellectual resources act as Chloé’s brand patents and copyright. Human resources are the most important in the Chloé fashion house since they form its labor force, which ensures that the company succeeds (Barnard 2007). The fashion house has placed a great significance on the training and development of its sales staff. The monetary resources of the company are facilitated by the support offered by Richemont, its parent corporation. Although Chloé has ensured the selection of the best person for every task, it has witnessed a high turnover of its creative executives.

Concerning the channel of product distribution, Chloé values the retail approach. This has resulted in the establishment of the company-owned boutiques, multi-brand stores, superstores, and point-of-sale counters. The company is represented in more than one hundred and thirty stores across the globe where it owns some and others are franchise entities (Mendes & Rees-Roberts 2015). Such stores are mainly found in the United States, Europe, and Asia while South Korea, the Middle-East, Japan, and China form a flourishing market. Additionally, more than five online stores are presently offering Chloé’s products and the company has made significant strides in acquiring a huge market share in China where it has a Chinese webpage for its customers.

The major operations undertaken by Chloé encompass designing, generating, developing, marketing, sales, and distribution. Import and export are also part of the company’s key endeavors, which assist it to uphold an international presence. Its main partners include Lamy, concerned with the provision of the corporation’s sunglasses, Iris, tasked with the delivery of shoes, and Coty Prestige, which has purchased the corporation’s beauty permit and is accountable for offering different types of perfumes. Consumer relationship is essentially exceedingly strong amid clients and sales personnel (Brannon 2010). Returning customers are marked in the database of loyal consumers and are given benefits that include an invitation for occasions, price reductions, and pre-sales to mention a few.

Concerning the income model, the corporation has two major channels that encompass wholesale and retail. The retail stream exists in the form of ordinary retail and direct retail, also called online sales. Direct retail accounts for about 40% of the revenue acquired through the channel while ordinary retail takes place in stores and brings a higher proportion of the income. The amount of revenue acquired through the wholesale channel is not certain when compared to its retail counterpart, but it is approximated to be close to three hundred million dollars each year. Fundamental bases of cost are manufacturing, branding, and retailing (Bruzzi & Gibson 2000). However, there are existing challenges for the corporation. Increasingly developing markets such as India and Brasil have not yet been explored. It is left to Chloé’s creative managers to tell how effectively new practices and struggle for market shares achieve the set objectives. Nevertheless, as the corporation contends with heightened resilience in its brand equity, the arising challenges are anticipated to be overcome through its carefully planned policies.

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Marketing and Brands

Luxury brands have existed as leaders in the fashion industry with their estimable aesthetic significance and striking yet traditional business administration. Nevertheless, the recent entry of various fashion houses in the luxury markets over and above decreased sales associated with economic downturns have resulted in increased challenges for Chloé (Kim, Fiore & Kim 2011). To overcome the recent unanticipated problems of aggressive competition, Chloé has shifted toward marketing communication with the help of social media. The application of social media platforms such as Facebook and Twitter has expanded to all marketing approaches of the company and has become its business expansion tool.

Chloé’s competitors include Calvin Klein, Charvet Place Vendôme, and A.P.C. Unlike Chloé, the competitors deal with menswear such as shirts and suits. This gives them outstanding brand objectives and policies. Concerning the points of parity (POP), all the four brands are in the luxury fashion industry, provide a significant degree of prestigiousness and social status and remain reasonably priced for the middle and high-income groups (Kim, Fiore & Kim 2011). Additionally, they all employ a multi-channel distribution approach that includes online stores and physical storefronts. The points of difference (POD) for Chloé’s products are that they are more trendy, fashionable and quality than those of its competitors. In a positioning map, Calvin Klein, A.P.C., and Chloé offer quality products at a high price. Charvet maintains low prices for its high-quality products.

Positioning map.
Fig. 1: Positioning map.

Preliminary studies have been undertaken to draw samples of luxury fashion brands such as the products offered by Chloé. The data was obtained from luxury brand customers through interviews. The aspects of social media marketing studies encompass customization, entertainment, interaction, inclination, and communication. Multiple regression analysis established that entertainment has a considerable positive influence on trust, intimacy, and intention to buy. Other constructive results encompass the influence of customization on trust, the impact of interrelation on the intention to buy, intimacy generated by communication, and inclination based on confidence. It appears that customization, entertainment, and inclination gratified customers’ anticipation for luxury fashion brands (Schroeder & Salzer-Mörling 2006). Since Chloé seeks to offer value to clients in all possible approaches, its products and services have tended to center on the provision of entertainment content at no cost, tailored services, and improvement of social media use, which are inclined toward facilitating customer relationship.

Marketers in the Chloé fashion house have established a considerable connection between trust and purchase plan. Since the confidence variable in the relationship with customers is considerably linked to purchase intention, the mediating influence of customization and inclination play a vital role (Welters & Abby 2007). Effective marketing by Chloé has shown successfulness of social media marketing on consumer relationships and intention to purchase hence creating an approach of facilitating performance through the definition of particular factors of influence. All the elements in Chloé’s social media marketing strongly sway customer affiliations and persuade them to buy (Bashir & Verma 2017). Such practices, in addition to the facilitation of communication amongst customers, provision of tailored services, issuance of exciting content, and reception of genuine information based on the best interest create an entertaining ambiance.

Chloé does not currently major in outstanding fashion brands for men. The products for men that the company provides are based on both what is and is not fashionable about style. The designers should realize that men do not regularly shop and when they do, they are inclined to products that best suit them. With this understanding, the company should establish a game plan after thoroughly identifying excellent designers for men’s clothes that will make them look good everywhere (Turunen 2015). This calls for majoring in numerous fashion lines for men’s products for the company to guarantee a broad scope of elegant, modish shirts, suits, pants, and accessories for fashion-sensitive gentlemen.

It is difficult to defy the ethical appeal of eco-friendly products. In the new menswear line and its other products, Chloé should seek eco-friendly distribution as a way of protecting generations to come. Nevertheless, sustainable and eco-friendly products usually come with a high price tag, which may compel Chloé to weigh the concerns of ethics against affordability and demand (Welters & Abby 2007). Although it is laudable to produce sustainable brands concerning environmentally conscious clothes, they are often not easily accessible. They necessitate careful sourcing and choosing materials, which encompass sustainable fabrics like organic cotton. Key countries for production include Austria, Denmark, China, Finland, Germany, Hong Kong, Italy, Japan, Sweden, Switzerland, Taiwan, the Netherlands, the United Kingdom, and the United States. In its critical path method, Chloé seeks to deliver all its fashion brands on time since the management understands that good product offered early outshine amazing ones supplied late. To succeed in this endeavor, managers in the company remain focused, challenge employees to prioritize crucial tasks, and learn lessons from past mistakes for enhanced improvements.

Fashion theorists are convinced that brands are a depiction of social, monetary, cultural, and political variations and should articulate modernity while representing the feeling of the times. Drucker’s theory of business offers valuable management thoughts that challenge a company’s performance. What has led to the collapse or failure of once large and successful corporations around the world is the fact that their theory of business does not work anymore. A successful theory of the business such as the one employed by Chloé has three fundamental segments. The first component is anchored in suppositions concerning the environment of the organization, for instance, society, the market, consumers, and technology. It describes things for which a company is paid. The second part holds assumptions of the mission of the company; what an organization deems meaningful practices for its success (Pentina, Guilloux & Micu 2018). The third element entails presuppositions of the core competencies necessary to realize the company’s mission. This establishes areas in which organizations should excel to maintain a competitive benefit. Researchers should thus seek to establish the pointers of a stagnating theory and the best approach of rethinking it while taking effective measures to modify strategies and operations in the supply chain.

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Conclusion

Chloé fashion house is under luxury brands holding Company and numerous celebrities have endorsed its products. This report has explored and given details of Chloé’s supply chain. The company’s policy has turned out to be a great achievement in the market and has made its competitors follow suit. Social media marketing and the satisfaction of the needs of customers have made Chloé one of the leading organizations in the fashion and luxury brands industry. To maintain a leading position, the company should work diligently towards upholding only the trendy and classic brands for women, men, and children. Moreover, the company should focus on offering quality products within an environmentally friendly and sustainable capsule variety at low prices.

Reference List

Barnard, M 2007, Fashion theory: a reader, Routledge, London.

Barthès, R 2006, The Language of fashion, Berg Publishers, Oxford.

Bashir, M & Verma, R 2017, ‘Why business model innovation is the new competitive advantage’, IUP Journal of Business Strategy, vol. 14, no. 1, pp. 7-11.

Brannon, E 2010, Fashion forecasting, 3rd edn, Fairchild Books, New York, NY.

Bruzzi, S & Gibson, P 2000, Fashion cultures: theories, explorations and analysis, Routledge, London.

Kim, E, Fiore, A & Kim, H 2011, Fashion trends: analysis and forecasting, Berg Publishers, Oxford.

Mendes, S & Rees-Roberts, N 2015, ‘New French luxury: art, fashion and the re-invention of a national Brand’, Luxury, vol. 2, no. 2, pp. 53-69.

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Pentina, I, Guilloux, V & Micu, A 2018, ‘Exploring social media engagement behaviours in the context of luxury brands’, Journal of Advertising, vol. 47, no. 1, pp. 55-69.

Schroeder, J & Salzer-Mörling, M 2006, Brand culture, Routledge, New York, NY.

Turunen, L 2015, ‘Challenging the hierarchical categorisation of luxury fashion brands’, Nordic Journal of Business, vol. 64, no. 2, pp. 119-138.

Walker, R 2018, Why fashion brands all seem to be using the same font, Web.

Welters, L & Abby, L 2007, The fashion reader, Berg Publishers, Oxford.

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StudyCorgi. (2021, July 26). Chloé Fashion House’s Business Model Analysis. Retrieved from https://studycorgi.com/chlo-fashion-houses-business-model-analysis/

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