Ask Chip Bergh, president and chief executive officer of Levi Strauss & Co., how the true blue American brand has managed to stick around for more than 160 years and he will tell you this: thanks to a combination of innovation and values.
He will also tell you it hasn’t been a sweet and easy ride. Because, like most things that have been around for what seems like forever, the brand has struggled to stay relevant as times and trends change.
A couple of decades ago, for instance, Nike benchmarked Levi Strauss, held it up as an industry standard. Today, however, the global sportswear giant is on track to reach $50 billion in sales by 2020, while Levi’s teetered on the brink of bankruptcy in the early 2000s.
But like all great American tales, the San Francisco-based denim brand has made a comeback, doing roughly $4.5 billion in sales last year (less than the record $7.1 billion it pulled in back in 1996, but getting better), thanks in large part to the changes Bergh has made since he joined the business more than four years ago.
During a keynote speech at the American Apparel and Footwear Association’s (AAFA) annual executive summit in Washington, D.C., Wednesday, Bergh explained his plan for ensuring that Levi’s lives to see its 326th birthday and beyond.
“We’re not going to be bigger than Nike, but I want to make this company great again,” he said, adding, “At the end of the day it comes down to the people, the product and the brand.”
Turn and face the strange
It often takes an outsider to understand what’s wrong and Bergh, a self-described brand guy with no background in apparel (“That will probably go on my tombstone,” he joked), came in like a wrecking ball. After switching up leadership and the board of directors, among other changes, he “racked and stacked everything” and realized that in order to drive the economic engine of the company, the focus going forward would be two-fold: grow the core, expand for more.
“When you slice and dice it, we are a men’s bottoms business,” he said, pointing to what he considered huge opportunities for growth in the women’s, outerwear and footwear categories.
However, there was a big risk they would build it and no one would buy it.
“Our demographic globally averaged around 42 years of age. We were missing the younger consumer,” Bergh lamented. “The way [Millennials and Generation Z] shop is totally different than the way I used to shop: they don’t shop a lot; they’re much more focused on experiences; and when they do shop they’re shopping with their phone in their hand…The 30-second TV spot, while still a piece of our marketing puzzle, may or may not work.”
That’s one reason why in May 2013 Levi’s purchased the naming rights to the San Francisco 49ers stadium for $220 million over two decades, which hosted Super Bowl 50 on Feb. 7.
“Sport is about the only thing Millennials watch live on television anymore,” Bergh explained, “and we owned a stadium for a full year for roughly the price of two 30-second spots.”
Levi’s also launched a complete NFL collection, licensing all 32 of the league’s teams, and through seeding its products to players, created a new fit for athletic bodies called 541. Bergh revealed it’s the brand’s fastest growing style since the iconic 501 launched.
Its women’s business, meanwhile, experienced double-digit growth in the second half of last year, even as the Lululemon-led athleisure craze continued to shake up the market.
“What was driving [athleisure] more than anything was an underlying desire for stretch and comfort and to look good,” Bergh said. “ So we spent a lot of time on our women’s line over the last year or so to get it right, trying to address that consumer need, and this past summer, after 18 months of evolvement, trying to nail our women’s business and get our product right, we launched our new range of women’s in July. And yes, some of the product has a lot of stretch.”
Between 80 percent and 90 percent stretch, actually, but the collection also includes classic cuts and no-give denim.
“Brands like Levi’s that have so much history, so much authenticity, live with one foot in the past, honoring and respecting our history, but with one step constantly moving forward into the future,” Bergh said.
One of the ways the company is doing that includes focusing on improving the lives of the workers who are making its products—most of whom are women in developing markets such as Bangladesh, Cambodia, Egypt, Haiti and Pakistan—through education.
Bergh said that at the plants the program has been tested in, turnover has been reduced, factory owners have a more stable workforce and the return on investment has paid dividends in the communities where these women live and work.
“Having a purpose, standing for something and being the kind of company that isn’t just there to make money but is there to do the right thing for the world takes it right back to [founder] Levi Strauss 163 years ago,” he said. “The reason we’ve been around as long as we have is because we’re not just about making the most money we can on a pair of jeans.”
Companies sourcing in Mexico will very soon be facing labor costs that are 10 percent higher.Read more
The North American Free Trade Negotiations have turned into a blame game about which party is doing the most to damage the deal. Needless to say, little progress seems to have been made at the fifth round of negotiations that wrapped in Mexico City Tuesday.Read more
These retail technology startups are enabling retailers to boost operational efficiency and improve consumer purchasing journeys on multiple channels.Read more
Neiman Marcus revenue up on e-commerce initiatives and women's, Burlington income surges on strong assortment and off-price model, Madewell boosts J Crew's top line and Free People leads Urban Outfitters.Read more
FDRA data revealed that footwear consumers may be shopping more in stores for the holidays.Read more
Price may be king but convenience governs much of the way traditional retailers are thinking about their customers today.Read more