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Surfing The Slowdown

NEW YORK — “If at first you don’t succeed, try again. Then quit. There’s no use being a damn fool about it.”<br><br>The legendary comedian W.C. Fields’ misinterpretation of an American maxim sums up the approach...

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NEW YORK — “If at first you don’t succeed, try again. Then quit. There’s no use being a damn fool about it.”

This story first appeared in the July 17, 2003 issue of WWD.  Subscribe Today.

The legendary comedian W.C. Fields’ misinterpretation of an American maxim sums up the approach some jeans companies are taking to the current slowdown in consumer demand to denim, while others are sticking to the more traditional “try, try again” version of the philosophy.

The last several years were a period of strong growth in the category, a time when dozens of brands jumped into the jeans pool, many crowding into the extreme high end of the business, pushing dungarees that retailed for well over $100.

But executives agreed that, for a slew of reasons, some economic and some fashion driven, the nearly $5 billion jeans business has gotten a lot tougher in recent months. For some brands, primarily sportswear companies for which jeans labels are chiefly a matter of market segmentation, there’s a simple answer to the slowdown. They increase their assortment of nondenim bottoms, adding more khakis, cargo pants, corduroys and other looks.

However, officials at other companies contend their veins run blue with indigo dye and the denim business is the only one they know, which means the slowdown must simply be weathered. They take comfort in the notion that fashion sectors tend to be cyclical and that denim has never fallen out of favor with American shoppers since it worked its way into the wardrobe more than a century ago.

For those that are keeping their bets on denim, there’s a lot of disagreement about how best to manage the downturn. Some contend that, after burning through trends including superlow-rise jeans, resin coatings and wildly abusive washes in the past two years, consumers are ready for something a little simpler, which means it’s time to return to classic five-pocket jeans.

Others argue that the only reason sales are slipping is because consumers are growing bored with the category, which means it’s time to push the envelope even further, turning out more extreme looks in limited quantities to create an air of exclusivity.

Michael Silver, president of Western Glove Works, the Winnipeg, Manitoba-based maker of Silver Jeans, said he believes consumers were overwhelmed by watching brands churn out “new styling every month, week and day.”

“It tended, by sheer variety, to make everything look the same,” he said. “Nineteen-dollar jeans looked similar to the $190 jeans when all the bells and whistles were everywhere. And we were part of that, trying to come up with new ideas all the time. The consumer got so confused and spent so much time over the last 1 1/2 to 2 years wearing fashion jeans and facing the obsolescence every month that they really came back to wanting the more basic type of products they could live in.”

Paulette McCready, president of New York-based Nautica Jeans Co., offered a similar assessment: “Consumers have been bombarded with denim options in recent years, making it difficult to portray denim as a novelty.”

From these similar conclusions, the two companies chose opposite courses of action.

Nautica Jeans has tweaked its assortment to provide an even split between denim and nondenim bottoms, McCready explained. While the company continues to work on new denim details — in particular, promoting a “Dimensional Denim” look with baked-in wrinkles — the company also has boosted its offering of chinos, corduroys and utility styles. McCready said she expects the brand’s jeans sales to be flat through the back half of the year, with growth coming from nondenim looks.

Silver, on the other hand, concluded that getting into nondenim bottoms would only serve to cloud his brand image.

“I can only go so far with that,” he said. “I can show an item-and-a-half [of nondenim bottoms]. I have to leave that to the sportswear players who are much more mobile. I am going to stay more in the denim side.”

The alternate-route approach is a common one among the status brands. At New York-based Polo Jeans Co., produced under license by Jones Apparel Group, president Bubbles Bott said, “We have some chinos in the marketplace right now and cargo long bottoms that have done very well for us.”

She said the brand had built up nondenim bottoms to represent 12 percent of its assortment.

“A year ago, it was zero nondenim,” she said. “This year, it’s not a huge amount, but it’s significant enough to make a difference.”

Among companies that are sticking with their the denim focus, there’s no consensus on fashion direction.

At Mavi America Sportswear, executive vice president of sales Ron Gelfuso said the New York-based company is tightening its assortment and focusing on more basic looks.

“We are becoming much more five-pocket oriented,” Gelfuso said. “I know that sounds like an oxymoron, since we’re a five-pocket company, but we’re focusing more on our core business rather than on the momentary fashion elements that had been so important for the last two years. Rather than having lots of bodies and a wide variety of finishes, we’re looking at more in the five-pocket silhouette.”

He said Turkish-owned Mavi has reduced its overall number of stock-keeping units for fall by about 30 percent, a move that allows a tighter fashion focus and makes it possible to more closely manage inventory at a time when retailers are trying to work with minimal stock.

Diesel USA Inc. is pushing harder on the fashion front and offering more limited-run styles, though Andreas Kurz, chief executive officer of the Italian company’s U.S. arm, acknowledged that the fashions are more subtle.

“The washes are pared down from what they used to be, they’re less aggressive,” he said. “People right now seem to look just for an easy model, with a nice wash, but nothing too much out there.”

The problem with more toned-down looks, he acknowledged, is that they don’t call attention to themselves on the selling floor in the way that outrageous styles can.

“The curb appeal, or whatever you call it, they don’t have that so much anymore,” he said. “It’s more difficult to be unique and different when everybody is softer and lighter. We pay more attention to details — for example, using different-sized buttons.”

The company’s gotten a good response to its launch of limited-edition styles, which are produced in small runs and sold at its chain of 25 U.S. stores, as well as through selected wholesale accounts.

“What has changed now is that we used to do a big amount of business with what we called ‘never-out-of-stocks’ and more basic items,” Kurz said. “Those don’t seem to have as much appeal as they used to. They’re more looking for newness and individuality. The life cycle of the washes and fits becomes shorter. It’s not so much about the price points, it has to be unique, individual, limited edition. People are responding to that very much.”

Even companies known for their basic products are tweaking their lineups. At Levi Strauss & Co., the 501 style — for many the look that defines basic blue jeans — is getting its first tune-up in a decade, as the fit is tweaked to resemble how the jeans looked in the 1950s.

“We’re seeing a pickup worldwide in our 501 business,” said Phil Marineau, president and ceo of the San Francisco-based company, which has been fighting sales declines for the past six years. He called the look the “new classic 501,” which will slouch slightly lower on the hips and be slightly looser than the fit the jeans have had since 1993.

Tampering with a classic can backfire on companies, as Coca-Cola learned in the Eighties when it rolled out New Coke, which was soundly rejected by consumers. It’s an example that’s familiar to Marineau, who worked at Pepsi prior to joining Levi’s in 1999.

But Marineau emphasized that the changes would be subtle and that Levi’s didn’t plan to promote them to consumers, but simply allow the new 501s to trickle out into stores.

“The 501 has been here for 100 years, and we’ve had various fits, not different styles, but fits, over time. And we’ve gone back to one of the classic fits from the 1950s, which in this day and age seems to be a real spot-on fit,” he said. “We’ve tested this extensively, particularly with 501 users. We’ve had absolutely no complaints from loyal 501 users.”

Levi’s also is rolling out for fall a more subtle version of its Type One Jeans, a look with exaggerated details like oversized buttons and extra-bright stitching that launched in the U.S. for spring retailing, but did not meet the company’s expectations. Marineau said the firm is releasing a version of the jeans in a basic stonewashed fabric, which Levi’s thinks will appeal more to consumers than the rigid, dark and coated versions that hit stores in the spring.

Jeans executives also emphasized the slowdown in the category is not an across-the-board phenomenon. In recent years, the strongest growth came in the junior segment and among vendors of jeans retailing for $100 and up. Those categories are now the areas seeing the steepest slowdown.

“There’s a major disconnect between what happens in a lot of those big inner cities and what’s really happening across the American people,” said Angelo LaGrega, president of mass-market jeans at Greensboro, N.C.-based VF Corp. “People focus on the runway and high fashion, but this is a big, mass business. In this industry, we tend to focus more attention on the sizzle and not so much on the steak.”

In recent years in the junior bottoms business, he added, “we got to the point where denim might have been 70 to 80 percent of the assortment. That was highly unusual, something we’ve never seen before.”

While that business is now slowing, he said the misses’ segment has remained stable, as lower-rise styles and stretch jeans continue to make their way into the mass channel. He also noted that the plus-size jeans category is enjoying strong growth.

At the companies that have ridden the tidal wave of demand in the junior business over the past few years, executives are now looking for ways to consolidate their position.

At New York-based Mudd Inc., president Dick Gilbert said he’s looking to do just that by ratcheting up the brand’s advertising pitch.

“We’re spending a lot of money on television. The product is still very solid and we want to promote the brand a little bit,” he said. “We did a little bit last year. We’re doing five times as much as last year.”

Last year the company ran a $600,000 campaign on cable stations and this year, Gilbert has upped the ad budget to $3 million, he said.

“I want to get this brand as an icon brand,” he said.

Overall, executives agreed that following a boom period when it seemed that almost anything blue with two legs and a low waistband would sell, they’re going to need to get more creative in their marketing approaches to keep sales strong through the coming season.

“Consumers are very intelligent and I think it’s very difficult to market in traditional ways to these end consumers,” said Andrew Pollard, director of sales and marketing at Sixty Inc.’s New York office. “What’s happening is, girls really want to be individual.”

“There’s a major disconnect between what happens in a lot of those big inner cities and what’s really happening across the American people,” said Angelo LaGrega, president of mass-market jeans at Greensboro, N.C.-based VF Corp. “People focus on the runway and high fashion, but this is a big, mass business. In this industry, we tend to focus more attention on the sizzle and not so much on the steak.”

In recent years in the junior bottoms business, he added, “we got to the point where denim might have been 70 to 80 percent of the assortment. That was highly unusual, something we’ve never seen before.”

While that business is now slowing, he said the misses’ segment has remained stable, as lower-rise styles and stretch jeans continue to make their way into the mass channel. He also noted that the plus-size jeans category is enjoying strong growth.

At the companies that have ridden the tidal wave of demand in the junior business over the past few years, executives are now looking for ways to consolidate their position.

At New York-based Mudd Inc., president Dick Gilbert said he’s looking to do just that by ratcheting up the brand’s advertising pitch.

“We’re spending a lot of money on television. The product is still very solid and we want to promote the brand a little bit,” he said. “We did a little bit last year. We’re doing five times as much as last year.”

Last year the company ran a $600,000 campaign on cable stations and this year, Gilbert has upped the ad budget to $3 million, he said.

“I want to get this brand as an icon brand,” he said.

Overall, executives agreed that following a boom period when it seemed that almost anything blue with two legs and a low waistband would sell, they’re going to need to get more creative in their marketing approaches to keep sales strong through the coming season.

“Consumers are very intelligent and I think it’s very difficult to market in traditional ways to these end consumers,” said Andrew Pollard, director of sales and marketing at Sixty Inc.’s New York office. “What’s happening is, girls really want to be individual.”

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