Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, February 28, 1993 TAG: 9302260031
SECTION: BUSINESS PAGE: B-1 EDITION: METRO
SOURCE: SHEILA LONG LANDMARK NEWS SERVICE
DATELINE: GREENSBORO, N.C. LENGTH: Long
WRANGLER ROPES ITS WAY UP
From the boardroom - you will rarely find a gray flannel suit here - to the laundry facilities, Wrangler employees typically wear Wrangler products.For one thing, the employees like it that way. It was at their suggestion that the company did away with a Fridays-only dress-casual day and decided Wrangler clothing was good enough for the office every day of the week.
For another, the company keeps at its immediate disposal a well-rounded test market for its clothing.
So it didn't take Wrangler long to discover that the pockets in the new line of Timber Creek slacks were cut too short, allowing loose coins to fall out. The pattern was redesigned, and the problem eliminated.
It's stories like that - when the final numbers are in later this year - that may have boosted Greensboro-based Wrangler past Levi Strauss to become America's top seller of blue jeans in 1992. Wrangler traditionally has been relegated to hind-pocket status to San Francisco-based Levi's when the U.S. market for blue jeans is divvied up each year.
But according to figures compiled by MRCA Information Services Inc. for the first 10 months of 1992, Wrangler lassoed 18.3 percent of the total market, compared with Levi's 17.4 percent. MRCA is a private group in Connecticut that researches product sales.
For Wrangler, that 18.3 market share is up from 15 percent last year and 14.5 percent five years ago.
A Levi Strauss spokesman professed no great concern and, in fact, disputed the MRCA figures. But the privately owned company declined to disclose its own figures.
Levi Strauss spokeswoman Karen Bachman says market share totals do not tell the entire story.
"Market share is only one indicator, and profitability is another," Bachman said, adding that Levi Strauss just completed what company officials are expecting to be its most profitable year. "Our strategy is the quality of our earnings, not simply volume. The volume of sales is not our focus."
Final figures for 1992 are not yet available, but Levi Strauss posted 1991 earnings of $356.7 million on sales of $4.9 billion. In 1990, the company earned $251.2 million on $4.25 billion in sales. Those figures put Levi's - based on sales of all products, not just blue jeans - at roughly five times the size of Wrangler.
Wrangler president John Schamberger said he is pleased with the market share figures that have been released, but he isn't getting overconfident just yet. Levi's, he acknowledged, has typically been strong in November and December.
But he's certainly pleased.
"One of the reasons we've been successful is that we put out the best product for the best value," he said. "We're producing the best-valued jean."
Wrangler's 12,000 employees have undergone big changes over the past six years. Possibly the biggest came in 1986 when VF Corp. of Wyomissing, Pa., bought Blue Bell - Wrangler's former parent company - for $813 million.
Other changes have included: automated sewing machines; computer systems that design jeans, shirts and other clothing; and a computerized system that helps stock store shelves quicker.
Wrangler's five-person management team say they were anxious about the new company moving in, but looking back they agree the sale was a good move for VF and for Wrangler.
Both companies brought strengths to the table. One of Wrangler's contributions was its computer system, which has since been implemented at other VF companies. In fact, Greensboro is the site of VF's technology service center and the system that tracks sales companywide.
And former Wrangler employees have moved up and taken management positions with other VF companies.
"Looking at where we are today . . . the keys to our success - we've got the product and we've got the people," Schamberger said.
Wrangler has striven for product consistency, and by doing that the product that hits store shelves has latched hold of a loyal following. Yellowing in acid-washed jeans was a problem industrywide about three years ago, but a different laundering process has eliminated the discoloration.
New laundry facilities that the company spent several millions of dollars to develop, for example, ensure consistency and aid in developing new finishes. The Greensboro facility is the "test site" for other Wrangler laundries. Two 100-pound washing machines are used to do trial finishes like stone-washing. Once the desired finish is reached, the formula is recorded and sent to the other laundering sites.
"We're looking for consistent and constant improvement, and always asking, `What are we going to do to get better,' " Schamberger said.
That's from a company that's not exactly wallowing in red ink. In fact, Wrangler - VF's largest division - has rolled in consistent profits.
Wrangler sales jumped $100 million and pretax profits rose by $18 million in 1991, according to company officials. VF, the world's largest publicly held apparel company, does not release total sales and earnings figures for its divisions.
Schamberger predicts Wrangler will be more than a billion-dollar company, with more than 100 million units sold in 1993.
To get there, though, the company's goal of "execution," or timely delivery of products, is imperative. Schamberger said the company has had problems meeting reorders.
The delivery problems stem from an overwhelming demand for products, according to Angelo Lagrega, vice president of consumer marketing, who says that product demand has exceeded expectations.
"The demand is outperforming what we thought the market would do," he said. "We predicted that the market was going to be flat or down this year."
But 1991 was a hot year for the jeans business. People spent more than $6.5 billion on jeans, up from $6 billion in 1990. During the first half of 1992, sales were $2.6 billion, and the total for the year is expected to exceed 1991 sales.
Carl Priestland, chief economist for the American Apparel Manufacturer's Association in Arlington, says more jeans are sold during the fall of the year when it is getting cooler and school doors are opening after summer vacation.
Jeans and casual wear are great businesses to be in, Priestland says, adding that the demand for jeans will continue to increase.
In order to meet that increased demand quicker, Wrangler has put into place a market-response system that in part allows the company to ship out replacement units to stores more quickly than before. Computerized checkouts at merchandise outlets, like Kmart and Wal-Mart, automatically notify computers at Wrangler of sales. Wrangler immediately begins working to replenish the sale item.
Wrangler also is counting on a team-based manufacturing system to enable the company to respond quickly to the market's needs.
Wrangler established strategic business units about five years ago. They are set up as satellite divisions with a home manufacturing base and shared cutting and distribution and administrative centers. A vice president or general manager heads each SBU, which is made up of a representative from each discipline - manufacturing, operations, marketing, sales, advertising and merchandising - in the unit.
The team comes together to plan, make decisions and discuss ongoing operations, and each member is responsible for communicating the team's progress with people in his functional area.
Lagrega credits SBUs for pushing decision-making down to a team level and giving all employees a sense of control. Teams decide what products they want to make and the costs they can meet to do it. Wrangler's executive management must approve any major strategic decisions.
Schamberger says that the system has allowed Wrangler to focus on its merchandise and what consumers want. The units have resulted in new product lines such as Timber Creek and Wrangler Rugged Wear. The rugged-wear line is specialty apparel for the fishing and hunting markets and includes insulated and lined jeans.