Ugg Australia: Brand Facing Extinction
This past holiday season, I saw a huge line of people outside of the Soho Ugg store. Aren’t Uggs over? Who’s interested in buying them? Certainly not the fashion conscious crowd. There were many tourists in line. I’m guessing they do not live in a metropolitan area, however, I do remember seeing Uggs here and there in the city. Ugg revenues increased 60% this year–I feel that the trend has finally trickled down to the general masses–even Payless has stopped making them!
I predict that this year, they’ll make just about the same as 2006 b/c:
-they position themselves as a high-end luxury brand, sold only at Nieman Marcus, Nordstroms, etc. and there’s a recession. Who’s going to spend their money on luxury at this time?
-there’s a trend towards eco-friendly lifestyle–organic cotton, and products that are good for the environment–sheepskin is not one of them.
-The Ugg brand is tightly associated with the shape of the original boot–they’re trying to branch out to espiradilles and have seen success, but Uggs are uggs, not sandals or shoes of any shape. Taking the lead in any other footwear product will be increadibly hard. Also, as the trend dies out, there’s less desire for that look/brand. It’s interesting how they’re advertising sandals–Uggs were originally worn by Californian surfers and celebrities in Hollywood in warm weather. They morfed into something practical for winters outside areas that are warm.
-Uggs are all made in China. Sheepskin is sourced from Australia and the US. Transportation costs are predicted to increase. Tensions with China on trade regulations will also determine how well this company performs.
The best scenario they can hope for is if Uggs become a classic–like Wellington’s or Birkenstock. But both names sound like classic old english traditional names. I’m not confident the Ugg brand will last.
