EDITORIAL: Levi's loses out as discounts put out a mixed message

The battle between Levi-Strauss and Tesco - or between consumer

cheat and consumer champion, as much of the national media would have us

believe - is now moving into stage two.

Following the European Court of Justice (ECJ) ruling against Tesco,

there was an immediate flurry of tabloid outrage that 'they' (the

Europeans) had banned 'our' (good honest Brits everywhere) right to

cut-price branded goods (seemingly now a God-given one). One week on,

brand manufacturers and retailers are taking up position, attempting to

maintain the story's momentum in their favour - or where that fails

launching their own marketing communications on the issue.

This week Tesco unveils an ad campaign through Lowe Lintas, boasting

that it will continue to sell discount Levi's sourced legally from

within the European Economic Area. Asda has vowed to battle European

legislation on parallel imports and is adamant it will continue to sell

cut-price French Connection, Nike and Calvin Klein gear.

On the manufacturer side, French Connection has responded by slamming

Asda for selling previous seasons' fcuk merchandise, taking the

understandable line that the out-of-date connection is a damaging one.

Far less understandable is the news that Levi's is to sell more

clothing, more cheaply through its discount outlets.

The logic at Levi's has become seriously twisted. Having put up a

rigorous defence that it has invested heavily in building the quality

promise and desirability of its brand, Levi's is now conceding that

those attributes can be picked up at a knock-down price in one of its

Factory Outlet Stores.

This is precisely the sort of price-meddling that got Levi's into a mess

in the first place. Consumers are not blind to such hypocrisy. A

convincing and consistent argument that a premium and innovative brand

must maintain investment, and consequently a certain margin, would have

been the right line to take.

Instead, Levi's appears to have buckled to media pressure. To constrain

Tesco's ability to sell cheap jeans looks indefensible if Levi's then

broadens the range of discount stock available through its ill-named

Factory Outlets.

It is factory output, poorly controlled, that is one of the root causes

of problematic international price disparity.

There is a strong case to be made for protecting brands from the damage

that opportunistic retailers can inflict - and it is one that Marketing

will continue to make. But the brand defenders are currently losing the

debate. Until they regain control over how and where their products are

distributed, and stop sending mixed messages to consumers, they will

continue to lose.


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