BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Tuesday, 10 July, 2001, 16:24 GMT 17:24 UK
Battle of the brands
Levis jeans - a favoured brand
Levis claim that how, where and at what price jeans are sold is critical to the brand's success
By the BBC1's Money Programme Rajah Datar

The world's biggest brands have spent a fortune building mystique and exclusivity, but now they are under threat from superstores which think they are charging too much.

The war is reaching its climax with an increasingly heated battle between Levi Strauss and Tesco.

Superstores are fighting for the right to sell more designer brands on the cheap, next to the baked beans. If they win the boss of Levis sees a bleak future.

Consumers are obsessed by labels. As a nation we spend an estimated 20bn a year on branded fashion goods.

In response to this increased demand discount stores have been mushrooming across Britain - flogging famous names on the cheap.

So brands seem to be losing control of their exclusivity.

Consumers today are very well travelled, they see prices all over the world... why should Levis be one price in America, another in France and a third price in the UK

Christine Cross, head of Tesco's non-food sales

However, finding the goods to sell isn't easy: the brands come through a roundabout route - the "Grey Market" - because the brand owners won't sell directly to supermarkets.

Rip-off Britain?

This is a battle for consumers' hearts, minds and wallets. It all boils down to one question: is the British consumer being ripped off?

On the one side are the discounters and superstores like Tesco: they say that in this country we fork out much more than consumers abroad for exactly the same designer labels, and it has to stop.

They want unfettered access to the grey markets around the world to bring cheaper branded goods back into the UK.

On the other side are the brand-owners, the dream merchants. They say there is no rip-off, and unless they can control how their products are sold, the dream will be shattered and they will be out of business.

Tesco's supermarket trolleys
Fighting for the right to sell brands cheaply

Now the war is reaching its climax with an increasingly heated legal battle between Levi Strauss, the world's biggest jeans company, and Tesco, Britain's leading supermarket chain.

501 battle

It all started with a row over the famous 501 jeans.

In the 1980s, Levis spent a fortune creating a huge demand for their 501s.

Then Tesco decided they wanted to sell them.

Levis said no. The company did not want their premium jeans sold in supermarkets.

Tesco would not take no for an answer, and started importing cheaper 501s from America.

Levis went to court and has stopped imports from outside Europe - for now.

"Our brand is our most important asset. It's more valuable than all the other assets on our balance sheet. Its more valuable than our factories, our buildings, our warehouses and our inventory," explains Joe Middleton, Levis European president.

"We must have the right to control the destiny of that brand."

Tesco's strategy

With brands becoming as internationally identifiable as nation states, Tesco have shrewdly tapped into a growing hunger among regular shoppers for the big label.

Prof Christine Cross is head of all Tesco's non-food sales and although she is not allowed to buy in brands very cheaply from outside Europe, she is keen to track down bargains on the continent.

Levis are determined to stop her: its a game of cat and mouse.

The true cost of making this jean is not just the factory element. Its much more than that

John Middleton, Levis' European president

And now the government is joining in, trying to persuade the EU to allow supermarkets like Tesco to import grey market goods from anywhere in the world.

Branding dilemma

But fashion branding is increasingly tough and expensive.

"Branding is about making choices helping you project who you are or more importantly who you want to be," says Chris Nurko, brand expert.

"So brands are just a way of short cutting your, not only your decision making but also helping you define your identity."

But the kids are fickle: fashion brands like Levis have to innovate continually to stay in favour - and that, they say, takes cash.

"The important point is that all these costs are an investment in the brand. This jean, the true cost of making this jean is not just the factory element. It's much more than that," says John Middleton, Levis' European president.

Government weighs in

But at the end of the day the government remains unconvinced by the brands arguments.

As part of its renewed campaign to clamp down on "Rip-off Britain" it has produced fresh new evidence which it says confirms that the British consumer is being exploited.

The supermarkets scent victory.

If the superstores and the government have their way, in the short term we will be able to buy many more cheaper branded goods.

But in the long run, will this really make us happy? Or will it kill the dream and destroy the brands we love?

Search BBC News Online

Advanced search options
Launch console
The Money Programme investiages the sale of label goods
Battle of the Brands
The marketing and selling of fashion goods
See also:

16 Jan 01 | Business
Tesco confident in jeans battle
Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories