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JEAN-ETIC ENGINEERING

DOCKERS CHANGES ITS NAME AND VENTURES OUT OF OUTLET CENTERS WITH A NEW CHAIN

By Jesse Serwer

Even as Dockers celebrated its 20th anniversary last year, it made a most unusual move for such a recognizable brand: a name change. The Levi Strauss & Co. casual-wear line that has become practically synonymous with khakis was renamed Dockers San Francisco.

“We felt we needed to make a shift that showed that this brand is more than men’s pants — it’s about head-to-toe dressing for men and women,” said Kerry Cooper, Dockers’ vice president of re- tail and demand planning. “San Francisco has an easygoing style and sophistication; it’s our home, and it’s something that we’ve used in the past as an inspiration. We think the Dockers San Francisco name will help people get the bigger picture.”

Dockers operates five outlet stores — one each in Arizona, New York and Texas, and two in California. Now the company is opening nonoutlet stores, the first of which opened in June at Tampa, Fla.’s International Plaza Mall. A flagship store opened at Westfield San Francisco Centre in September and then another at Kravco Simon’s King of Prussia Mall in October. A fourth is set to begin operating at Tysons Corner Center, in McLean, Va., later this month, and the last of the five is slated to open in December 2007 or January 2008 at New Jersey’s Freehold Raceway Mall.

The units, which measure about 5,000 square feet, are divided into separate zones for women’s and men’s apparel. The zones are then, in turn, broken up into the four components emphasized in Dockers’ recent “Dress to Live” campaign: work, weekend, dress and golf.

“There’s no line of sight directly across the store, which was intentional,” said Cooper. “We want to bring to life all the different wearing occasions to make sure he and she can see all the different ways of outfitting from head to toe.” Cooper says at other chains, consumers cope with pants in one place, with shirts as much as 200 feet away or even on another floor. “You don’t necessarily see them together.”

Menswear accounts for about 70 percent of Dockers San Francisco’s wholesale business; women’s apparel will have a larger presence in the retail units, at about 40 percent. And pants comprise the lion’s share of Dockers’ wholesale menswear business, but the new stores will carry a more equal balance between pants and tops.

The store design reflects the aesthetics of the Bay Area. “We’ve done a lot of things so [the stores] feel like our hometown even if you’re in Chicago or Philadelphia,” said Cooper. The inspiration draws from the lofts of the South of Market district, she says. “So when you’re walking in from the outside, the first thing you’ll see are paned glass windows like in a loft. All of the components are eco-friendly, from the recycled wood floors to the reclaimed redwood cash register to the way that we’ve done the lighting. That’s part of who the brand is and part of what San Francisco is.”

It has been reported that Dockers plans to open as many as 10 stores next year, but the chain will not comment on any plans beyond the current five, which the company is treating as test modules.

“We need to prove that the economic model works and where the right locations for us are before we spend a lot of money on real estate,” Cooper said. With the exception of the San Francisco flagship, the new stores are clustered on the East Coast, but this is no indication of where Dockers expects to go if and when it decides on a larger rollout, she says. “King of Prussia is the second-largest mall in the U.S., so it’s a chance for us to see what happens in a big mall,” said Cooper. “Freehold, N.J., is a smaller market we’re testing to see if we’re better off in really large cities and malls or in smaller markets like there are in the heartland.”

All five are in malls, but highly visible locations in well-trafficked lifestyle centers will be under consideration too. “We’re a brand that people know, but they don’t necessarily know our retail concept, so we need high-traffic locations where we can introduce them to it,” said Cooper. “I don’t think it hurts to be near places where your target consumer is shopping already. Being next to a Ruehl or a J. Crew would be great.”

Some say a Dockers store would be successful in any region. “I don’t think there’s any part of the country where they won’t do well,” said George Whalin, president and CEO of Carlsbad, Calif.-based Retail Management Consultants. “My guess is any major mall company is going to want to have a store with the name value that Dockers brings, but it’s a concept that will really work well in lifestyle centers.”

The level of commitment Levi’s has demonstrated in expanding Dockers beyond the outlet stores is a reversal of sorts from 2004, when the company sought to sell the brand to relieve companywide financial woes that had grown into a debt burden of about $2 billion.

“Levi’s had tied their business to baby boomers for a long time, but once baby boomers stopped buying more than one or two pairs of jeans a year and Lucky Jeans and all these other European-inspired brands came along, they were really hurt,” Whalin said. “They had to reinvent themselves, and over the past few years, they’ve done that. Meanwhile, Dockers has continued to sell an awful lot of men’s and women’s pants to baby boomers.” Though boomers are without a doubt the ones the company has been identified with, the Dockers brand itself suggests that the target customer is actually within the 25-to-49 age range.

Levi Strauss says Dockers’ earnings have grown for seven straight quarters, which is roughly concurrent with the time John Goodman, the president and general manager, has been at the helm. Levi Strauss is not publicly traded and will not disclose specific sales numbers, but Dockers’ U.S. sales rose nearly 6 percent for fiscal 2006 (ended in November), accounting for nearly 20 percent of Levi’s total sales growth. In the second quarter Dockers drove the largest improvement in the Levi Strauss portfolio, with revenue in both men’s and women’s categories up by double digits from the previous quarter. Levi Strauss overall posted a 14 percent increase in earnings for the quarter, which put the company on track for one of its best earnings years since the late 1990s.

It’s too early to tell what effect the stores will have on the chain’s identity, but Cooper says having that flagship in its backyard is already helping the company internally.

“Opening a store here in San Francisco, where the design teams can spend time and really see everything come to life,” she said, “has been invaluable.”