It's easy to forget that jeans giant Levi Strauss & Co. is also the maker of the Dockers casual-wear line, even though it accounts for a good 25% of the overall business. While most of the San Francisco-based company's efforts are focused on reviving the jeans lines, Dockers U.S. President Bobbi Silten is also intent on strengthening the Dockers business, traditionally known for its men's khaki pants, launched in the mid 1980s.
Sales of Dockers-brand clothing have slid along with the fortunes of the whole company, which in 2001 posted a sales drop of 8%, to $4.25 billion. But like her counterparts at the Levi's division, Silten is intent on spiffing up her brand, largely through revamping the product line. BusinessWeek Correspondent Louise Lee recently spoke with Silten about her efforts. Edited excerpts of their conversation follow:
Q: What's your basic strategy for the Dockers business?
A: I like to keep things simple. Let's expand sales with our current customer. Let's attract new customers, a younger customer in his twenties. And let's move beyond pants.
Q: How is your strategy of product innovation changing?
A: We have a disciplined approach to innovation instead of an attitude of, "Let's innovate and go crazy." In women's tops, we have a jersey-knit fabric and use it over and over, but we use it in a tank top or a short sleeve top and in different colors. We build a library of base fabrics. When we use the same fabric for several different prints. If a print is selling well, we have the fabric to print lots of it. If it's not selling well, you can shift quickly and print something else on the same fabric.
Q: What are some of the newest products that hold the most promise for Dockers now?
A: The men's "Go Khaki" pants with Stain Defender. The pants are coated to make water and other liquids bead up and roll off instead of staining and are being shipped to stores now. The product orders came in at levels five times our expectations. It's our most successful product launch ever. We launched the Mobile Pant [a pant with multiple pockets for cell phone, pager, and handheld organizer] last year. Now we're adding Stain Defender to that.
Q: How else has the balance between basics and fashion merchandise shifted?
A: Today, we divide our product line into core, core-plus, and seasonal. It's a pyramid, with core merchandise, which we would produce for at least three years, making up 50% of the mix. Core-plus is a little more trendy, product we'd make for 18 months to three years, and is 40% of the mix. And the last 10% is pure seasonal, much trendier and with more markdown risk, which is product we'd make for six months or less. In the past, the mix was split between core and seasonal. We had too much seasonal.
Q: How do you see the balance between Dockers' men's and women's business changing?
A: Women's is now 20% of the Dockers business. In three to five years, I see women's being 30% of the mix. Women's is the place we have a lot of opportunity to grow.
Q: What about pants vs. tops?
A: Tops are a fragmented business, and there's more markdown risk, because the fashion cycle in tops is faster than in pants. Still, from a mix standpoint, I'd like to see tops be 25% of the mix within three to five years, up from 12% now.
Q: How are you working to improve relations with the retailers who carry Dockers?
A: We want to make sure our retail customers make money. Over the last two years, we've worked to improve customer economics. We've lowered some wholesale prices and introduced new products at lower prices. Also, there's a volume incentive plan. Through growth in sales, the retailer can receive additional funds. We're trying to be easier to work with. In the past, they've loved our product, but we haven't given them the right economics.