Jeans War: Survival of the Fittest
The parade of competing blue jeans advertisements, standing hip-to-hip on billboards and bus stops, in magazines and on television, shows how crowded the denim arena has grown.
Levi Strauss & Co. boasts about its hard jeans, and Lee Co. hits back with ads for its rough-and-tumble dungarees. And when Levi sniffs that Ralph Lauren has worn its pants, J.C. Penney Co.’s Arizona jeans brand counters with “Stop telling us what’s cool.”
But as they shout out their competing advertisements, the denim companies are learning that it pays to heed what customers say, particularly when youth-oriented fashion is in play. A case in point is Lee, a subsidiary of Wyomissing, Pa.-based VF Corp., which credits better listening with helping the company to weather a painful industrywide downturn in sales of traditional five-pocket jeans.
Lee isn’t the only manufacturer scrambling to deal with slower growth in the denim sector. Last month, Levi said it would furlough 4,000 workers at seven U.S. factories for two months because of an excess jeans inventory.
Levi’s market share dropped from 18.7% at the end of 1997 to 16.9% on June 30, according to Tactical Retail Monitor, a New York-based market research firm. But during the same period, the market share of VF Corp.’s Lee and Wrangler brands rose to 25.3% from 24.5%. And company executives say there’s a direct link between the market-share increase and two new lines that grew out of increased market research.
The Pipes and Lee Dungaree lines introduced by VF during the past two years were the first sub-brands ever for the 109-year-old company. Both products are clearly cousins of the main family of denim wear, but Lee executives say the new jeans clearly are designed and marketed with a younger customer in mind.
For decades, Lee had carefully honed its image as the perfect physical and fashion fit, particularly among females 25 years of age and older. “We prided ourselves as being the brand that fits, and we had lots of research on fit,” said Gordon Harton, Lee’s vice president of consumer marketing.
But younger consumers now drive denim sales. And as Lee’s marketing department ratcheted up the use of focus groups in 1996, researchers began to craft a different definition of “fit” from their conversations with young consumers.
Lee Jeans customers had long been telling the company that “fit meant pants that were closer to the body,” Harton said. But among younger consumers looking for mobility and a different sense of fashion, “fit meant, basically, that if [material] doesn’t touch the body, it fits.”
Armed with that knowledge, Lee Jean unveiled Pipes, a Lee sub-brand aimed at board-sports fans who needed--and, from a fashion standpoint, demanded--loose, baggy apparel. But Pipes wasn’t an immediate hit in 1996. The line languished on store shelves until advertising aimed at younger consumers began to click.
Emboldened by the eventual success of Pipes, and scrambling to make up lost sales as the market for traditional five-pocket jeans continued to cool, Lee laid the groundwork for its second new sub-brand. Like Pipes, the Lee Dungarees line is aimed at younger men and women who want denim but don’t want to look like Mom or Dad. The new line’s introduction in the spring was Lee’s “largest and most aggressive new-product marketing effort,” Harton said.
Creating the new products was just part of the puzzle, Harton said. The company had traditionally spent heavily on magazine advertisements tailored to older females. That strategy wouldn’t work with younger consumers, who pay more attention to electronic media and follow the fashion lead of sports and music stars. And, Harton said, Lee had to make it clear whom the new apparel was for: “We had to make sure they understood this product was for them, that this wasn’t for their mom and it wasn’t for their dad.”
Market research into various Lee Jeans icons suggested that younger consumers were attracted to Buddy Lee, a doll that Lee used during the 1920s to market its wares. The marketing department’s decision to introduce the quirky “spokesdoll” campaign during a 2 a.m. broadcast on the Comedy Central cable channel raised some eyebrows at Lee’s headquarters in Merriam, Kan.
“They thought, ‘What’s going on here?’ ” Harton said. “But the response has been completely amazing. We’re receiving about 100 letters a week addressed to Buddy Lee, and we’ve seen phenomenal increases in tracking our brand recognition with younger consumers.”
Lee’s ongoing research has identified other groups--such as the consumers now referred to as “amateur explorers.” These people are at home in an Eddie Bauer sport-utility vehicle--even if they never venture beyond the parking lot of a suburban shopping mall. But they have clear likes--including twills rather than denim; deep, functional pockets; and snaps and hooks to hold their gear.
In a bow to the ever-changing nature of fashion, Lee continues to monitor various segments of its market. “We probably always talked to our customers to some degree,” Harton said. “But the approaches we’re using now, the questions we’re asking and the information we’re getting is different from before.”
Levi Strauss is singing the same tune when it comes to market research. The San Francisco-based company is abandoning its “one size fits all” philosophy and breaking its market into segments. Levi’s Silver Tabs, for example, are marketed to seven distinct “tribes” of younger consumers. Advertising is geared to the music and lifestyle choices that govern fashion tastes for each tribe.
Levi also is spending more of its marketing budget on grass-roots, or street-level, marketing. While the company has signed higher-profile sponsorship deals with attractions like last summer’s Lilith Fair concert tour, it also has sponsored more than 200 local events designed to get its products noticed in consumers’ backyards.
Harton said that Lee is heading in the same direction when it comes to market research. “The bluejean market is segmented now,” he said. “And what we’re trying to do is understand each of those segments--what influences their decisions--and not just with apparel. We need to understand their lifestyles, what they relate to.”
The changing retail market means that manufacturers will have to pay closer attention to what smaller groups of customers want, said Randy King, owner of King Western Wear in Studio City.
“Ten years ago, Levi’s had 70% to 75% of our business,” King said. “But now, when it comes to Western wear, it’s Wrangler that’s done its homework.”
King suspects that Levi gradually dropped Western styles that weren’t popular enough to merit broad distribution through mass merchandisers and department stores. He’s seen devoted Levi customers shift to competing brands as the company abandons things like the comfortable Lycra waistbands that many older urban cowboys prefer to wear.
“The denim market is segmented and it’s diverse,” said King, who still wears Levi pants on occasion. “And companies like Levi need to remain dynamic enough to realize that, if they want to be around in 10 years, they need to know who their customer is.”
