Heritage denim model Levi Strauss & Co. isn’t any stranger to weathering storms at retail. The all-American label has been doing so for the reason that mid-1800s, and is taking over 2020’s challenges with a forward-looking technique to pandemic-proof its enterprise.
At the WWD digital Apparel and Retail Summit on Wednesday, CEO Chip Bergh mentioned that though Levi’s went into the Covid disaster with little information about what its finish impacts would possibly appear like, he set the objective to “emerge from the pandemic stronger” by a “focus on building for the future.”
The denim big is doing so by “doubling down on consumer connection,” he mentioned, in a time when consumers have been studying to do extra with much less. “I think the days of conspicuous consumption are gone,” he mentioned. “Consumers are much more focused on conscious consumption—they’re buying fewer things but they’re buying brands that they know and trust.”
Levi’s has the good thing about having constructed a repute on its storied historical past, because the model’s basic 501 silhouette stays a favourite of Gen Z influencers and sartorial tastemakers. But regardless of its sizable retailer footprint and wholesale presence, the denim big has needed to make new investments to ensure reference to consumers throughout a interval of sporadic retail lockdowns.
“Obviously, there’s the hard pivot to digitization,” Bergh mentioned, characterizing tech enablement as the corporate’s utmost precedence in latest months. “When we went into shelter in place we doubled down hard on building out e-commerce and omnichannel capabilities,” which contributed to the fast third-quarter bounce again after a Q2 that was painful for a lot of retail, he added.
What’s extra, the corporate has invested closely into digital processes to streamline its general operations. “We’re talking about doing everything from designing digitally all the way through our entire supply chain—manufacturing and finishing a pair of jeans,” he mentioned.
While the denim trade “has historically been very analog,” Bergh believes it’s important that manufacturers embrace extra environment friendly processes all through the worth chain. Levi’s has invested in AI instruments to assist predict retailer visitors patterns and thus inform staffing wants. It has additionally been using data-driven expertise to tell its promotional technique, hitting consumers with the kinds they need, when they need them, to keep away from pointless reductions and margin hits. “My belief is the pandemic [has] accelerated what might have taken five or 10 years, and it’s compressing into this short period of time,” he mentioned.
Embracing new expertise helped the Levi’s shortly construct out the omnichannel capabilities—like curbside pickup, BOPIS, and delivery straight from shops—which have helped attain shoppers even by stay-at-home orders and coronanvirus-induced retailer shutdowns.
The ship-from-store program allowed Levi’s to promote by merchandise which may in any other case have languished on stockroom cabinets, protecting retailer employees engaged and employed on the similar time. “Twenty percent of our e-commerce orders in the second quarter and third quarter were filled from our retail locations, and that helps us optimize inventory and reduce markdowns,” Bergh mentioned.
The pandemic has additionally illuminated consumers’ growing appetites for circularity, he mentioned, prompting the launch of Levi’s SecondHand, its official take-back and resale program. Shoppers can promote their pre-worn Levi’s denims and jackets for credit for use towards future purchases, whereas the corporate sells the items—some up to date, and a few classic—on its SecondHand microsite or in shops throughout the globe.
“People will go out and hunt for authentic, vintage Levi’s, or just older Levi’s that have been worn in,” Bergh mentioned. “It really is a signal of just how powerful this brand is that a consumer will come into our store and buy a 25-year-old trucker jacket,” and pay two or thrice the price of a brand new product, he added.
These sorts applications have strengthened Levi’s direct-to-consumer enterprise in latest seasons, Bergh mentioned, and that’s a development he believes will proceed. When he joined the corporate greater than 9 years in the past, U.S. wholesale channels had been liable for practically half of Levi’s world income, whereas DTC hovered at round 21 p.c. “Fast forward to today,” he mentioned, “and our total direct-to-consumer business is now almost 40 percent of our global revenue, and U.S. wholesale is under 30 percent overall.”
“Wholesale will always be important to us,” Bergh added, because it represents a large-scale, worthwhile facet of the enterprise that’s run with comparatively small groups. “But in the direct-to-consumer world, in both brick-and-mortar and e-commerce, we’re in much more control of how our brand shows up.”
The means to steer the ship is a vital one throughout turbulent instances, which is why Bergh is pushing the corporate’s DTC-led technique. “It’s a real clear opportunity for us,” he mentioned, to be “in direct contact with the consumer” and set up a one-to-one relationship constructed on each product and repair.
“We’ve really tried to build our stores to be very experiential,” Bergh mentioned, citing the implementation of in-store tailor outlets that permit consumers to customise their good match, and reserve-in-store capabilities and wardrobe styling assist. “It provides some in-store theatre, and a way to engage the consumer beyond just a transaction.”
As 2020 involves its long-awaited shut, Levi’s will proceed ahead in on the lookout for new methods to make inroads with its followers. DTC will play an inarguable half in that technique. “So we’re going to continue to focus our investments there, and continue to work on becoming a great vertical retailer,” Bergh mentioned.