Byline: Scott Malone

NEW YORK — As Levi’s goes, so goes the jeans business.
Levi Strauss & Co.’s three years of sales declines — a trend the company recently said will continue through this year — has left all areas of the jeans industry wondering what the dungaree icon is going to do to revive itself.
Retailers, mills and even the San Francisco-based firm’s competitors said tough times at Levi’s aren’t good for the industry as a whole. So they’ve been keenly interested in hearing about what the turnaround plan would be.
As reported last week, the company’s new president and chief executive officer, Philip Marineau, in his first major interview since taking the reins, said the turnaround will be pegged on “great basic product,” rather than a heavy marketing push aimed at convincing young consumers that Levi’s is cool.
At least on the surface, the comments about great basics left some market observers scratching their heads.
“They’re going to turn around by having great basic product? Isn’t that kind of an amazing statement?” said Thomas George, owner of E Street Denim, a boutique in Highland Park, Ill. “What do they have now? I thought the product was great and basic.”
But while the remarks puzzled some, others saw a grain of wisdom — pointing out that there is a distinction between good and great, and having product in the latter vein means constant change.
“They had a tendency to rest on their laurels,” said Michael Silver, president of Silver Jeans, a Winnipeg, Ontario-based company that has made strong basic product a cornerstone of its approach to the market.
Silver said that what makes any jean great changes every season, and that keeping the “great” label requires minuscule changes — lightening up or darkening a wash, tweaking a fit, changing the length of an inseam — that consumers may not even notice at first glance, but can make a difference over time.
“It’s just a constant case of fine-tuning,” he said.
That sentiment was echoed by a buyer at a moderate-priced department-store chain, who spoke on the condition of anonymity. The buyer praised Levi’s for not trying to turn itself into a cutting-edge trendy resource, but said the company needs to react more quickly than it does to longer-term fashion trends.
“When something major comes up, like stretch, then they need to get into it,” the buyer said. “If it’s a decorated denim that can be here today and gone three months from now, they won’t be executing well enough to do enough and get out fast enough. But with something like stretch, they should be involved.”
The buyer also said Levi’s needs to be able to respond to demand for things like color varieties more quickly, and added that the fall merchandise the company has shown reflected a stepped-up effort on both fronts.
Levi’s has also talked about trying to increase its tops business, which the buyer said would be a logical extension for the company, if done right.
“There’s always opportunities in tops,” the buyer said. “My experience has been that it’s such a small part of their business that they never seem to get it right. They don’t put enough into it. Customers are not going to buy a top just because of the brand name.”
However, the buyer, suggested, Levi’s “should certainly have some core denim shirts that they can stay in. That would work.”
He noted that Levi’s efforts on fleece tops, however, have been less than successful.
The buyer also noted that Levi’s misses’ product has been selling well lately, but that the company has had problems getting goods into the stores on time — an issue that Marineau has acknowledged Levi’s is trying to fix.
George of E Street suggested that Levi’s isn’t likely to be able to make major improvements to its product because of the price pressures inherent in doing business at the large retailers that have allowed the company to grow to its current $5.14 billion size.
“When your product is discounted on every Sunday by 30 to 40 percent, and it’s the bait at the value-oriented department-store retailers — the Penney’s, Ward’s and Kohl’s — that’s what happens,” he said.”What are you going to do to make product more interesting and sell it for $29.99?”
George also said the company should not peg its hopes on the Engineered Jeans line — the ergonomic redesign of the 501, which is bowing in the U.S. this spring.
“I applaud them for pushing the envelope, but the stuff they bring in from Europe, it’s exceptionally forward merchandise and runway-ish,” said George, who has ordered the jeans for spring, but not yet received them in his store. “You’re talking about selling four pair, eight pair, 10 pair. It’s not a volume item.”
Levi’s Marineau has acknowledged that the company isn’t expecting to see great volume out of the Engineered Jeans, but given the attention they’ve attracted, conversations about new Levi’s product almost inevitably lead in that direction.
Reflecting the strength of Levi’s classic styles, E Street’s George noted, “The best Levi’s product we sell is recycled jeans. They have that cool mentality that people remember.”
Ron Gelfuso, executive vice president of Mavi America Sportswear Inc., agreed that the company probably doesn’t need to make major changes in its product.
“The 501 and 505 are as basic as it gets, and that’s what they based their reputation on,” he said. “I don’t see them reinventing a classic jean. But if they’re talking about washes or finishes to give the basic five-pocket jean a fashion appeal, then that would be something new and fresh for them.”
He suggested that Levi’s problems lie in its image, which it has been trying to make hipper over the past few years.
“Their problem is not in their product. Their problem is in their image,” he said. “There is no amount of advertising you can do to make someone move toward something they’re not interested in.”
Leonard Rothschild, president of The Lark, an eight-store Chicago chain selling young women’s and men’s clothing — which isn’t currently carrying Levi’s — said he believes that despite Levi’s recent advertising efforts, hip youngsters have lost interest in the brand.
“The youth of today doesn’t care about basics,” he said. “Levi’s has a quality product, but if there’s no cachet to the product, they’ve lost it. The 15- or 16-year-old kid today doesn’t want to wear what his father is wearing. That is the real problem.”
He suggested that Levi’s best option would be to develop a new silhouette to catch the young market’s attention, although he admitted he wasn’t sure what the silhouette should be.
While Levi’s and many retailers said they aren’t expecting the Engineered Jean to become the next hot thing across the U.S., some observers said that the market shouldn’t be too quick to write that product off.
Ken Girouard, vice president of marketing and new product development at Cone Mills — a major Levi’s supplier — said he believes that both the Engineered Jeans and the high-end Red Line product could take off, if given a chance.
“Who’s holding up the trends from happening?” he said. “People ask, ‘Is the American consumer going to get it?’ I think you have to give them credit and give them time. But with today’s retailer, if it doesn’t sell in a certain amount of time, they pull it. People are not giving it enough of a chance. Are we going to see construction workers wearing Engineered Jeans? Who knows, but it takes a while for a trend to move along.”
At Swift Denim, president and ceo John Heldrich also said that the Engineered Jean could attract interest in the U.S., though he wasn’t as bullish on its chances for becoming a volume product.
“The Engineered Jean is selling quite well in Europe,” he said. “I think it will be more of an innovative — but not necessarily volume — item in this country. But I think Levi’s is starting to pick up a lot of innovative products, and if they market them well, that will return them to where they’ve traditionally been.”
Regardless of what product succeeds in helping Levi’s to turn its business around, observers by and large said they were happy to hear the company saying that it was going to shift its emphasis away from trying to marketing itself as cool. As reported, Marineau said that given its tremendous size, Levi’s needs to appeal to a broad customer base, which it can’t do with niche advertising.
E Street’s George applauded that realization, noting that many companies have succeeded in keeping hold of consumers’ hearts — and wallets — simply by turning out reliable goods.
“Forget the fact of trying to be esoteric,” he said. “How cool is General Motors? It’s not an idea of being the hippest thing out there. It’s understanding who your customer is and making the bottom line.”

load comments
blog comments powered by Disqus