Levis At Walmart??

In 2002, CEO of Levi Strauss, Phil Marineau was faced with a tough decision: whether he should sell product at Wal-Mart. In the last five years, Levi-Strauss had lost sales and had to close US plants to move production to cheaper offshore areas. Levi's really needed to revive the brand image to gain back some lost sales and was using marketing to create new advertisements and product placement to broaden their target market. Levi's had tough competition on every level of the price-point spectrum, whether it be high end retailers like Diesel or Calvin Klein, middle vertically integrated retailers like Gap or American Eagles, and on the bottom, private-label brands like Wal-Mart and Target.

Levi's had sold to Wal-Mart through a value brand called Brittania in the 80's and the 90s, but that came to an end in 1994 over a dispute in Canada about Levi's Orange Tab jeans. After that, sales dwindled for Brittania, and Levi's sold Brittania to VF Corp. In 2002, however, Levi's was thinking about offering a new value brand for Wal-Mart. It was not that easy of a decision though. They had to think of a way to keep the existing customers in the other channels and not lessen the brand's perceived quality overall.

Overall, the apparel market had been growing steadily since 1998 until 2001, when it dropped 5.7% in dollars from the year before. The total jeans sales accounted for approximately 7% of the total $166 billion made in 2001 with 569 million pairs sold. Experts in the apparel industry forecasted an interesting year for sales in 2002, stating that most categories of apparel were going to level out or even decrease.

Jeans were just one of the different categories of pants along with casual pants and dress pants, and jeans had dominated the category until the 1990's when sales had tapered off when consumers migrated over to khakis, cargo pants, and other types of pants. However, when new innovations in fabrics and style in the jeans category came to the forefront in 2001, people's tastes began to switch back over to jeans. In 2002, jeans sales were predicted to grow by 2-3%.

Another large constricting development in the jeans market was that the average price had dropped over the last decade due mainly to off-pricing and private-labels brands that were so popular in mega-stores such as Wal-Mart.