An interesting article in the New Entrepreneur section of BusinessWeek, it features the Rock and Republic founder Michael Ball's new line, Recession Denim. The article also features the price drop in retail cost of Rock & Republic.
It is a good insight of the world of denim sales - decided to share it with you guys.
Last November, right around the time when the economy took a nose-dove, I spoke with Rock & Republic founder Michael Ball who had made a name and a fortune selling his elaborately expensive jeans. At its high-point (just before the economy tanked), the luxury denim category appeared to follow the inflated housing market, what with people willing to spend $300 - plus in order to carry the cachet that these fancy blue-jeans were supposed to confer on the wearer. In the fall of 2008, market researcher NPD Group reported that luxury denim had become an $11 billion industry in the U.S. and one that had grown enviably — 5% to 7% a year. Ball had built a $300 million brand empire based on his designer jeans before expanding his product line to include cosmetics, accessories, and shoes that were sold in 86 countries.
When the stock market crashed and the economy skidded to a halt however, people began to think twice about paying the kind of money for a pair of jeans that they would for a fine bottle of wine. Ball noted that during the first half of 2008, Rock & Republic’s sales had spiked 14% only to fall flat during the second half. His ambitious plans (which included boutique hotels) were placed on hold and he said that he was not going to price his jeans above $280. “The top-tier has fallen off,” he said, “there is no point in sitting there.”
Fast forward to a year later — Ball who is known as much for his brash personality and marketing finesse as he is for his expensive jeans was now pushing the top-tier down even further. In a nod to affordable luxury Ball released a new line of denim called appropriately enough: Recession Jeans. Priced at $128 to $132, the new iteration of Rock & Republic cost less than half the price of Ball’s famous $300 designer duds.
While the new price still hovered way above a pair of jeans at the Gap, Ball was not necessarily abandoning the $$$ = hip quotient that he had built his brand on. When Ball was starting out he created a swell of demand for his original pricey jeans by limiting the number of retailers he would sell to —even refusing to sell to Barney’s and Bloomingdale’s). He deployed a similar strategy when he unveiled his recession collection this past spring, the four-line offering was billed as a Limited Edition and sold only in a small number of outlets and for a finite period of time.
Rock & Republic’s skinny jeans may now cost less than before but Ball still seems to know how to drum up exclusivity at any price point and that may be the key to staying one step ahead of the economy. Then again, if things don’t pick up, Ball and his competitors may have to push the top-tier down another rung or two. Then the future of premium denim might have a different kind of label, along the lines of: Rock & Republic jeans for Target.
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