Gap Pushes into Premium Denim
By Tom Ryan
The Gap chain last week overhauled its core product, denim jeans, with the launch of 1969 Premium Jeans. With most styles costing between $54 and $59, the collection offers a less expensive option to the $150-to-over-$200 price tags fetched by premium jeans such as True Religion, 7 for All Mankind and Citizens of Humanity.
The move comes as Gap has lost share in jeans over the last decade not only to those pricey labels but to teen competitors such as Abercrombie & Fitch and American Eagle.
"Denim is our birthright," Marka Hansen, president of Gap North America, told the Los Angeles Times. "I think we have ceded some of our business to others over the years as the market has changed and as people have looked to status brands. We’re not changing our positioning, not at all. What we’re trying to change is relevance."
After undergoing a two-year turnaround effort that has largely focused on reducing promotional sales, cutting costs and realigning real estate, Gap is counting on 1969 Premium Jeans to rejuvenate top line growth. With chic names such as Always Skinny and Sexy Boot, the launch is being supported by a digital and print "Born to Fit" marketing campaign, two pop-up stores in L.A. and Manhattan, in-store parties and a microsite to demonstrate its new-found focus on fit and finishes.
Jeans have also done well in the recession with sales rising 17 percent last year, according to NPD Group. Some see demand for pricey jeans waning.
"The economy shifted, and all of a sudden those outrageous prices actually look outrageous," NPD chief retail analyst Marshal Cohen told USA Today. "The super-premium jean business has dropped off tremendously because the inspirational shoppers aren’t going up that high, and luxury customers aren’t buying two or three pairs anymore."
But Eli Portnoy, chief brand strategist with Portnoy Group, a consulting firm, told the L.A. Times that the Gap is too late in moving into premium denim. Levi’s, for example, has been competing in the space for nearly a decade.
"Denim is still a good business, but it’s a crap shoot for Gap because they’re not leading the way," he said. "Denim alone is not going to be what saves Gap Inc."
True Religion’s CEO Jeffrey Lubell questioned whether $59.00 jeans could be perceived as "premium denim." He also contends that many premium jeans makers earn credibility by making their jeans in the U.S.
But Patrick Robinson, took over as vice president of design at the Gap in 2007, told the Chicago Tribune that Gap’s jeans needed a revamp because its relaxed styles weren’t relevant given the excitement around premium jeans. The lower pricing, he added, is also what today’s customers are looking for.
"What we give them now is an even better rock-star butt — at $59," he said. "And that’s Gap."
Discussion Questions: What challenges does the Gap face in positioning itself in the premium jeans market? What’s the likelihood that the premium denim strategy will revive sales?
One thing that has not been touched on in this article is brand image. Jeans by Lucky Brand, 7, and other premium names are cool to wear by name as much as style. Even if the Gap does everything right with look and style, will anyone really want to be seen wearing a pair of Gap “premium” jeans?
For those prices, we can head over to the Levi’s store.
The credibility of the message exists in direct relationship to the credibility of the messenger.
Gap?
Premium products?
Does anyone remember Gitano and Kmart?
And, while we are at it, premium jean shoppers aren’t likely to confuse Gap products with Rogan jeans. Some manufacturers like Levi (with their Big E brand) have tried to cross markets, but it is a tricky business at best.
Premium jeans that appeal to the slick set start at about $150 — anything else is what it appears to be — an attempt by a mass retailer to aspire to an elite market that wouldn’t be caught dead in down market apparel.
The Gap certainly ought to be in the business of “semi-premium” jeans. Retail prices like those of the 1969 collection aren’t much different from the product made by Seven for All Mankind to be sold at mid-tier stores like Kohl’s. The Gap doesn’t have a niche in the true premium business (price points $100 and higher) but needs something to position itself away from the commoditization approach of its sister company Old Navy.
The bigger question is whether the 1969 brand is compelling enough to command the customer’s attention at $50-60 per pair, and whether there is a perceptible difference in quality, fit and finish compared to The Gap’s core product. The Gap might consider adding brands outside its stable of private labels if it really wants to take a step away from the past.
The article brings up a few key points that will work against Gap in their push into the premium jeans market. And under previous leadership they tried to cut costs by skimping on quality in their denim offering leaving the total selection very one dimensional and the quality poor. I fear they disappointed a lot of shoppers who may remember the experience. Also, it’s a very crowded segment as everyone is looking at denim as the 2009 apparel savior, pressuring margins.
On the flip side don’t underestimate Gap’s brand equity, their ability to launch effective ad campaigns, and their size. They just need to make sure they deliver what’s advertised. So by no means count them out. They are still the 800 pound gorilla!
Gap may have a myopic perspective on premium jeans. It sounds as though they are talking amongst themselves, assuring management that they have a product to compete with other “premium” jeans. If consumers don’t see it that way, their internal dialog (no matter how convincing) won’t generate similar consumer perceptions or sales.
As RetailWire commentators are bound to note, there is quite a difference between “premium” brands and a single product within a line of jeans that is intended to portray a “premium” product.
Fit, which the article emphasizes, hardly seems like the pivotal characteristic for “premium”. I think that Gap has uncovered the brand’s gap in the marketplace. However, positioning (another word for wishing?) won’t make their jeans “premium” in the eyes of the consumer.
In The Tipping Point, Malcolm Gladwell writes about how a group of trendsetting kids in the East Village turned Hush Puppies shoes into an “epidemic.” But such phenomena are rare.
In the late 1990s, Levi’s came out with Hard Jeans. They identified a “new” trend with old-school “dungaree” type jeans and employed the same logic as GAP–“Denim is our birthright.” The marketing was horrible–they emphasized how uncomfortable the jeans were, thinking that comfort wasn’t a factor for fashion mavens. The jeans flopped.
The tricky thing for big volume fashion companies like GAP and Levi’s is that their equity is not on the high end. Trendsetters, the folks they are ultimately hoping to target, just don’t think of them as cutting edge. And all the marketing in the world won’t turn that around. As Gladwell writes, Hush Puppies became cool in spite of themselves. They didn’t raise their price and target the fashion elite. Rather, the elite found them.
GAP should expect some halo effect with their core product with their revamped 1969 jean. But they are unlikely to see any real volume from the product no matter how much hype they put into it.
Does calling them premium jeans make them premium jeans? There are elements such as piece goods, design, construction, fit, etc, that go into genuine premium jeans. If I call my Toyota a Ferrari, will it be a Ferrari?
I almost fell out of my chair reading the term “premium jeans.” I’m not so sure there are enough morons willing to pay $59 for a pair of $14 jeans.
The Gap has, from its inception, always been about denim bottoms and there is little doubt that they can provide a good product at $59, or any other price point for that matter.
The larger question is “who is the target customer and how does this fit in with the overall assortment aimed at that customer?” With monthly comp sales dropping consistently for last few years, it’s obvious that the Gap brand no longer commands the customer loyalty that it once enjoyed.
If the $59 jean is simply a stand-alone price point in an otherwise unchanged assortment, this will probably have little impact on their overall business. If, on the other hand, the line is part of an overall strategy to identify and re-target their customer base, this could be the beginning of a turnaround for a once powerful retail brand.
Time will tell.
The best place to buy premium jeans for my daughter has been Goodwill, not Gap. The only similarity is they both begin with ‘G’.
You might say, “Sure, who’s going to do that?” At $3-$6 per pair, six pairs for summer work and fall at college were less than one pair of imitation premium jeans. They were all practically new, extremely clean and a great value.
My guess is that buying the ‘premium’ is far less in vogue than Gap is dreaming. It’s also quite surprising that they would launch in an economically stagnant market. But what do I know? I think $29.50 is high for LL Bean Double L, or two pair for $49.50 from Jos. A Bank. I may be way out of touch, but for practical folks, they are looking for value far more today than ever. I think ‘Calvin Klein’ and ‘Jordache’ on the back pocket having meaning went out in the ’80s.
I see no gain for Gap in this endeavor. Gap would be far better to set themselves up as a value for great looking clothes than to attempt an image of something they are not. They will never win at that perception game when the perception is already settled. Being the best at something you are and what your consumers expect you to be creates far more opportunities than appealing to something you are not.
The GAP by its efforts for premium jeans will create a point of difference between the premium jeans market at $100 plus pricing and their price points and gain traction in their denim business.
The apparel business is all about building volume by bringing style and design into popular price points.
I think the GAP will energize both their denim bossiness as well as their stores’ traffic by this move.
Wow, a lot of skepticism here! Gap’s 1969 line may not be a true “premium” jean, but it is a noticeable step up in quality and fit from their standard line, at least for this aging rock star’s butt! They may or may not capture the magic of a cultural trend, but they may indeed revitalize their jeans sales if shoppers find the jeans a good balance between fashion, fit, and finish. So far, I think they’ve got the product right.
I saw the 1969 jeans this weekend during a trip to the local mall. I also saw the $20 off promotion that they were running on them. So is this a premium (or semi-premium) jean, or a promotional item?
This points to the issues others are raising here. Gap has become, like Levi’s, irrelevant to today’s younger fashion consumer. They have their customers, and they will sell their share of jeans, but they are no longer able to move the market like they once did.
With the consumer still firmly entrenched in their bunker, and demand lagging, relevancy is becoming a real issue for a lot of apparel retailers, not just Gap.
I had high hopes that Patrick Robinson would go past denim and make Gap relevant in separates and collections. Based on my visit to Gap last week to check out his work, that isn’t the case. Non-denim bottoms are still flimsy; not suitable for work and not attractive for casual. Tops and jackets are boring, untailored and made out of the same old fabrics. Most tee shirts are in a super-soft fabric that at first seems like a major upgrade; that is until you pick it up and see how thin it is. I did not see one compelling non-denim item in the entire store. At the same time, clearance items were plentiful and crammed into racks in the middle of the store (BEFORE you hit the premium denim) and the dressing rooms were filthy. Tough to use the word “premium” when the environment doesn’t support it!
The new premium denim is impressive in some ways; flawed in others. On the plus side, the can’t miss display does scream “We are going after denim!” Sales associates were well-trained in the fits (including the fact that some styles inexplicably come in different lengths while others do not), and the fabrics are now buttery soft and forgiving while at the same time departing from the baggy “weekend jean” curse that has plagued Gap in the past. The fits are great and the prices aren’t unreasonable; however, they are inconsistent. I bought two pairs of the “always skinny” distressed jeans in the store for $69.50 each only to find them on sale on the Gap website for $49.50. Immediate loss of credibility that makes the perception of the in-store price go from “Not bad for premium” to “What a rip-off!”
I applaud Gap’s denim effort on many levels; however, denim does not a fashion (or basic) business make and launch-time price slashing games kill credibility. If this is as good as it gets, I’m worried for Gap.
I like the idea. It also gives Gap a shot at getting out of the J.C. Penney look-alike contest that they’re winning. We always talk about assortments being like triangles, with the “diamond bra” idea at the top. Gap has been sorely lacking in that area the last decade or so (when did Mickey leave?). I’m not sure it’s going to move that huge needle they’ve got, but at least it’s an effort to do so.
“True Religion’s CEO Jeffrey Lubell questioned whether $59.00 jeans could be perceived as ‘premium denim.’ He also contends that many premium jeans makers earn credibility by making their jeans in the U.S.”
+1. Along with David, I confess to not “getting” the “premium denim” market–though I’ve long guarded against chair-falling moments by installing thick carpeting–but I’ll take Mr. Lubell’s word for it.
And not to be (too much of) a wet blanket, but I wouldn’t be surprised if this ends up being another miscue; not another fiasco like “Forth and Towne” perhaps, but one which disappears quietly into retail history; just as GAP had the Midas touch in the ’70s, ’80s, and ’90s, in the past decade it seems to be a rudderless ship.
Who is defining the segmentation? The 1969 Jeans are in the same segment as Levi’s better jeans. Gap is not trying to be True Religion.
Certainly, jeans are in Gap’s heritage, but they dropped that heritage more than 20 years ago. However, if they are going to be serious about mid-range casual, they must have a mid-range jean line. That is what 1969 appears to be.
This is not a turnaround product for Gap. It is a necessity. Jeans of every range are much too ubiquitous to ignore and the range that fits the Gap Brand is precisely 1969.
There’s an underpinning truth that we haven’t talked about and GAP may be a symbol of it; Our expectations of all concept lifespans is being altered by the speed of technological change. If a brand is 20+ years old now, it’s not a comfort, it’s a worry.
The GAP may simply have reached the end of its useful life, regardless of the price of jeans.
How big, really, is the “premium” market? Are people who truly want premium jeans going to turn to the GAP as the answer? Young girls who may aspire to “premium” jeans will not be fooled and chances are they will forgo extra pairs to have one true pair of premium jeans.
I do not think boys are so concerned in these matters–I bet they are more concerned about their sneakers.
As for adults– I again think that people who want a premium jean will shell out the money for true “label” premium jeans. I do not think that this will be an endeavor with great results.