Levi Strauss Canada

Holding An Ember : The GWG® Brand

Syndicate Rejupenation
Bawono Adhi Mutia Safrina Husna Kesumawati Dian Gita Utami M. Satiadharma Gumbira Safrinanda
Company History : Levi Strauss
●
Levi Strauss & Co was
1853 • Levi Strauss & Co. is one of the
founded

world's leading branded apparel

companies with sales in more than 100
●
Levi Strauss & Co. patent riveted
1873 jeans and begin selling them.
countries worldwide.
• Over the years, Levi’s jeans have

1974
●
Company sales reach $1 become more popular, initially due to
billion
its durability. Jean products expanded,
targeting different consumers.
Downturn in sales as high-end and also
1998 - 2002
●

private-label brand attract market • The primary lines are Levi's jeans
and Dockers casual pants, and now
added Levi’s Strauss Signature®
Employed more than 23,000 people
2002
●

●
Operated in more than 150 countries
Company History : GWG®
●
GWG started producing shirts, overall, GWG® offers limited line of
1911 - 1927 heavy outdoor coat, and first denim products that focuses to
the segment of men by
offering 4 fits, 4 finishes:
stonewash, stone bleach,
●
Expanded in womens wear workforce rinse and black, and 16
1930 - 1961 ●
It has dynamic growth and Levi’s Strauss
sizes from 28 waist to 42
purchase GWG 75% ownership
waist with two different
lengths.

Regarding the licensee

Levi’s bought remainder of the company
agreement of the
●

1972-1980 ●
GWG sold in most clothing outlets
company to Levi Strauss
Canada, in 1998, 8% of
its net wholesale goes to
Levi.
●
Company by GWG introduced
1992 - 2001 ●
GWG licensed to Jack Spratt
 Case Background

• Levi Strauss & Co. purchased 75% of Edmonton's Great Western Garment
Company (GWG) in 1961. Levi Strauss Canada decided to license GWG to Jack
Spratt Manufacturing Inc. in 1998.
• Jack Spratt was not giving a good performance and Levi’s company thinking of
taking the license and revive GWG brand.
• Both Levi's and GWG brands have been affected by the popularity of designer
label jeans, private label jeans, specialty retailers and new trendier brands.
• With competitors like Wrangler, Wal-Mart, Zellers and premium brands that
popular among younger age groups like The Gap, Calvin Klein, Tommy Hilfiger,
Diesel, and Guess.
 #1
Why do consumers buy jeans?
What is the buying decision based on?
How do you segment these consumers?

Buying Reason

• Utilitarian reason
• Fashion
• Showing owner character
• Reflecting own personal independence and style
• Comfort, ease and compatibility
• Practical and strength

Buying Decision:

• Brand name
• Design
• Price
• Fabric quality/fit
• Distribution Channel
• Advertising
 #1
Why do consumers buy jeans?
What is the buying decision based on?
How do you segment these consumers?

National
Geography International

Sex : female and male

Demography Age : teens, adult
Economic state : low, middle and high

Fashion Conscious
Quality Conscious
Psychographic Fit & comfort
& Reflecting personal independence & style
Behavior Follower / Peer pressure
 TYPE OF JEANS

Flare jeans for Fashion-Conscious consumers

Relaxed Fits for older consumer

Ultra Baggy for Younger consumer

 What are the leading

#2 attributes of the competitors?

How does this match or not match
the consumer buying decision?

Brand Price Dist. Channel Attributes Segment

GWG and Levi’s Jeans
Orange $42.99 - Bay, Sears, Zellers, Classic, Quality, Originality, Fit, and 15 -24 male &
Tab $69.99 Original Levi’s Store Independent, Five main fits with three female market
finishes, frequently differentiate the
finishes
Red Tab $49.99 Bay, Sears, Zellers, Classic, Quality, Originality, Fit, and 15 -24 male &
Original Levi’s Store Independent, 12 fits, constantly female market
updated new fits, frequently
differentiate the finishes
GWG $18-$22 Small mass merchants, Quality, Comfort, and Price, four fits, Male
selected Mark’s four finishes
VF Corp
Wrangler $29.99 Wal-Mart, Zellers Western and Country, five main fits Male customer
with three finishes
Rustler $19.99 Wal-Mart, Zellers, Saan, Similar level of ruggedness with Male customer
Giant Tiger Wrangler, Western Style, five main fits
with three finishes
Brand Price Dist. Channel Attributes Segment
Specialty Retailers
Denver Hayes $34.99 Marks Work Medium to high quality fabrics, five main fits 25-50 years
Warehouse with three main finishes, offered other old males,
products in the store suburban strip
Bluenotes $39.99 Thrifty’s Medium to high quality fabrics, five main fits 15 – 24 years
with three main finishes, seasonal specialty old male and
offer based on innovations in higher segment female
GAP $49.99 The Gap store Medium to high quality fabrics, five main fits 18 – 35 years
with three main finishes, seasonal specialty old
offer based on innovations in higher segment
Private Label
Nevada $24.99 Sears Simulating branded style, 30-40% price cut Male &
Female
Rockland $16.99 Costco Aggressive pricing Male &
Female
Originals $19.99 Wal-Mart Placing side by side with branded promotion Male &
Female
Cherokee and $19.99 Zellers Simulating branded style, Placing side by side Male &
Truly with branded promotion, weekly sales flyer Female
Reitman’s $25-$30 Simulating branded style Female
Cotton Ginny’s $25-$30 Simulating branded style Female
Brand Price Dist. Channel Attributes Segment
Premium Brands
Silver $69.99 Dedicated store, Unique lifestyle image, catwalk fashion Male & Female,
Apparel store collection Premium consumer
Guess $79.99 Dedicated store, Unique lifestyle image, catwalk fashion Male & Female,
Apparel store collection Premium consumer
Tommy Hilfiger $89.99 Own line store, Unique lifestyle image, catwalk fashion Male & Female,
Apparel store collection Premium consumer
Polo Ralph Lauren $89.99 Dedicated store, Unique lifestyle image, catwalk fashion Male & Female,
Apparel store collection Premium consumer
Calvin Klein $79.99 Dedicated store, Unique lifestyle image, catwalk fashion Male & Female,
Apparel store collection Premium consumer
Diesel +$100 Own line store, Unique lifestyle image, catwalk fashion Male & Female,
Apparel store collection Premium consumer
#3 What is happening in the overall market place?
What is happening with channels?

Men's Jeans 15+ (1996) Men's Jeans 15+ (2000)

Levi's Total Levi's Total

Sears PL Sears PL
Wrangler Wrangler
Costco Costco
Mark's Mark's
Zellers Zellers
Wal-Mart Wal-Mart
Rustler Rustler
Thrifty's Thrifty's
GWG GWG

Market Share Comparison on Men segment

#3 What is happening in the overall market place?
What is happening with channels?

Women's Jeans 15+ (1996) Women's Jeans 15+ (2000)

Sears PL Sears PL
Levi's Total Levi's Total
Zellers Zellers
Wal-Mart Wal-Mart
Reitmans Reitmans
Silver Silver
Thrifty's Thrifty's
Gap Gap

Market Share Comparison on Women segment

 #3
What is happening in the overall
market place?
What is happening with channels?

Market Place was Change

Since 1996 to 2000, competition in jeans fashion category has change.
• Levi’s with its product line was a market leader in 1996 and had significant
gap with its competitor.
• In 2000, their market share was drop up to 12.3% while in other hand some
of the competitor had rise their market share.
• New competitors brand in men and women has pop up and get a significant
market share. Promotional pricing by department stores increase and
entrant were pushing down the average paid for jeans. This cause the fallen
of price paid for jeans.

Industry observers believed the market place had moved from jeans to casual
with the popularity of the ‘khaki’ pant from 1998-200.
In 2001 the denim cycle was believed to be beginning again.
 #3
Changes in Distribution Channel

Department Store

• Eaton’s was absorb by the Bay and Sears

Specialty Store

• Aggressive expansion plan by The Gap

• Continued presence by chains such as Thrifty’s and Mark’s Work Warehouse
• New entrants such as American Eagle Outfitters and Old Navy

Mass Merchant

• Woolco acquisition by Wal-Mart (1994)

• Kmart closed half of its stores and the other half was purchase by Zellers (1998)
• Wal-Mart rapid expansion

Other Channel

• New entrants such as Winners and Costco

 What is the context in which
#4
Klee needs to make a decision?

• Overcrowded Marketplace
 Some distribution channel create their own private-label brands  more
competitive products in the market.
 Changes to the retail landscape  the average price paid for jeans had fallen.
• Significantly sales drop of GWG brand (Exhibit 3)
• Priorities of the parents company with Levi’s and Dockers brands  no guarantee
that GWG would be any growth beyond Jack Spratt.

He is doing absolutely nothing with the licensee  hasn’t invested any money into
it, hasn’t updated any of the fits, hasn’t tried to build it.
 #5
Is there enough of an “ember” to bring back the brand?
Does the brand have strong enough cache?
What are the channel considerations?
What are the financial considerations?

GWG® Brand
Image and Attributes Quotes
Strong Brand Awareness “50 years ago jeans synonymous with GWG”
“Popular brand, well known company”
Functional Image “More functional than stylish”
“GWG are rough, rugged and durable”
Poor Distribution Channel “I don’t know which stores I could find them”
“Haven’t seen them around here for years”
Body Fit “I just don’t like GWG fit”
“The pockets make my butt look big”
“Uncool” Brand “Wayne Gretzky looked bad in them”
“George W Groovey with bad haircuts and ridiculous
fashions”
Price “GWG were’s always a great price”
 #5
Is there enough of an “ember” to bring back the brand?
Does the brand have strong enough cache?
What are the channel considerations?
What are the financial considerations?

From limited consumer research, the GWG brand has strong brand image in
quality, comfort, and price, but for now there is not enough of an “ember”
to bring back the brand.

They were a hit with baby boomers decades ago

when they were in their teenager years.

Unfortunately, GWG have fallen out of favors with today's youth, it’s
perceived to be their “parent's jeans.”  market share has dropped
considerably.

Note: Now, consumers were seeking good-value jeans (fit, fashion relevancy, cool
factor of the brand name) and 15-to-24 years old category purchased twice as many
jeans as the 25+ age group.
 #5
Channel Consideration

More channels of distribution for jeans in Canada  more

competition  more kind of products supply in the market 
more buying power

Must Do!!
The company has its own sales force to call on department stores
and specialty clothing stores. It is anticipated that the GWG line
will be available in discount department stores such as Wal-Mart
and Zellers, along with a host of smaller, regional chains stores
and independent retailers. Sales promotion incentives will be
needed to secure distribution.
 #5
Financial Consideration

• Must have a person responsible for the updating of all the fits and general
management of the brand’s product for a cost of $60,000 a year.
• $50,000 for other existing staff to create some refreshed point-of-sale
materials, sell the brand to retailers, and support it from the existing
infrastructure.
• The jeans could be made for:
– a minimum cost of $15.00, shipped at $0.35 a unit, with an estimate
90 days of inventory needed to expect 15 days in both A/P and A/R.
– used a tax rate 40% and WACC 12% to evaluate internal decisions

Consistency with the Levi’s and Dockers brands in offering an additional 2%

as a discount on top of the early payment discount.
 CONCLUSION

GWG® Brand
• Develop a positioning strategy
statement for the product line.
• Determine the unique selling
proposition.
• All marketing communications
strategies must be directly linked to
the positioning strategy.
• Make some form of marketing
communications support to reacquaint
and reconnect baby boomers with the
brand.
 - Thank You -

Syndicate Rejupenation
Bawono Adhi Mutia Safrina Husna Kesumawati Dian Gita Utami M. Satiadharma Gumbira Safrinanda