Last November, Levi’s opened its 501st store in China and the company is now set to launch a new global brand in the world’s most populous country and other Asian markets this fall. It is the first such launch outside of its home market in the US.
Although the iconic jeans label has not disclosed the name of the brand, it is widely acknowledged that the new offering will be different from its current and traditional lines. Tod Gimbel, senior director of corporate affairs at Levi Strauss’ Asia-Pacific division, is quoted as having said that although the new offering is focused on China, it will still become “one of our big brands”.
Gimbel has also suggested that Levis’ new line will be marketed and rolled out differently. A key consideration will be price - a pair of jeans in the new line is likely to cost about US$50. “The brand is designed to appeal to the rapidly growing market of upwardly mobile, youthful consumers,” he says. “We’ll be targeting educated 18 to 28-year-olds who covet fashionable jeans, but may not be able to afford jeans in the high end of the market.”
Levis’ latest initiative follows developments at fashion house Hermès, which announced late in 2009 that it plans to open its first store under the Shang Xia brand in China in September this year. Shang Xia will have its own design team and will incorporate Chinese raw materials and traditional craftsmanship. The collection will be designed, manufactured and sold in China .
Hermès’ new line is being pitched as a type of ‘affordable luxury’ collection. The fashion group regards this sort of experiment as a competitive brand strategy in 2010 to recuperate its slower development in the world’s second-largest luxury market. The first Shang Xia store will be in Shanghai and, if customer reaction is positive, Hermès will probably open a store in Paris and gradually roll out its new line worldwide.
Meanwhile, menswear retailer Ermenegildo Zegna, which also produces a China-only line that accommodates not only the specific fashion tastes of Chinese men but also the country’s climate, saw sales grow by more than 30 per cent in China last year. This is a contrast to more mature markets like Japan and the US where the brand has seen a drop in profitability.
Alain Fairnington, managing partner of Mext Consulting in Asia, believes firms such as Levi’s and Hermès are blazing a trail in China that will soon begin to pay off. “The next ten years will be a ‘golden decade’ in China as a majority of the population transitions into true consumers,” he says.
“These people will have the same aspirations and desire for self-esteem as any newly affluent group, and therefore will be attracted to recognised but affordable brands.”
With such a flurry of activity happening for the apparel industry across China, the country may soon become a genuine hotbed for brands seeking to innovate and launch new products and lines.
And how will established brands like Levi’s look to roll out and market their latest brand offering in the market - without risking their flagship brand?
Alain Fairnington, managing partner for Asia at Mext Consulting:
“Although China has a growing number of very affluent people who are attracted to ‘top-end’ brands, the big volume market over the next decade will be among an emerging ‘middle class’ general population. This population is ageing rapidly, so targeting youth is becoming less rewarding.
Although there will still be ample marketing opportunities among younger, fashion conscious youth, this may be a shortsighted strategy.
The biggest growth area will be among older people who are also experiencing significant increases in their disposable income. So maybe a ‘Dockers’ brand strategy offering affordable, stylish, casual wear for adults is where Levi’s market may best be found.”
David King, regional CEO China at iris Worldwide:
“I believe that this is a clever move by Levi’s who have built a strong brand here in China, but have identified the need to catch their future consumers younger than they are able to currently. I would anticipate that with the right designs and some smart marketing that the concept would succeed.
If we were advising Levi’s on this launch, we would ensure that the brand did not patronise its target audience, nor latch on to some apparent youth trend in order to appear to be ‘one of them’. From our ongoing global youth research we know that a smart approach for Levi’s would be to engage the target in the places where they hang out (on and off line) as if they had always been there.”
Michael Wood, Greater China CEO at Leo Burnett:
“For its new brand, Levi’s has to ensure it has a value proposition that appeals to a wide enough group of people in the market to justify the investment in building a new or separate brand franchise.
I believe that Levi’s will continue to engage youth through both traditional and new media. TV will continue to build status, awareness and credentials behind the new brand. Digital and event sponsorship will build engagement and affinity with the brand, creating communities of like-minded people who recognise the brand origins but appreciate the affordability. It will be interesting to see whether they underpin the new brand by association with the core brand, as Coca-Cola often does.”
Ray Ally, executive director at Landor Associates Beijing:
“This new offering could work for Levi’s, as a lot more consumers are likely to get to know the brand now. In terms of strategy and the rollout, it must make a very clear distinction between its main and secondary brand.
The sub-brand must have a unique look and feel and consumers need to be able to see the difference, so this has to be supported by clear communications. In terms of a brand launch, there cannot be a better time than summer – as messages of vibrancy and youthful exuberance can be conveyed and is suited for the new brand.
The new line can’t just be a cheaper version of Levi’s but yet it must still reflect the overall heritage of the brand.”
Got a view?
Email [email protected]
This article was originally published in the 6 May 2010 issue of Media.
Although the iconic jeans label has not disclosed the name of the brand, it is widely acknowledged that the new offering will be different from its current and traditional lines. Tod Gimbel, senior director of corporate affairs at Levi Strauss’ Asia-Pacific division, is quoted as having said that although the new offering is focused on China, it will still become “one of our big brands”.
Gimbel has also suggested that Levis’ new line will be marketed and rolled out differently. A key consideration will be price - a pair of jeans in the new line is likely to cost about US$50. “The brand is designed to appeal to the rapidly growing market of upwardly mobile, youthful consumers,” he says. “We’ll be targeting educated 18 to 28-year-olds who covet fashionable jeans, but may not be able to afford jeans in the high end of the market.”
Levis’ latest initiative follows developments at fashion house Hermès, which announced late in 2009 that it plans to open its first store under the Shang Xia brand in China in September this year. Shang Xia will have its own design team and will incorporate Chinese raw materials and traditional craftsmanship. The collection will be designed, manufactured and sold in China .
Hermès’ new line is being pitched as a type of ‘affordable luxury’ collection. The fashion group regards this sort of experiment as a competitive brand strategy in 2010 to recuperate its slower development in the world’s second-largest luxury market. The first Shang Xia store will be in Shanghai and, if customer reaction is positive, Hermès will probably open a store in Paris and gradually roll out its new line worldwide.
Meanwhile, menswear retailer Ermenegildo Zegna, which also produces a China-only line that accommodates not only the specific fashion tastes of Chinese men but also the country’s climate, saw sales grow by more than 30 per cent in China last year. This is a contrast to more mature markets like Japan and the US where the brand has seen a drop in profitability.
Alain Fairnington, managing partner of Mext Consulting in Asia, believes firms such as Levi’s and Hermès are blazing a trail in China that will soon begin to pay off. “The next ten years will be a ‘golden decade’ in China as a majority of the population transitions into true consumers,” he says.
“These people will have the same aspirations and desire for self-esteem as any newly affluent group, and therefore will be attracted to recognised but affordable brands.”
With such a flurry of activity happening for the apparel industry across China, the country may soon become a genuine hotbed for brands seeking to innovate and launch new products and lines.
And how will established brands like Levi’s look to roll out and market their latest brand offering in the market - without risking their flagship brand?
Industry comments
Alain Fairnington, managing partner for Asia at Mext Consulting:“Although China has a growing number of very affluent people who are attracted to ‘top-end’ brands, the big volume market over the next decade will be among an emerging ‘middle class’ general population. This population is ageing rapidly, so targeting youth is becoming less rewarding.
Although there will still be ample marketing opportunities among younger, fashion conscious youth, this may be a shortsighted strategy.
The biggest growth area will be among older people who are also experiencing significant increases in their disposable income. So maybe a ‘Dockers’ brand strategy offering affordable, stylish, casual wear for adults is where Levi’s market may best be found.”
David King, regional CEO China at iris Worldwide:“I believe that this is a clever move by Levi’s who have built a strong brand here in China, but have identified the need to catch their future consumers younger than they are able to currently. I would anticipate that with the right designs and some smart marketing that the concept would succeed.
If we were advising Levi’s on this launch, we would ensure that the brand did not patronise its target audience, nor latch on to some apparent youth trend in order to appear to be ‘one of them’. From our ongoing global youth research we know that a smart approach for Levi’s would be to engage the target in the places where they hang out (on and off line) as if they had always been there.”
Michael Wood, Greater China CEO at Leo Burnett:“For its new brand, Levi’s has to ensure it has a value proposition that appeals to a wide enough group of people in the market to justify the investment in building a new or separate brand franchise.
I believe that Levi’s will continue to engage youth through both traditional and new media. TV will continue to build status, awareness and credentials behind the new brand. Digital and event sponsorship will build engagement and affinity with the brand, creating communities of like-minded people who recognise the brand origins but appreciate the affordability. It will be interesting to see whether they underpin the new brand by association with the core brand, as Coca-Cola often does.”
Ray Ally, executive director at Landor Associates Beijing:“This new offering could work for Levi’s, as a lot more consumers are likely to get to know the brand now. In terms of strategy and the rollout, it must make a very clear distinction between its main and secondary brand.
The sub-brand must have a unique look and feel and consumers need to be able to see the difference, so this has to be supported by clear communications. In terms of a brand launch, there cannot be a better time than summer – as messages of vibrancy and youthful exuberance can be conveyed and is suited for the new brand.
The new line can’t just be a cheaper version of Levi’s but yet it must still reflect the overall heritage of the brand.”
Got a view?
Email [email protected]
This article was originally published in the 6 May 2010 issue of Media.
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