As a brand that produces and markets premium jeans, True Religion managed to maintain a recognizable image despite the market being crowded by competitors such as 7 for All Mankind, Levi’s, Citizens of Humanity, and others. The high brand equity in both South-East Asia and the United States helps True Religion to sustain its internal advantage as a reputable brand with high positioning and thus enhanced differentiation. Another strength of the company is linked to the fact that its garments are manufactured in the United States, and American customers value this aspect – not only can they contribute to the local economy but also can feel better for not buying clothing manufactured at suspicious factories that disregard the rights of their workers. The positive brand positioning and image are supported by the wide assortment of jeans as well as a strong trademark that customers instantly recognize: the brand logo with the smiling Buddha and the horseshow on the jeans’ back pockets.
True Religion Jeans Case Study
Even though True Religion has some internal advantages, it experienced a significant decline in sales, which remains to be addressed. In the first several years of True Religion’s expansion of the premium jeans market, the gross margin for the segment of direct consumer sales reached as high as 77% in 2008. In 2009, the indicator decreased to 74% and reached 70% in 2012 (Barney & Hesterly, 2014). The operating profit margin was as high as 40.6% in 2007 and dropped to 33.3% in 2012 (Barney & Hesterly, 2014). The two main reasons for the decline were the “unfavorable mix shift toward sales in outlet stores and the overall decline in average denim prices paid in the company’s stores” (Barney & Hesterly, 2014, p. 27). As the target segment of customers willing to pay more than $200 for a pair of jeans declined, more and more clients were looking for True Religion jeans in outlet stores, leading to the decrease in average prices people paid.
Over the past several years, the company’s competitors have invested in differentiating the selection of their products to offer customers more options such as athleisurewear while True Religion remained dedicated to jeans and t-shirts. As mentioned in the Forbes article by Learner (2017), sports clothing is a trend born by consumers, and the lack of the brand’s attention to this trend was among the reasons why clients became uninterested. The internal restructuring of True Religion may allow the company to look at the market from a new perspective.
For instance, going private may mean that the company will have to re-evaluate its choices when it comes to its garment selection. This will mean that True Religion conducts an analysis of market demands and listens to new customer segments regarding offering them athleisurewear apart from jeans and t-shirts. The millennial generation is especially important because their demographic dictates the largest demand segments for the majority of brands that fall in the ‘reasonable to higher prices’ bracket. Given the fact that at the moment, True Religion is fighting the chance to survive, there is no other reasonable decision rather than to restructure and try to remain relevant among all other competitors. Expanding the selection of products to include more than just jeans and basic t-shirts is the most important recommendation that True Religion should consider, especially given the high popularity of expensive athleisure clothing.
Barney, J. B., & Hesterly, W. S. (2014). Strategic management and competitive advantage (5th ed.). Upper Saddle River, NJ: Prentice-Hall.
Learner, R. (2017). Where True Religion went wrong. Forbes. Web.