True Religion Case Study

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1. Introduction. True Religion was born in 2002 year as a premium denim brand, which reached second position on the U.S. premium denim market by 2010. However based on the case 1 – 4 (Barney and Hesterly 2012) the company was facing high fluctuation of stock during last year’s due to the uncertainty of fashion market trends. In addition economic recession, which resulted in market decline, rough material price increase and market saturation led to fiercely competition between premium denim sector players. True Religion brand benefited within first years from “distressed” jeans fashion boom, but yet today the current strategy will not be sufficient to withstand high competition under given market conditions. Arising question is: how to adjust current strategy of True Religion to ensure its market position and strengthen global brand recognition? 2. Premium Denim industry overview The origin of denim jeans had place in 1874, but the premium jeans concept was popularized by Calvine Klein in late 1970’s. Since then premium denim market has been encountered alternately sales growth and slowing down following fashion trends changes, but remains until today highly fragmented industry. Currently Porter’s 5 forces model of premium denim industry is characterized by low entry barriers as there is low initial capital required and high margins and returns. That’s why even if this sector is already saturated, still encounters new players entrances. Bargaining power of denim fabric suppliers is low due to the low margins and intense competition. Threat of substitutes is high as there is no switching cost and many other apparel types are available. Bargaining power of buyers is also established as a high threat. Before the recession premium denim brands targeted “aspirational” middle – class consumers, but this target group had traded down in 2009 to less

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