A long-awaited revolution in the jeans business has begun, somewhat quietly. After years of sales declines, Levi Strauss & Co. said in October it would begin producing a mass-market line for Wal-Mart Stores Inc.

The line officially launches at the Bentonville, Ark.-based chain’s 2,850 U.S. locations on July 22, but last month Levi’s began sending small batches of Levi Strauss Signature jeans to select Wal-Mart units to test its distribution systems before the full rollout.

In developing Levi Strauss Signature, executives at the San Francisco-based firm began walking a tightrope. They were adamant they were not going to open distribution of core Red Tab products to the mass giant, because of the line’s opening price points of about $30 that are higher than what Wal-Mart charges for jeans and out of concern that Levi’s other customers wouldn’t want to go head-to-head with the world’s largest retailer.

So the Signature line doesn’t bear the distinctive Red Tab, pocket arcuate or two-horses leather patch that have been the brand’s trademarks for more than a century. The identifying marker on the new collection, which will retail jeans for $23 to $26, is a leather patch bearing a replica of the Strauss signature from an old sales invoice.

When the jeansmaker released its second-quarter results, it revealed it had already built up more than $10 million of inventory for the new line as it readied for the launch and that it had invested another $10 million in infrastructure.

“Levi Strauss Signature has a very promising future and in short order it will be a major…international…brand that is an important part of our overall company sales,” said president and chief executive officer Phil Marineau.

Levi’s officials have said they expect the business to generate “hundreds of millions” of dollars in annual sales and industry sources have said it could quickly reach the billion-dollar mark.

Marineau also acknowledged that, given the lackluster retail environment, the Wal-Mart launch is the main reason Levi’s is expecting sales growth in the second half of the year.

Levi’s officials have emphasized that they believe they have to sell to the mass market because of its huge sales potential. Statistics illustrate the sector’s strength in denim: Last year the average price paid for a pair of women’s jeans in the U.S. was $23.35, according to STS Market Research of Cambridge, Mass. Wal-Mart alone claimed 10 percent of the $5.26 billion spent on jeans by American women over the age of 13, also according to STS.Officials at VF Corp., the world’s largest apparel company and Levi’s biggest competitor in the mass channel, contend they’re not worried about the new competition.

“First of all, our customers tend to cross-shop anyway, especially females. They have been buying Levi’s and Riders, and Wrangler and Lee across many channels of distribution,” said Angelo LaGrega, president of Greensboro, N.C.-based VF’s mass market jeans brands, a portfolio that includes Riders, Wrangler and some Lee business. “In some ways, we think long-term it’s going to help the whole industry.”

He explained that VF’s research shows that only 40 percent of shoppers at mass-market stores buy jeans there, adding, “by getting brands like Levi’s and competing with brands like Riders, it brings more people into the apparel area.”

He denied claims by Levi’s officials that VF has been trimming prices on some of its mass-market products in advance of the arrival of Levi’s Signature at Wal-Mart.

Levi’s brings a powerful asset to the game: the most recognized jeans brand in the U.S. and probably the world, according to most sources. The biggest question will be its ability to fulfill Wal-Mart’s potentially massive orders on time.

One of the contributing factors to Levi’s six-year sales slump was a breakdown in its distribution procedures in the late Nineties. Levi’s officials said they’ve fixed those problems, but they also acknowledge that the Signature business is a massive undertaking.

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