8.02.2006

Get your Levi's at Walmart?

Every once in a while, both the Mrs ThatOneGuy and I run into people who say, in passing conversation, that if they could AFFORD to shop elsewhere, they wouldn't shop at Walmart. This always makes me laugh, many times right outloud. Mrs. ThatOneGuy doesn't laugh outloud though, she's much more polite than I am. To her credit, and frankly, mine too. :)

Four years ago, Levi Strauss was contacted by Walmart, wanting to carry their brand in the stores. LS thought that would be great - who could argue with what Walmart can offer? The world's largest retailer - you get your product in there and you've got it made - you just made your year, if not your five-year plan.

That's what THEY thought too. Until they went to the vendor meeting. It turned out that Walmart wanted them to provide their product at a cost that was well BELOW their COGS (cost of Goods/Services), ie: what it cost them to produce and deliver.

So what did LS do? They really wanted what Walmart could get them: financial gains to prop up flagging retail sales over the last ten years. (Levi's -a privately held corporation- kind of got left out of the trend-denim craze that was the late 80's and all of the 90's) So, they went back to Walmart and told them they would give them a line to offer in their stores, at the price they were asking. LS went to work developing and sourcing materials for this line. They've been there for about 3 years now. What they delivered was a line of jeans with the traditional "Red-Tab" on them, but the denim materials were MUCH lighter than the standard Levi's "Red-Tab" material, single-stitched construction as opposed to the usual double-stitch, and no rivets, no extras.

Reports were that the line in Walmart lasted (wear-wise) about half as long as other jeans LS had created, and were not selling as well as Levi's had wanted them to as a result. They're still sold in Walmart, but now the brand is watered down, both inside and outside of Walmart.

But Walmart got what they wanted. So, if you think it's still a good deal, go ahead and buy your Levi's at Walmart.

I'm just sayin'.

4 comments:

That One Guy said...

You may have noticed that i didn't post any references for this story. I heard it on NPR's talk of the nation the other day, I think. I'm trying to find the link and will post it when I find it.

That One Guy said...

Actually, it was heard here on Radio West's broadcast on July 14th. The guest was author Charles Fishman, who has just published a book called "The Walmart Effect." He calls Walmart a "genuine reflection" of the values of the country. Go to KUER.org and get it via podcast.

The Keeper Of Odd Knowledge (KOOK) said...

Remember the Vlasic pickles commercials you used to see several years back? They were the premium pickle. Wal-Mart did the same thing to them. Wanted them to sell a ginormous jar of pickles for like $5. Doing so caused such a rush on that size of pickle jar (even though it was restaurant sized and would spoil in most family refrigerators before they were eaten) that Vlasic had to buy cucumbers from competitors. Now you never hear of Vlasic as a premium brand. Same deal. Typical Wal-Mart Tactic

The Keeper Of Odd Knowledge (KOOK) said...

Another favorite is this: Say you are a manufacturer in the U.S. to get a wal-mart contract you have to promise to source a % from overseas and each year they force you to up that %. They also lower their buying price each year to you.