Alpha Tribes: Diesel vs Levi’s

We present to you another Alpha Tribes analysis of Diesel and Levi’s. The aim of this report is to give you an insight into how we think and for us to highlight which brands we believe demonstrating the traits of a truly tribal brand (whether knowingly or not), against organisations within the same sectors that have not yet embraced such principles.

Industry: Fashion

The Contenders: Diesel vs Levi’s

The Winner: Diesel

Summary

Founded in 1978, Diesel has always been a leader; a brand that sets the benchmark for creating rather than following trends.

Whilst brands such as Levi’s have sought to get everyone into a pair of 501s, Diesel has created a premium brand for independent thinking people who follow their own unique path in life, it has created a business that people can identify with and believe in.

As a brand that has a strong belief in challenging established conventions, it comes as no surprise that this is a company that takes chances and is successfully different from its competitors not just because of its products or services but because of what lies within its soul.

Great brands are not based on great ads or clever logos. They’re built on substance, belief and a consistency of behaviour that people can be part of; Diesel has established a strong sense of identity and belonging and that goes a long way to understanding their high performance and the tribe that surrounds this brand.

Performance and Sustainability

Diesel has demonstrated a substantial increase in performance in recent years. By 2009, annual sales were approximately €1.3 billion. Revenue is largely derived from denim sales, but the brand has also become extremely successful and influential through its range of accessories and children’s wear, Diesel Kid. The brand is now Number 2 in the European casual apparel market and is a brand that consumers truly trust.

Innovative Tendencies

Diesel is well known for being one of the true innovators in fashion retail. It was the first brand to launch distressed denim and it has been extremely successful in branching out into accessories and children’s wear. As a result, Diesel has become a strong competitor to the established market leader, Levi’s.  The brand’s design, advertising and management style embodies a love of humour, creativity and irreverence towards established rules, which its brand tribe truly buys into.

Tribal Leadership

The company is well known for picking out social issues and things people are debating in the public and repackaging them in interesting new ways that engage its brand tribe. Its “Stay Young Forever” campaign in 2001 was Diesel’s commentary on the ethical implications of cloning and stem cell technology, whilst its “Stop Knifing, Start Spooning,” employee activity was a humorous commentary about the problem of knife crime in London.  For Diesel, the activities they take part in are wholly appropriate based on its core beliefs – and the results speak for themselves.

Tribal Influence

In a staid market, Diesel has imposed originality and creativity by bringing out a personality that’s about humour, daring colours and provocation. The company is also focussed on appealing to the style-conscious and higher end of the market, raising its profile as a truly aspirational brand.

Product vs Brand Focus

For Diesel, the focus has always been about the brand.  In a 2009 interview with Brand Channel, Founder, Renzo Rosso, said: “Diesel is an international brand—very trendy, very young and very cool. I want every teenager to dream about having Diesel jeans. Diesel doesn’t have to be the biggest brand on earth, but the coolest. For me, a cool image is more important than a big turnover.” Asked what is the essence of Diesel’s brand, Rosso answered, “Passion and creativity. They are the DNA of the brand and the basis for all of our products, our daily work and our lifestyle. My goal is to be a pioneer in everything we do.”

Authenticity/Magnetism/Honesty

Diesel has established a unique brand positioning and is indeed authentic. It presents customers with a brand choice rather than functionality.  The brand’s magnetism is exemplified by its HR processes. Employees are drawn to the organisation because they feel a strong affinity with the company’s clothes and attitude, which means that Diesel often recruits from its passionate customer tribe, rather than from those who are simply looking for a good job in fashion retail.

The Loser: Levi’s

Summary

Levi’s is a bona fide global brand, and is widely known to have invented jeans.  However in mature markets consumers are increasingly resisting what they see as bland ubiquity.  Consumers do not embrace a brand just because a company regularly releases new products, marketing campaigns, or promotion; they embrace it because they feel it and believe it. This is where Levi’s has fallen short – in recent years it has lost its edge and has suffered as a consequence in established economies.

Nonetheless, the brand has continued to perform well in emerging markets and its inventiveness in these markets suggests there could be a bright future if the company can adopt these bold approaches in traditional markets.

Performance and Sustainability

Levi’s was once the unchallenged leader in its field but in recent years the company has lost its competitive edge and has spent a decade in the doldrums. Whilst still strong in the Americas and Asia, Levi’s has seen sales slump in mature markets such as the United States, Europe and Japan.

In terms of future success, the question is whether Levi’s can become relevant again.  Performance growth in the America’s and Asia would suggest there is hope of a turnaround and if the brand can create the right conditions, its brand tribe could flourish both inside and outside the organisation.

Innovative Tendencies

Denim products, Straight-cut, loose fit, low rise, twisted, classic, contemporary, organic. You name it, Levi’s probably covers it. The company has even branched out into branded mobile phones. The company is clearly not afraid to bring out new products or ideas, though it’s perhaps a little unfocussed on the brand, trying to be all things to all people.   Anyone remember the “Engineered Range”? The less said about that “innovation” the better probably.

However, there are signs of improvement in the emerging markets – take the clever innovation in India of offering an instalment plan to buy jeans and other products. With this thinking and focus on belief building interventions around their brand is there any wonder Levi’s is seeing growth in the emerging markets?  If the brand would only start adopting some more of this inventiveness in its mature markets, the company could see its brand tribe reinvigorated.

Tribal Leadership

Over the past decade Levi’s has been so inwardly focussed that it missed the great change occurring in the world where customers crave more than just products with a name and fancy advertising.

After years of spin and gloss, people now crave something more from this brand. Levi’s does have an opportunity to re-invent what it means to the 21st Century consumer. The opportunity is to stop talking about or focussing on equipping people with jeans, but by creating the environment and conditions that projects an aura, an attractive group identity.

Tribal Influence

Synonymous with the word “jeans”, Levi’s created the market and led the category for decades. In the 1990s, it lost significant market share and in 2010 the brand still seems to be carrying that injury. The company has been trying to get itself back on track but it’s hard when for years it was coasting on sheer size rather than changing with the times and nurturing the Levi’s brand tribe.  The company has also started competing on cost and has a huge distribution network so there is very little scarcity and lots of bargain bin hunting, which surely can’t be desirable.

Product vs Brand Focus

Levi’s continues to build everything out from the product, which given it invented jeans is perhaps understandable. However, the brand must shift its focus if it is to finally shake off its troubles from recent years and re-engage with its brand tribe effectively.

Authenticity/Magnetism/Honesty

Levi’s remains popular, but is struggling to retain its cool as younger upstarts such as Diesel increasingly eat into its market share by creating a persona and something to believe in.