Problem
Faced with 5 years of declining sales, should Levi’s sell a brand to mass discount retailer, Wal-Mart?
Executive Summary
Quick! Name the first company that comes to mind for the following products: facial tissue, photocopiers, and jeans. Did you answer Kleenex, Xerox, and Levi’s? I bet you did. The #1 apparel brand for brand awareness and recognition, “Levi’s” is virtually synonymous with “jeans.” In the past several years however this strong brand recognition has failed to translate into sales growth and in fact the company has seen a progressive decline over the last 5 years.
Faced with the declining sales, Levi Strauss & Co.’s CEO, Phil Marineau, has been considering selling a Levi’s brand to mass discount retailer,
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In the case of Levi’s it seems that mere brand name recognition isn’t enough. And with 5 years of declining sales, Levi’s has to reinvent itself or die. After reviewing the situational analysis of the company, several alternatives can be considered.
Alternatives
1. “Do nothing” and hope to sell more. Faced with a 5 year decline in sales, doing nothing isn’t a very sound strategy. However, perhaps current initiatives such as new product offerings and specialty retail channels need more time to catch on.
2. Enter a new market with a new product. Sell a Levi’s value brand to mass retailers such as Wal-Mart, a retail channel that accounts for 31% of all jean sales. The potential increase in sales from this new channel is probably very good in the short term, however the risk is that entry into the discount market even with a Levi’s value brand that’s differentiated from the main product line, will further devalue and dilute the brand, making it unattractive to its current retailers. If Levi’s gets dropped from chain, department stores, and independents because its brand is no longer relevant to its customers, then the potential loss could offset a good deal of any potential gain. Further, once the brand loses its “shine,” through dilution, discounting and devaluation, the benefits to Wal-Mart of carrying a higher profile “national brand” are lost. A likely scenario is
With other companies starting to encroach upon the Jeans market share, Levi’s decided to introduce a new product. With the goal to gain profits, Levi’s pursued diversification with the new product. This product was formal clothing for men.
In the past, JCP had, on average, one price campaign every day. The stores were full of sale signs and retail rise was getting out of control. JCP partnered with numerous exclusive collaborations which was hoped to bring about an expansion for the firm. However, due to the economic slump, the oversaturation of the market, and an expected lack of quality in the goods from the consumer perspective, JCPenney’s success was degrading in contrast to its competitors. (Sloan, 2010).
J.Crew as an iconic brand targeting young working professional by focusing on preppy and classy look failed in identifying brand focus. Also, their business model is performing poorly in the fast-fashion industry compare to traditional competitors, with its high prices, diverging quality, and undesirable brand image. Hence, the brand perception by customers has changed and many of them prefer to purchase the discounted products rather than full-priced items.
This report has been created with the intent to analyze the athletic apparel industry with a specific focus on Lululemon Athletica, Inc., further refered to as Lululemon. In this report you will find that the strengths and weaknesses of Lululemon’s current strategies and future goals are analyzed and compared to that of its closest competitors. In conclusion to the analysis, recommendations have been made to potentially guide Lululemon Athletica, Inc. in a positive direction in regards to its future endeavors. The following
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The industry we have chosen is the department store-retail industry. Within this industry, we have chosen the department stores of JCPenney and Macy’s. We find this industry, as well as these two companies, interesting from a strategic perspective. JCPenney has recently undergone a massive strategic restructuring in regards to its pricing, brand offerings, and store layout, pushing it away from the typical department store strategy of discounts and coupons. Its new strategy has become much closer to Wal-Mart’s strategy of every day low prices. Macy’s, on the other hand, has restructured with a push from the economic
It\ 's five years later, and sales have reached a plateau. The product is clearly in the maturity stage. What should you do to increase sales?
"We think of Macy’s today as the Great American Department Store because we have kept alive our heritage while also changing for the future, " (2016, Lundgren). When Macy’s first started, no one would have guessed that it would become one of the world’s largest retail operations in the world. The success of the store lands on many people’s hands. If they know how to work the system, they can help the company grow. Some of the people who are involved in making the company successful are first line mangers, even the top managers are involved. In this case they didn’t work very good making decisions which led Macy’s to go down as a company.
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The product life style of the department store is in the mature or declining phase of its product life style, because of the declining sales. Furthermore, according to estimates, market share has eroded away to 7 per cent, as of 2010, and is far below the desirable rate 15 per cent (Johnson, 2011, p. 3). Also, the brand image is being heavily relied upon and the bottom line is not showing significant increase in the years presented in the journal article. Macy’s is afloat due to a strong management team and the aggressiveness to deal with problems as they arise. For example, continuing to adjust its portfolio of stores, focusing on fashion, and developing private labels in bedding, outerwear, ‘tween’ clothing, increase national advertising and using celebrities. Additionally, Macy’s advertising is combining the national department store image with July 4 and the Annual Macy’s Thanksgiving Parade, which appeals to the American citizen. Solution
Nike’s recent decline in market share and stock can be attributed to changing trends in consumer spending habits and apparel tastes. Nike can re-establish a competitive advantage in the short-run by implementing an innovative design team and brand ambassador. Long-run competitive advantage can be achieved by fully committing to a sustainable innovative business model or by incorporating innovative technology trends into their retail structure.
8. Do you think there is a core image of Levi’s that can survive across the wide range of prices and outlets that it operates in? What is it?
Levi’s in the comfort business. Not just mean physical comfort but providing psychological comfort – the feeling of security that, when you enter a room of strangers or even work colleagues, you are attired within the brand of acceptability. Although what a consumer defines as psychological comfort may vary from sub-segment to sub segment. The key phrase here is that last one, ‘from sub-segment to sub-segment’. In its attempts to be sensitive to the various fluctuations of taste among the denim-wearing public, Levi’s has diversified its brand by creating a wide range of jean styles.