The case of Levi Strauss (1)
Who doesn’t know Levi’s, the American blue jeans icon known all over the world? Today, Levi’s is one of the world’s largest brand-name companies in the blue jeans and casual pants markets. Its products are sold under the Levi’s, Dockers and Levi Strauss Signature brands. While Levi’s conveys an image of quality and innovation, the brand is mostly recognized for its status as the original pioneer brand among international customers. With sales in more than 100 countries, Levi’s is a global company with three geographic divisions: the Americas, Europe Middle East and Africa and Asia Pacific. In 1853, during the California gold rush, Levi Strauss set up his own business in San Francisco. He sold durable and tough pants that became a standard dress for miners, dockworkers, railroad workers and “cow boys”. However, the first blue jeans were born in 1873. At that time, Jacob Davis, a Levi’s customer, suggested Levi Strauss to patent the process of putting copper rivets in pants for strength. They went into business together and founded what would become the world’s most popular clothes. After the World War II, American products met a great success in the world and enjoyed a strong popularity in Europe. Jeans symbolized American freedom and conveyed many of the core values of American democracy. Therefore, people wore Levi’s jeans as a symbol of their freedom and individuality. Hollywood also had a huge impact on the popularity of blue jeans. By wearing blue jeans, James Dean, for example, in “The Rebel Without a Cause” brought fame to blue jeans and other popular actors did the same. With such images, blue jeans became synonymous with rebelliousness, danger, adventure, and most of all, a non-conformist youth culture.
[pic] Until late 1960’s, there was no or minimal competition and the company decided to expand distribution internationally. In the early 1970’s, the business environment quickly changed and Levi’s faced its first real competitors. It was not prepared to compete in a fast-paced climate and the business became unprofitable. Early 80’s, the company recovered its initial position by focusing on its core competencies and late 80’s, Levi’s identified a new fashion trend, the casual dress, and established a leadership position in that segment with the introduction of the “Docker” brand.
Levi’s started to lose share in the 1990’s
Despite the fact that Levi’s created the market, was synonymous with the word blue jeans and led the category for decades, Levi’s started in the 90’s to lose significant share of the blue jeans market Levi’s felt that it was benefiting from such a high brand awareness and brand leadership position that nothing could happen to itself. New trends started to develop in the market, especially in the teenage market. In the 90s, Levi’s was such a hot and great brand that it thought it would be able to sell the same product to everyone. Though, it didn’t take into account that young people were more fashion-oriented than before. Indeed, it neglected the teenagers’ aspirations, which is a non-sense for a brand once synonymous with rebellious youth movement. The blue jeans were not cool anymore and became out of fashion. It was more suitable for parents than for fashion teens. US teens describe Levi’ jeans as “too straight”, “not baggy enough”, “too plain” and “preppy”. Young people were looking for a product allowing them to show their identity, to set their own style and trends. They could not show their individuality anymore by wearing pant of their parents. Then, a new fashion style emerged at the expense of the traditional blue jeans: the trend toward wide-leg, baggy jeans and combat pants. This new fashion was one of the answers to teenagers’ needs. In fact, it reflected an underground style representing what young people were looking for: authenticity, functionality and non-conformity. It was first adopted by skateboarders and...
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|Net Income (loss) |30 390 |(349 317) | |
Source: Levi Strauss Annual Report, 2004
Source: Levi Strauss Annual Report, 2004
* Due to the elimination of Slates dress pants business which contributed to $24.2 million to the decline.
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