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?