New Creative This Fall: Ugg aims to protect its fashion foothold

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Ugg Australia is aiming to avoid the annals of once-hot brands.

The erstwhile surf-and-ski sheepskin boot brand, a unit of Deckers Outdoor Corp., emerged as a fashionista must-have during holiday '03, in large part due to celebrities including Cameron Diaz and Kate Hudson pairing the fuzzy footwear with shorts. As a result, sales during the typically tame first and second quarters this year skyrocketed, and now Ugg hopes to propel its unexpected positioning into a permanent place in the high-fashion market.

Ugg this fall bows new creative from its first outside agency, House Design and Film, Los Angeles, that aims to "Create a look and feel more akin to Gucci and Prada than to Timberland and Merrell," said Anders Bergstrom, marketing coordinator for Ugg. "We're pressing on our luxury positioning, so fruitful over the last year, and stepping with both feet into the luxury fashion world."

Though Ugg has long used Conde Nast fashion title Vogue as its primary communication vehicle, previous creative has focused on the functionality of the boots for outdoor, often snowy sports, more of a "catalog-style `here's what to do with the product,"' Mr. Bergstrom said.

dropping seasonal bias

The new high-fashion ads, which will be seen beginning in October issues of Vogue along with Hachette-Filipacchi's Elle and Hearst Magazines' O, the Oprah Magazine, purposely eschew snow to distance the seasonal bias formerly attached to the brand. Instead, the ads feature sensual shots of a model donning the new fashion-forward styles. One younger-skewing execution in the August issue of Teen Vogue features splashy lilac-colored boots, part of a variety of new colors and styles being launched to expand the brand.

But maintaining the kind of momentum that drove second quarter sales from $250,000 in 2003 to $11.75 million in the comparable quarter this year is certainly a challenge. Ugg projects to sell $75 million this year, more than double last year's $35 million total.

`so last year'

Marshal Cohen, chief analyst at NPD Group, said "The Ugg boot now is `so last year,' that's what they're going to have to fight against." In addition, he said, the company faces an onslaught of lower-priced copycats as it moves into traditional boot season. To compete, "Ugg will have to educate the market on the benefits of Ugg as the ultimate, as the real thing versus the imitation."

That's exactly what Mr. Bergstrom plans to do. The competitive friction, he said, is what he believes will help drive sales beyond a fashionista flash-in-the-pan. "In 2003, the Ugg brand created an entire category of footwear that sparked a variety of low-price-point Costco-distributed competitors." But, he said, "We're the leaders, we invented it and now we have to reinforce our position and tell people, `If you want luxury and high-fashion lifestyle, come to Ugg."'

Ugg also plans to expand its lock on luxury sheepskin with the launch this fall of new handbags (which have already been featured in Vogue), as well as a newly forged license for outerwear.

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