SYDNEY: Diesel Australia is about to undergo the biggest shake up of its 20-year corporate history.
The denim giant has adopted an aggressive new pricing strategy aimed squarely at stealing market share from competitor, and rumoured category leader, G Star Raw.
The Australian business, which distributor Angus Imports claims is worth as much as $40 million per annum, has always been positioned at what it terms as the "aspirational" end of the denim spectrum.
However G Star's amplified retail activity, together with the growing strength of the Australian denim market through home-grown labels such as Ksubi and Sass and Bide, has forced Diesel's Australian arm to begin slashing its retail entry points.
Diesel Australia marketing manager Helen Robbins said she expects the repositioning to turn Diesel's Australian arm into a $80 million a year business by 2011.
Robbins said the multi-tiered roll out began during the spring/summer 2009 selling season when Diesel first began discounting its men's and women's apparel lines by between 10 and 15 per cent. For spring/summer 2010 prices have dropped by 20 per cent or more, bringing its top end jeans down to $400 from their original $600 and its entry level denim prices from $290 to $199. The changes are reflected across both its clean essentials and fashion collections with T-shirts that had a recommended retail price of $129 in 2008 now positioned at $69 and Diesel's signature bomber jackets that were selling for upwards of $350 priced at $299.
Robbins said the pricing restructure - which had been given the nod of approval by Diesel's Italian head office earlier this year - was just one of a number of initiatives the brand was adopting to increase its sales volume.
Other moves included expanded its presence in department store David Jones - from 17 doors to 35 doors - and working with retail chain Glue to develop concept stores.
Robbins said Diesel had watched with interest the G-Star "phenomenon" which had seen the competitor brand announce plans to open 30 stores across Australia by next year. With Diesel holding around 50 wholesale customers and only four retail stores it did not intend emulating G-Star's retail approach but would instead focus on cementing its existing wholesale avenues, she said.
"What this means is G-Star will become a mass market brand because it's going to be absolutely everywhere. Our wholesale customers say they love our strategy which is to get our apparel out there but not flood the market.
"We knock back more wholesale enquiries than we have customers because brand image is something we want to protect. The increases that we'll get won't be through new doors but it'll be through depth of doors."
Robbins stressed the competitive pricing structure did not mean a reduction in the quality of its product with all pieces still made in Italy with Japanese denim.
"There has not been a single percentage drop in quality which is imperative to this whole thing. Nothing has gone to China. We're having to work with our margins for our wholesale customers with discounts being given to our distributors based on the volume of product they order," she said.
Robbins said the brand's new affordable price points had opened up new opportunities within the youth market with Diesel radically altering its marketing plans to reflect its interest in this segment.
This included increased sponsorship activity based around music festivals as well as brand promotion through social network sites.
Diesel: Has radically altered its existing price points.