Byline: Robert Murphy

PARIS — Opening a handful of small, gallery-like stores may seem like dust in the wind for jeanswear giant Levi Strauss & Co., but Levi’s considers its network of so-called “icon” stores central in a strategy to augment its profile and curb declining sales.
Over the past two years, the company has rolled out five small European icon stores, each with a minimalist, artsy decor. Most recently, the company opened Zinc in Barcelona, joining similar units in London, Paris, Berlin and Milan.
All are located in emerging, trendy neighborhoods, have about 500 to 800 square feet of floor space and no exterior markings identifying them with Levi’s. They carry a limited assortment of product, including the premium Vintage and Red lines — some customized by local artists and designers — trendy accessories, sneakers, used records and books. Each store is overseen by a different manager, who is given free rein to curate exhibits and host various events.
As the San Francisco-based company struggles to turn itself around, it has come to view its European operation as a model of the marketing strategy the corporation as a whole should follow. The company quietly opened its first U.S. icon store called Selvedge in New York’s trendy NoLIta neighborhood last fall.
“We were experiencing declining brand equity and declining sales because we had neglected our youth customer,” said Gunthram Ochs, retail marketing manager for Levi’s Europe. “The icon stores are the spearhead of our overall strategy to revamp our retail presence.”
Since 1997, Levi Strauss has suffered sales erosion, prompting the privately held organization to buff its image and spruce up its product offerings. The sales slump was widely attributed to Levi’s failure to adapt to the strong fashion wave that crested in the early-to-mid-Nineties over the jeanswear market, as status and designer brands, trendy junior resources and the private labels of hot specialty chains built strong jeanswear business.
As reported, Levi’s sales fell for the fourth consecutive year in 2000, down 9.6 percent to $4.65 billion. The firm expects to stop the flow of red ink this year, despite reporting a first-quarter sales dip.
In Europe, according to Ochs, the icon stores are playing a crucial role in Levi’s turnaround efforts.
“The icon stores are the creative motor driving the revamp,” he said. “Although they are not isolated from the larger strategy, they represent one of the most important phases of the operation because they will help shore up Levi’s reputation among opinion-leading consumers.”
According to Yann Dacquay, co-president of Paris marketing firm Premier Reflex, many well-established brands, including Nike and Adidas, have been trying to build their cachet with a young audience.
“An established brand, with time, easily becomes a classic and no longer perceived as innovative,” said Dacquay. “Levi’s lost its edge with young people. It was no longer cool because kids associated the brand with their parents’ values.”
Retail concepts are considered the best marketing tool for targeting young opinion leaders, who tend to be put off by traditional ad campaigns, said Dacquay.
“The game is to cloak the brand and to associate it with fresh values in order to give it a new identity,” he said. “Making a shop a place where a client comes not necessarily to buy, but just to have a good time and discover new ideas, builds the brand’s identity very efficiently among young people.”
Cloaking the brand is exactly the game that Levi’s is playing by keeping its name off the sign — the London unit is called Cinch, Paris is Nim, Berlin is Buttenheim and Milan is B-Fly. Ochs said Levi’s relies on word-of-mouth to generate traffic for the stores.
The stores are only one facet of Levi’s overall strategy in Europe. This spring, the firm launched an offbeat ad campaign for its ergonomic Engineered Jeans, showing young people contorting their bodies. The company has also been overhauling its entire retail network in Europe.
Ochs said the icon stores, which currently operate at a break-even level, are not expected to be profitable, but “they are at the creative forefront of our efforts.” He said the combined efforts are bearing fruit.
“Over the last 12 months, sales at flagships have increased 50 percent, while shop-in-shop sales are up more than 100 percent” in Europe, he said.