Levis vs tesco cases and case study, aompare PDF

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Levi's vs. Tesco Case

Author: Rosalind Masterson Online Pub Date: March 06, 2016 | Original Pub. Date: 2014 Subject: Brand Management & Strategy, Retailing Level: | Type: Indirect case | Length: 442 Copyright: © Rosalind Masterson and David Pickton 2014 Organization: Levi Strauss & Co.| Tesco | Organization size: Large Region: Northern Europe | State: Industry: Manufacture of wearing apparel| Retail trade, except of motor vehicles and motorcycles Originally Published in: Masterson, R. , & Pickton, D. ( 2014). Levi's vs. Tesco. In Marketing: An introduction (3rd ed., p. 453). London: SAGE Publications Ltd. Print. ISBN: 9781446266472. Publisher: SAGE Publications Ltd DOI: http://dx.doi.org/10.4135/9781473938229 | Online ISBN: 9781473938229

SAGE © Rosalind Masterson and David Pickton 2014

SAGE Business Cases

© Rosalind Masterson and David Pickton 2014 This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes. 2021 SAGE Publications Ltd. All Rights Reserved. The case studies on SAGE Business Cases are designed and optimized for online learning. Please refer to the online version of this case to fully experience any video, data embeds, spreadsheets, slides, or other resources that may be included. This content may only be distributed for use within Newcastle University. http://dx.doi.org/10.4135/9781473938229

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Levi's vs. Tesco

SAGE © Rosalind Masterson and David Pickton 2014

SAGE Business Cases

Abstract The case concerns a feud between Levi's and Tesco and the latter's wish to sell imported jeans cheaply in retail stores. Levi's refusal led to the court deciding against Tesco, claiming that a manufacturing company has the right to oversee its products' distribution.

Case The world's biggest brands have spent a fortune building their names and they protect their image jealously. Large retail chains have enormous amounts of marketing power and are used to being able to dictate terms to their suppliers. A clash seemed inevitable. The court case involving Levi Strauss and British supermarket chain Tesco was part of a power struggle between these two camps. Britons spend an estimated £20 billion a year on branded fashion goods, and Tesco wants the right to sell those designer brands cheaply, but if it wins, then the brands' exclusivity is lost. Sourcing the goods was not easy. Tesco had to buy them through the grey market. Levi's would not sell to the supermarket directly and bona fide Levi's distributors were worried about selling the jeans on to supermarkets. Christine Cross, head of Tesco's non-food sales, felt that consumers should not have to pay such high prices: “Consumers today are very well travelled, they see prices all over the world… why should Levi's be one price in America, another in France, and a third price in the UK?” However, Levi's was concerned for the future of its business: “Our brand is our most important asset. It is more valuable than all the other assets on our balance sheet. It's more valuable than our factories, our buildings, our warehouses and our inventory,” explained Joe Middleton, Levi's European president. “The true cost of making this jean is not just the factory element. It is much more than that.” Many were unconvinced by the brand's arguments. If the superstores gained the right to stock anything they wanted to, then Brits could buy cheaper jeans – either with their groceries or through traditional channels forced to reduce prices or lose sales. Of course, the longer-term casualty would be brand value, which would be unlikely to survive the shame of jeans being sold alongside baked beans. The court decided that a manufacturer had a right to oversee the distribution of its products. Levi's won and its brand image was saved – until next time.

Discussion Questions • 1. Why was Levi's so reluctant to sell its jeans to Tesco? • 2. How was Tesco able to sell the jeans so cheaply? • 3. If large food retailers are able to sell designer brands at cheap prices, what are the long-term implications for branding?

Reference Datar, R. (n.d.). Battle of the brands.The Money Programme. BBC TV. Retrieved from http://news.bbc.co.uk/ 1/hi/programmes/the_money_programme/archive/1604636.stm

Data Source Information about this case was extracted from Datar (n.d.).

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Levi's vs. Tesco

SAGE © Rosalind Masterson and David Pickton 2014

SAGE Business Cases

http://dx.doi.org/10.4135/9781473938229

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Levi's vs. Tesco...