In contrast to an earlier strategy that surrounded its high-profile Super Bowl spot for Type 1 jeans (see story P. 25), Levi Strauss Signature jeans will advertise only in Wal-Mart stores with three 30-second spots on Premier Retail Networks in-store screens, along with in-store signage, and some support in weekly ad circulars, a Wal-Mart spokeswoman said.
Competing Wal-Mart brand VF Corp.'s Wrangler Red Label Hero jeans, meanwhile, in preparation for the Levi's move into its discount store turf, plans a more traditional ad campaign with one or two spots on cable TV, according to Mark Clift, VP-marketing communications for VF jeanswear, mass marketing division.
"Levi's is an [icon]-it means jeans-no one would ever discount that," said Wrangler's Mr. Clift, who said he hopes the attention to Levi's will bring more Wal-Mart customers into the jeans section. Nevertheless, he is reshaping his latest round of ads for the company's new Five Star Denim jeans, focusing on male customers in small towns and rural areas, and dropping the income of its target audience to as low as $40,000 from $60,000 household income targeted in the past.
much at stake
Levi Strauss has much at stake in this launch, hoping to capture a larger share of the $11.6 billion jeans market. "Some [retailers] have indicated by action they are reducing some of the positioning of the regular Levi's business," said Harry Bernard, exec VP-chief marketing officer for retail consultant Colton Bernard. "When [Levi Strauss customers shopping at JC Penney's or Sears] decide they can get what they want at Wal-Mart, I believe some of them will disappear," he said.
Federated Department Stores' Macy's already has cut back on its Levi's product, dropping its women's lines, a spokeswoman for the retailer said. Other retailers are not making changes. A Sears, Roebuck & Co. spokeswoman said "Whatever Levi's does with Wal-Mart will not have any effect on us." A spokeswoman for Levi's biggest customer, JC Penney, which accounts for 12% or $496.4 million of Levi's $4.14 billion in sales, did not return calls seeking comment by deadline. Levi Strauss declined comment until a date closer to launch.
All the wrangling comes amid some good news for the national brand retailers who have long lost market share to private-label and designer brands. The NPD Group's NPD Fashionworld reports that for the year ending in April 2003, sales for national brands are up 7.5% from the previous year, compared with a drop of 5.6% for private-label jeans and 10.4 % drop in sales from designer competition.
Jury still out
Despite the huge sales volume potential for Levi Strauss, Mr. Bernard, believes "the jury is still out" on whether Signature will further erode Levi Strauss' financials by moving core customers to the lower-priced Wal-Mart product. "My prediction: It's not going to be good."
Even the media launch for the line has created some debate. The San Francisco-based Premier Retail Network, founded in 1993, is a private company backed by a number of media-related firms such as GE Capital, owned by General Electric Co. Its monitors are in 5,400 stores, including Wal-Mart, Circuit City, Best Buy and Kroger Co.'s Ralphs supermarkets. Mark Mitchell, PRN's exec VP-sales, says Wal-Mart customers alone offer 145 million viewership impressions per month, about the length of time the spots will run. He called the buy "efficient" because it reaches only the audience Wal-Mart is targeting.
But Brad Adgate, senior VP-director of research, Horizon Media, New York, questioned whether customers, especially those with children, pay attention to the spots because they "are not there to watch TV."
Interpublic Group of Cos.' Foote, Cone & Belding Worldwide, San Francisco, the agency for Levi Strauss' Dockers brand, created the TV spots. B.A.R.C. Communications, San Francisco, handles in-store promotions. Toth Brand Advertising, Concord, Mass., is Wrangler's agency.
contributing: wayne friedman, bradley johnson