moneybox: Daily commentary about business and finance.

The Branding Iron

James Surowiecki
Posted Wednesday, March 3, 1999, at 1:05 PM ET

In the past year, Levi Strauss has stopped referring to itself as "the world's largest brand-name apparel manufacturer" and started calling itself "one of the world's largest brand-name apparel marketers." The increase in modesty was meant to indicate the company's newfound commitment to what's called "brand management." But it also foreshadowed the dramatic transformation of Levi from one of the few apparel companies committed to employing U.S. workers at good wages into one of the many apparel companies that rely heavily on contract labor from Latin America and Asia to make their goods.

Levi Strauss is a private company and for most of its history has been both successful from a bottom-line perspective and renowned for its excellent management-labor relations. In the past two years, though, the Levi's brand has struggled. Last year, the company's sales fell 13 percent, largely because of declines in the company's flagship jeans business. And last week, Levi announced it is shuttering 11 of its 22 North American factories, in towns ranging from Harlingen, Texas, to Warsaw, Virginia. The company will be laying off 5,900 employees in order to shift production abroad.

In one sense, this comes as no surprise. Almost all Levi's major competitors--Guess?, the Gap, Tommy Hilfiger--have their goods made overseas. And if there is something ironic about that most American of products--Levi's blue jeans--being stitched together in some Guatemala City maquiladora, well, it's one of the many ironies that we now accept as just a matter of course. The Levi's jobs were good, unionized jobs, with solid wages and benefits. But they were the kinds of labor-intensive jobs in which developed economies enjoy no comparative advantage, which means they were the kinds of jobs that are difficult for the U.S. to hold on to.

Even so, Levi would probably have kept those jobs in the States if management hadn't done such a bad job of adjusting to changes in popular taste. As kids shifted toward wide-legged, baggy jeans, Levi's failed to move in that direction. And even though the wide-legged craze already appears to be dying down, Levi's more recent ad campaigns, which emphasize how hard its blue denim is and which hark back to icons like Marilyn Monroe and Marlon Brando, have felt oddly hermetic, as if conceived in a cultural vacuum.

Still, it's fair to ask whether Levi's management could really have done a much better job. For branding to work as a business strategy, after all, the brand needs to be powerful enough for consumers to have associations with it that are difficult to shake.

But if the virtue of branding is that your name means something important to consumers, the vice of branding is that your name means something important to consumers. When consumer taste changes, their appetite for your product will likely change as well. In analyzing what happened with the explosion of the wide-legged market, for instance, some people argued that the problem was that kids just didn't care about the Levi's name. But kids did care about the Levi's name, cared enough to know that Levi's wasn't the company you looked to for wide-legged, baggy jeans, just as the disco kings and queens knew that you didn't buy tight designer jeans from Levi's.

Reinventing brands is certainly possible. Gucci has done it in amazingly well since the ascent of Tom Ford as designer. But any reinvention has risks. In the case of Levi's, it seems safe to say that eventually the wheel will turn, and consumer taste will swing back to a more classic style. You can understand why Levi Strauss doesn't want to stand still. But dreaming of a new identity is much easier than actually creating one.