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Write a 250 word response to the following post. Do not simply respond – provide new information.
Levi’s was caught in the middle between low-end labels using offshoring to lower costs and high-end denim companies using fashion jeans to capture affluent customers (Barney & Hesterly, 2019). Levi’s reputation for quality had always commanded a premium value, but its product was becoming less differentiated as customers had more options (Barney & Hesterly, 2019).
The personal pair proposal offered Levi’s an opportunity to differentiate based on customization while lowering some costs. Levi’s could charge a $15 premium, but technology, retail, and SG&A costs would increase by $20/pair; however, operating costs would decrease by $3/pair and distribution costs of $11/pair could be eliminated (Barney & Hesterly, 2019). Levi’s would then create $9 of economic value per jeans over traditional sales. However, if customers were only willing to pay a $5 premium – the economic value would be forfeited (Barney & Hesterly, 2019).
This proposal brings value to Levi’s through emergent technology. It also brings rarity through their partnership with a technology firm. The proposal is imitable by high-end fashion labels, but not by the low-end denim firms. Levi’s was well organized to execute this strategy because of their hand-sewn work process.
I believe that Levi’s should have pursued the Personal Pair proposal. Cho and Fiorito (2009) give research showing the apparel market was ripe for customization. Had Levi’s pursued this course, they could have enjoyed success like Land’s End, who made its name as a strong e-tailor.
References
Barney, J. & Hesterly, W. (2019). Strategic management & competitive advantage: concepts and cases. Pearson: New York, NY.
Cho, H., & Fiorito, S. S. (2009). Acceptance of online customization for apparel shopping. International Journal of Retail & Distribution Management, 37(5), 389-407. doi:http://dx.doi.org.ezproxy.regent.edu:2048/10.1108/09590550910954892
