The world’s biggest jeans-maker makes an unfashionable bet on the middle market
LEVI’S, the oldest and most popular brand of jeans, has seen better days, such as when Bruce Springsteen wore a pair on the cover of his 1984 album, “Born in the USA”.
It has also seen worse ones, such as in the mid-1990s, when it failed to make jeans that were defiantly baggy enough for urban teenagers. Sales of Levi Strauss, the 161-year-old parent company, peaked at close to $US8 billion in the 1990s; by 2009 they were about half that.
Things have since stabilised. In 2013 both revenues and profit grew for the first time in five years. But troubles that have dogged Levi’s since denim stopped being a statement and became merely a fabric have not gone away. Consumers are defecting to cheaper jeans, sold by “fast-fashion” retailers like Zara and H&M, and to trendier labels like Diesel and True Religion.
Among American men, Levi’s most important customers, there is a trend to greater formality at work: they are wearing tapered trousers to the office rather than 501s. There is another, more menacing trend, “athleisure”–wearing gym kit as everyday attire.
Its main practitioners are women, who would just as soon lounge around in yoga pants as in jeans. On July 8th Levi Strauss reported that net sales dropped by 2% in the second quarter, compared with a year earlier, partly because of a sharp fall in sales to American women.
With its gold-rush pedigree and rock’n’roll resonance, Levi’s exudes the sort of authenticity that most brands crave. But tradition is also a curse. A jeans-maker is unlikely to become a sportswear powerhouse like Nike, which has more than five times the sales. Nor can it easily branch out into dresses and blouses like its San Francisco neighbour, Gap. The brand is “trapped in its denim heritage,” says Ashma Kunde of Euromonitor International, a market-research firm.
One answer would be to redouble its bet on tradition by emphasising Levi’s American roots, shifting production back home and moving upmarket. That seems to have helped another Californian rock’n’roll legend, Fender, which moved production of some guitars back to its home state after a soul-destroying spell in the clutches of a media giant, CBS.
But that is not Levi’s plan. It is loth to raise prices, which would cede the middle of the jeans market to rivals like Wrangler. Instead, it is taking almost the opposite tack: a new marketing strategy shifts the brand away from rust-belt edginess and toward a cheerier mainstream.
For the past several years Levi’s has been urging consumers to “go forth” in chiaroscuro adverts that mention death, rough roads and a glimmer of light to show the way forward. In a Springsteenesque touch, Levi’s adopted a dilapidated steel town, Braddock, Pennsylvania, as the campaign’s mascot.
But it spoke more to a moody minority than to the fun-loving middle that Levi’s wants to reach. It has now dumped the campaign. A new one will focus on customers’ biographies rather than the company’s. People just wear jeans but they “Live in Levi’s”, it will say.
It will take more than a marketing fix to bring back the glory days. Chip Bergh, the chief executive, is chopping costs, perhaps to prepare the family-owned firm for the stockmarket. Just a quarter of its sales come from outlets it owns, including its websites; rivals sell women two tops per pair of jeans; Levi’s sells less than one.
Levi’s is trying to correct these imbalances, by opening more stores and by striking deals with sports teams like the San Francisco 49ers, hoping to sell more men’s shirts. There is growth to be had in China and India, tracts of which are still denim-less. Having tried and failed to launch a cheaper Denizen jeans brand in Asia, Levi’s is putting all its chips on the main brand, which is pricey by local standards.
It is also trying to become more “athleisurely”. New jeans for women add yogic stretch to the denim. A sporty cyclists’ version has cuffs that roll up to reveal reflective tape. Such innovations may keep Levi’s on trend. You won’t catch The Boss wearing them on his next album cover.
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