Built to Last: How Levi Strauss, the world’s most iconic denim brand, manages to stay relevant and capture new markets
COVID-19 devastated the world’s retail landscape, but that didn’t stop Levi Strauss. A combination of swift fixes, strategic innovation and clever thinking steered the company through the crisis.
You don’t have to be young to be agile. That might be the lesson learned from 167-year-old company Levi Strauss & Co. and its response to the surprises and challenges of the COVID-19 situation.
“We reacted by moving fast,” notes Daniele Cipolletti, Levi Strauss’ Operations Manager, Europe, who has been with the U.S. company for 14 years. Based in Milan, he had a close-up view of and insights on the beginning of the global pandemic and its subsequent lockdown phases.
Cipolletti and his colleagues at Levi Strauss faced notable challenges, from the supply chain to social media. Not just reacting to an unprecedented international event, but also facing up to the responsibility of keeping this seminal brand alive. “We decided to protect our journey,” he says. “It’s a long journey, but we want it to continue to grow longer in the next years.”
Fans of denim know the sturdy fabric is built to last and, as a company, Levi Strauss appears to be, too. From its beginnings as a dry goods business founded by Bavarian immigrant Levi Strauss to its creation of what would become its classic riveted work pants, patented in 1873 and known since 1920 as blue jeans, the firm has always had an eye on resourceful solutions. Designed as workwear, jeans quickly became essential – and later, fashionable.
“This company has been investing in innovation from the beginning, when they invented the first blue jeans with the rivet,” says Cipolletti. “It starts with the product, but moves through other areas of the company. There is always attention to innovation.”
Today, the company’s products (including the brands Dockers and Denizen) are sold in more than 100 countries around the world via various retailers, including 3,200 own stores and shop-in-shops. And the evolution continues, with the firm regularly introducing initiatives that shake up the decades-old denim business.
For example, the company’s Project F.L.X. (future-led execution) allows for 90-second digital denim finishing, using lasers to create designs and wear patterns that replace dangerous chemicals and lengthy processing times. “It’s a way to be both agile and sustainable,” explains Cipolletti, “because if you reduce the finishing to only when you have a demand, you’re not only creating efficiency in your supply chain, but you’re also only producing jeans if there is a consumer.”
These transformations have helped make Levi Strauss a well-oiled machine that has always run at a steady pace – until the emergence of COVID-19.
Winding down, ramping up
In mid-March 2020, most Levi Strauss locations, franchise sites and wholesale partners’ retail stores closed in response to the global pandemic – from the Americas to Europe to Asia.
In response, the company took several actions. First, social distancing measures were put in place in warehouses and stores. Omnichannel initiatives such as virtual concierge, ship from store, buy online pick up in store, mobile app shopping and loyalty programs were enhanced to strengthen the direct-to-consumer business. At the same time, logistics strategies including same-day delivery were tested in some markets.
The year-on-year increase in Levi Strauss’ e-commerce sales in June 2020
The amount of recycled denim in Levi Strauss’ Wellthread jeans
Although each country where Levi Strauss does business handled the lockdown in a different way, Cipolletti says the company was able to adjust and learn from the experience.
“As we closed the stores, we tried to feed them as much as we could until the last minute. All of the organization helped to maximize the health and the flow to the market during the different lockdowns.”
In the U.S., curbside pickup was introduced for customers to collect their orders. In India, Levi’s on Wheels traveling stores stocked with work-from-home favorites rolled into select neighborhoods. And to reduce costs and streamline operations, the company implemented cost reduction and inventory management initiatives. “Our overall supply chain reacted in a responsive way, showing elasticity and a sense of urgency, and good priorities,” says Cipolletti, who oversees the company’s biggest fulfillment center in Europe. Based in Unna, Germany, it is nearly 40,000 square meters in size, and delivers almost 70% of the business in Europe, including feeding Russia and Turkey via satellite locations.
Customers were also responsive, making up for lost time and heading for the digital checkout. Levi Strauss’ net revenues dropped by 27% in the third quarter of 2020. Yet e-commerce revenue growth of 52% partially offset this decline. The company’s global digital revenues grew by approximately 50% compared with the same period last year, to comprise about 24% of third-quarter returns – double the previous year’s share.
“The pandemic is accelerating retail landscape shifts and consumer behavior in ways that play to the strength of the Levi’s brand,” Levi Strauss CEO Chip Bergh concluded upon the release of the company’s second-quarter financial results. “And we are doubling down on our digital transformation, incorporating the power of AI and data science, and leveraging our iconic brands to have an even stronger focus on Gen Z and sustainability.”
At the end of May, some retail stores reopened, with safe shopping procedures in place, but a wide variation in sales. Cipolletti says stores have seen less traffic but more purchasing behavior than before.
Staying home but not standing still
Keeping a connection with consumers was key to coming out of the crisis. “We’re not going to let them forget about Levi’s while they’re cooped up in their home,” Bergh told analysts in spring of 2020.
The brand continued a steady stream of novel releases to generate excitement. Cipolletti points out that a collaboration with the New Balance sports brand launched in April sold out in just a few hours.
Levi Strauss also stayed in touch with jeans fans online with a heavy social media presence, including a month-long virtual music festival called Live 5:01, featuring recording artists such as Snoop Dogg, Jaden Smith, Sharon Van Etten and Michael Franti, and had the company donating to the artists’ charities of choice.
Community building continued through the slogan: “Stay Home. Stay Connected.” It’s part of a long line of company involvement in social justice issues, get-out-the-vote actions, equality messaging, and more. Awareness and activism are an inherent part of the brand’s values, says Cipolletti. “Today, to talk to the new generation, you need to be able to speak the right language to the right devices, and of course engage with them in doing a kind of advocacy for rights,” he explains.
Blue jeans, green plans
The good fight also includes the green fight, and Levi Strauss has made great strides in an industry known for environmental challenges.
“We have to remain committed to sustainability in these tough times,” says Cipolletti, noting that the company also developed reusable masks as part of their collection, thereby providing a Levi’s brand experience accessory that protected against COVID-19 and could also take the place of disposable face masks.
Additionally, in July 2020, the company’s jean geniuses introduced their most sustainable denim yet. Part of the eco-minded Wellthread line, the jeans for men and women are made from 60% organic cotton together with Circulose, a material developed by Swedish textile recycler Re:newcell, which contains 20% recycled denim and 20% sustainably-sourced viscose.
The crisis period has also been one for reflection for many firms, from taking literal stock to evaluating store locations, workforce, and company structure.
For the Levi Strauss team, working from home paradoxically resulted in more collaboration, notes Cipolletti, thanks to the implementation of online team working software. The stress now is on reviewing, redesigning and modernizing the process. The policy of open communication and connection extends outside the company too, he says, including taking decisions together with partners, such as DHL.
“We have a really one-to-one approach with our partners to share our outlook for the near future, because only transparency, visibility, and joint planning can help actors in the industry supply chain both to minimize and be successful, and to have a better reaction time.”
And while digital and direct-to-consumer boosted the firm during the dark days of the pandemic, online alone is not the future of Levi Strauss, Cipolletti says. “We need what we believe is an omnichannel approach, not just everything digital. And bricks-and-mortar is always traditional, but it also gives us the opportunity to tell a complete story and give that experience to the consumer.” — Susanne Stein
Published: December 2020
Images: Isabella de Maddalena for DHL Delivered.; Adobe Stock; Richard Baker/In Pictures /Getty Images