The Homa Files

Excerpted from BusinessWeek, “Selling $300 Jeans in a Down Economy”, by Stacy Perman, November 18, 2008

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Denim is an $11 billion industry in the U.S. and has been growing at around a 5% to 7% clip in recent years. Premium labels such as Rock & Republic now account for a 7% chunk of the total market. “Consumers will pay $300 for the right pair of jeans. They see it as an investment.”

Moreover, “certain denim brands have made it their focus to be a game-changer. They make you feel really great and you will pay twice as much for those. What they are able to do is get the consumer of many different age segments and deliver on the implied promise that these jeans will make your life better, you will feel better.”

Even in an economic downturn, Cohen calls denim “recession-resistant.” “People are going to make significant changes,” he says. “They don’t have a lot of money in their pockets. They may not buy three pairs, but they will buy one pair and it has to be about who has the right message.”

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At the time of Rock & Republic’s debut in 2002, premium jeans (those with price tags that start at $75) were on the rise, and the company acknowledges that their timing was spot on. 

The rest of their success came down to branding and marketing. Following a strategy to create a niche label within a tight space of niche labels, the line was unveiled at fashion shows primed to grab attention. Models careen down the runway drinking beer, flipping the bird at photographers, and lifting their skirts.

At the same time, Rock & Republic worked to heighten interest among consumers and retailers by creating scarcity. When Barneys wanted an exclusive deal to sell his line, they turned the luxury department store down. In the beginning they also turned away Bloomingdale’s. “The ability to say no made our brand.  We had a twofold strategy about where we placed the brand and leverag[ed] its exclusivity.”

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If any luxury brand has a shot at staying aloft during this downturn it very well might just be Rock & Republic. “We know very well from our data that strong brands hold up better than weak ones … strong ones have a distinctive position and a real perceived differentiation in the market. Rock & Republic seems to fit that bill even in a fairly competitive market.”

Moreover, one should not underestimate the cachet that Rock & Republic jeans continues to confer on its wearers. “Yacht manufacturers are suffering,” he says. “But let’s face it, someone that is willing to shell out $200 to $300 on jeans is not going to run out to the Gap for their next pair. There is tremendous badge value in this sort of luxury and if Rock & Republic has it, that is what people will buy.”

Edit  by DAF

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Full article:
http://www.businessweek.com/smallbiz/content/nov2008/sb20081118_392896.htm?chan=top+news_top+news+index+-+temp_small+business

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