Levis at Walmart??

1819 WordsMar 18, 20088 Pages
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…show more content…
There were many pros and cons of Levi Strauss selling a brand of jeans through Wal-Mart. I'll start with the pros first. There was a lot of opportunity to sell large volumes of jeans. There were over 50 million pairs of jeans sold at discount stores. There was a huge opportunity for Levi's to gain a part of that huge amount. Also, many people were looking for the best pair of jeans at the best deal. With the popularity of mass merchants these days, that segment was becoming the largest and fastest-growing retail channel. It was speculated that the mass channel sold almost 31% of all jeans in the US. JC Penney already accounted for over 10% of Levi's for the company's sales. There was growth, and that always allowed for plenty of opportunity, especially when so many consumers are seeking the value experience at the lower price. More and more men and women over 35 were wearing and buying jeans, but they would buy them for half of what the 15 to 19 year olds spend on their jeans. This large market segment of "over-35s" preferred inexpensive brands with the availability of larger sizes. The under-$20-jean- segment was dominated by major retailers, like Wal-Mart and JCPenney, and had huge market-share gains. Levi's also already had great brand-awareness and brand retention to work with, and that serves as a plus on the scale. Almost 20% of Wal-Mart's sales was comprised of private label sales alone, and considering how much Wal-Mart sells,
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