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Tuesday 16th October 2018


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Tesco and those Levi jeans
Feature: 3/11/2001

An article by Hamish McRae in the Independent newspaper puts a new - and very pertinent - slant on the Levi-Strauss/Tesco battle over the latter's right to sell the former's jeans at whatever price it chooses (see director-e News, Wednesday 21 November). We thought the article deserved a wider audience.

So Tesco is not allowed to sell cheap Levi jeans sourced from East Asia, McRae writes, but instead has to sell us expensive ones from the United States - or so says the European Court of Justice.

To most people this will simply seem outrageous and at two levels it certainly is. First, what on earth has it got to do with some European court (or with justice) where a British company buys its US stock? And second, what side is this court supposed to be on: getting cheaper prices for UK shoppers or bigger profits for an American multinational?

But get over your spluttering because the Tesco versus Levi tussle is much more than a Europe against Britain story or a manufacturer against shopper one. It goes to the heart of a number of key relationships in our economic system and says a lot about the sometimes rather odd values of Western society.

The relationship between a manufacturer, a distributor and a consumer has always been a complex one. The task of the manufacturer is not just to make something that people want to buy. It certainly has to do that, but it also has to make sure that the goods get to the customers. And it has increasingly to take responsibility for the quality of the goods during their entire life cycle, not just at point of sale.

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Manufacturer responsibility
The most extreme example of the continuing responsibility of the manufacturer is the most expensive of the consumer durables: cars. The car companies have used this as a way of protecting their dealer networks. Because they have to be sure that the products are prepared before sale and maintained thereafter, for the safety of their customers, they argue that they need to control distribution. New European legislation requiring them to take back and scrap cars once they have reached the end of their life cycle will further emphasise this lifetime responsibility.

But in the case of jeans you might imagine that this is all pretty simple. It is your responsibility, not Levi's, if they don't fit your bum. As for having a life cycle responsibility - well, provided you are warned whether they are likely to shrink or run that just about puts Levi's in the clear. Wash cycle responsibility yes, life cycle no.

But that ignores the significance of brands. Branding was invented in the second half of the 19th century as a way of guaranteeing quality. With unbranded goods the casual purchaser often had no way of knowing the quality of the product, regulation was minimal and there were particularly profound problems of adulteration of food and drink. So branding grew fastest in the food and drink industries.

The genius of the manufacturers was to take a device used to provide a guarantee of quality and turn it into a symbol of status. So when you wear Levis you are making a statement about yourself: that though you are a solicitor in north London (or whatever) you have the rugged, independent values of the American west.

The luxury goods end of the market has this taped. Go back 40 years and brand names were simply designed to distinguish the people who had money from those that didn't. Now the distinctions are more subtle, for the luxury end of the market has an almost infinite range of gradations. In terms of style, products range from stealth wealth to flash wealth; in terms of cash, from mass affluent to "if you ask the price you can't afford it".

Does it matter?

But those are products that are physically the same, wherever you buy them; does it matter how they are sold?

The marketers would argue that the purchase of a product is absolutely crucial to the way it is both perceived and enjoyed. The shopping experience is supposed to be part of the fun. Hence a dress bought in Harvey Nicks would feel different to an apparently identical one bought in, well, Tesco.

For some people, of course, the Tesco experience is preferable. You see what you want, pop it in the cart and think no more about it. The less poncing about the better. But successful upmarket retailers are very adept at making customers feel good about the things they are buying, and more importantly, about themselves. Service is attached to the product and people willingly pay for that service.

This link between product and service will become more and more important as we move to a world where goods carry on becoming relatively cheaper and services relatively more expensive. That is one of the inexorable trends of the past two centuries.

Mass production and outsourcing to developing countries has cut the cost of most manufactured goods, but the need for increasingly expensive human beings has held up the costs of most services. Simple example: it costs about as much now to pay for a TV licence as it does to buy a TV set. Go back a generation and the licence was a tenth the price of the set.

Get used to it

There is very little we can do about this, except get used to it. As the size of our workforce declines relative to the population there will be increasing pressure on the time of working people. We will be able to offset this in manufactured goods by continuing to increase productivity, but such gains are much harder to make in services. From the point of view of the manufacturer, though, this is a bonus: it can add service to the product and charge more for it.

But we consumers can do something about the excessive premium producers charge for branded goods - and that is how we can get back at Levi, notwithstanding the efforts of the European Court of Justice to thwart us. We have a choice. If a product is genuinely better, that is fine. But if a manufacturer overcharges for a name, or forces a retailer to overcharge, we can always buy another one.

And that ultimately is our power. Many people feel manipulated by the power of brands - the sense of being used is one of the drivers of current anti-Americanism. But we can only be manipulated by our consent. There are a tiny handful of products where there really is very little choice - Microsoft's Windows, for example - but there are other makes of jeans that do the job perfectly well. As long as we have choice our rights are more or less protected.

Come to think of it, given a choice of the governing legal authority, I would not plump for the European Court of Justice to look after my best interests. That is where we need protection. That surely is the toughest call: how does a democracy control a foreign court applying legislation over which we have no control?

The spirit of the Wild West would be to tell them to take a running jump.
Author: John Gibbon
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