Keeping Its Cool

NEW YORK — Diesel doesn’t seem to be running out of fuel.<br><br>In its 25 years in business, the company has managed to build an image of exclusivity and expand its volume without trading down in price. Market observers attribute this...

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NEW YORK — Diesel doesn’t seem to be running out of fuel.

This story first appeared in the April 24, 2003 issue of WWD.  Subscribe Today.

In its 25 years in business, the company has managed to build an image of exclusivity and expand its volume without trading down in price. Market observers attribute this feat to its European image; the fit and quality of its products; its quirky, aggressive and surprising advertising, and its distinctive, not-cookie-cutter stores.

“Diesel has managed to maintain cool integrity. It’s all about the marketing and the advertising. It’s always witty and off-kilter and intellectually engaging,” said David Wolfe, creative director of the Doneger Group. “They don’t sell denim by selling sex. They’ve had a different take from the beginning.”

Wolfe also believes that Diesel has maintained its strong image by making a product that’s not too overly styled. “The product has always been cutting edge without being scary. The clothes look good and are commercially viable. They have a foot in both camps. They have a cool image, but they deliver a commercial product.”

Since the company began in 1978, it has built a business that generates sales of $660 million, with $112 million coming in the U.S.

The U.S. has seen tremendous growth in the last three years in the high-end jeans market, with brands such as Diesel, Seven and Earl jeans popularizing designs that retail for $100 and up, and in some cases, convincing consumers to pay more than $200 for a pair of jeans. Diesel has benefited from this surge in demand, selling its jeans in America for more than $100, with some price points extending up to $195 and $225. The company encourages its customers to trade up to higher-priced products.

But Diesel’s popularity in the U.S. pales when compared with its profile in its native Europe.

“I honestly think they have a higher fashion cachet in Europe than in America,” continued Wolfe. “They didn’t diffuse down, but diffused up with Diesel Lab. They managed to maintain the image of pricey exclusivity. And the name of the brand is so right.”

Diesel StyleLab, launched in 1998, is an offshoot of the Diesel label. It’s a high-end casual collection highlighting innovative designs.

Wolfe believes that Diesel has enjoyed a longevity that other brands haven’t because they’ve never been the “in” jean of the moment. “I don’t think Diesel is aimed at the fickle fashionista. Diesel has a staying power that has never been red hot. It’s never been a flash in the pan fashion brand. It has more credibility than the ‘in’ and ‘out’ fast-forward jeans people,” he said.

Diesel’s image relies on its European flavor, which sets it apart from other contemporary and junior jeans brands.

“It’s a combination of fit, workmanship, quality and finishes,” said Kal Ruttenstein, senior vice president and fashion director of Bloomingdale’s. He also said Diesel’s European image “helps the brand.” He said Diesel Jeans sell well in the women’s contemporary department and the men’s departments at Bloomingdale’s, even with a Diesel store right across the street from Bloomingdale’s 59th Street flagship.

“I met Renzo Rosso [Diesel chairman] after the Chanel fashion show in Paris last month, and he told me he’s not in business to make money, but rather for the love of the job,” said Ruttenstein. That passion appears to be evident in every move he makes with the brand.

“Karl [Lagerfeld] wears them, and you couldn’t get a better model,” added Ruttenstein.

He pointed out that Diesel enters into strong partnerships, such as the one it has with Lagerfeld for the Lagerfeld Gallery denim line.

Fiona Firth, men’s casualwear buyer at Harvey Nichols in London, said the reason Diesel has been able to maintain its image of exclusivity and build volume without trading down in price is “the company is very focused and knowledgeable about the worldwide market. It has invested heavily in forging ahead with new techniques, particularly in the denim area with regard to denims and washing processes. This has meant there is always new product for the consumer.”

While she agreed that Diesel’s strong image is attributed to many factors, she said, “Product is king. If the product doesn’t work, it doesn’t matter how great the environment is. They are a very professional young company who really have their finger on the pulse and are not afraid to push boundaries.”

Carlo Pambianco, a luxury goods analyst in Milan, said Diesel’s strength lies in “innovative and unique product and communication, and the right store atmosphere, which reflects the company’s spirit.” In addition, Pambianco said Rosso is a symbol of the company, and has greatly contributed to the success of Diesel.

Serrano Bacetti, owner of the Enterprise jeans store in Florence, said he has carried Diesel since 1993, “a long time, considering this business.” Bacetti said that Diesel’s “dirty” wash at the end of the Nineties was a hit and contributed to the company’s success, and that the washes are still their forte.

“Although their collections include about 500 clothing items, Diesel’s denim is still the strongest product, and they are the best in this category,” said Bacetti. “Their washes continue to be very innovative, and they have a special sensitivity for them. They realized the fabrics are always the same and that the wash is what makes the difference.

“The fit is great, as well, and the company has expanded the women’s offering,” Bacetti said. He noted that Diesel’s bestsellers now are the “Hush” jeans for women, with a special silicone finishing. He believes the company’s medium to high prices are not a deterrent since that is where the action is now.

Sam Ben-Avraham, owner of Atrium, a 7,500-square-foot denim store in New York, said, “The customer for Diesel changes every day. We’ve been doing business with them for the past eight or nine years, and it keeps growing and growing. In all my years in business, I’ve never seen a company like that. I’ve seen companies go up and down. They reinvent themselves every season,” he said. He said they don’t do a single style until it’s dead. “It’s a whole new concept every season. They have amazing basic denim.”

Ben-Avraham said when it comes to denim, he’s able to sell Diesel’s highest price points. “We don’t carry the basic washes, we carry the fashion washes, which retail from $150 to $200.” He said the customer can be anywhere from her teens to her fifties. “She’s an NYU student, a graphic designer, and she can be a lawyer. It’s a big umbrella.” Ben-Avraham also noted that people love the advertising. “You can’t ignore it. It’s always in your face,” he said.

Marshal Cohen, co-president of NPDFashionworld, a market research firm based in Port Washington, N.Y., said, “They’ve got a panache about them. People think they’re a cool European brand.” He said what makes them distinctive is they have a healthy mix of freestanding retail stores and other retail accounts. “They have enough stores to maintain their image and they can be very selective about who they sell,” he said. “They’ve had slow, calculated growth.”

Diesel also reaches a broad age range of customers. Cohen said he’s seen kids as young as 13 and 14 buying its jeans, as well as adults in their fifties. “The sweet spot is the college kids and early-career customers,” he said. In addition, he said, Diesel’s stores are entertaining and they have become destination places, especially for tourists because the jeans aren’t available everywhere.

Cohen pointed out that Rosso hasn’t tried to bastardize his own brand. He said that brands such as Levi’s have tried to emulate Diesel, selling its Levi’s Red and Levi’s Vintage Clothing collections to specialty retailers, including Barneys New York and Sharon Segal at Fred Segal. Jeans in those lines retail for as much as $265.

“I think they’ve been very aggressive with their advertising, which has helped the brand,” said Alex Gonzalez, partner in A/R Media, a New York ad agency that does the campaigns for Valentino, Versace, Dolce & Gabbana and Escada. “It comes across as a European jeans brand for the U.S. market. They’ve been able to get that across. It’s not totally Euro, but it’s not home grown. For the American market, it has Euro appeal,” he said. “We’re living in a global market and it’s not Banana Republic or the Gap. It’s something other than that.”

He also said Diesel became very aggressive with its advertising when Levi’s was faltering.

“The American consumer is not sure where they’re coming from. They’ve been able to capitalize on the fact that they’re off the beaten path and they’re not apple pie,” said Gonzalez.

Explaining the brand’s award-winning advertising strategy, Maurizio Marchiori, vice president of marketing at Diesel USA, said: “We always try to shock people and to stimulate them. That’s the key issue. We don’t want them to think in our way, but we want them to start to think. Our language has always been irony.” He said the customer will question whether the ad message is true or whether the company is joking. “You try to give them a real message. If they disagree, at least they’ll think it’s funny,” he said. He said he wants the consumers to think: “This is a funny company, and this is my company. When they work in our stores, they find it’s amusing, too.”

Diesel’s ad campaigns won Grand Prix awards at the International Advertising Festival in Cannes in 1997 and 2001.

In fact, Mike Toth, president and creative director of Toth Brand Imaging, a Concord, Mass.-based ad agency, cited Diesel’s quirky campaigns in his new book, “Fashion Icon,” which comes out May 15. He believes the brand strikes just the right chord with young adults.

“I have four children, boys and girls, ranging in age from 18 to 24, and they all have a pair of Diesel jeans. It’s the jeans the kids really prefer. It’s not a Levi’s generation anymore. The promise of having a status denim jean that fits is really incredible. They keep the advertising fresh and surprising,” said Toth.

He believes even though the advertising is impressive, it’s not what sets them apart. “The kids know they fit and they like the D on the pocket. It’s the new Levi’s,” he added. “Diesel has become the utility jean of this generation that has grown up in pretty good time.”

Charles DeCaro, partner in Laspata/DeCaro, the New York ad agency that handles such clients as Harry Winston and Blackglama, said, “I own Diesel and I like their ad campaigns.”

Asked what about their image made him purchase a pair, he replied, “My studio is on Fifth Avenue and 13th Street, and the Diesel store is on 14th Street and Union Square. I buy them out of convenience.”

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