In 1873, 150 years ago, the iconic blue jeans were born in San Francisco when businessman Levi Strauss patented work trousers with metal rivets. One-and-a-half centuries later, Levi’s has survived not just merely as a brand but as an arbiter of diverse cultural trends.
Originally, the jeans were work overalls made for miners during the California gold rush. They were rugged, didn’t get soiled easily, and could be worn over regular trousers. From being the apparel of the working class to chic clothing, Levi’s became a versatile popular brand.
From gold miners, the jeans came to be associated with cowboys, popularised by John Wayne in his Western movies. When Marlon Brando wore them with boots and black leather motorcycle jacket, Levi’s became a symbol for rebels. They went on to become the uniform of the counterculture and the Civil Rights movement. They were a hit with soldiers during the Second World War. Hordes of youth were spotted wearing Levi’s 501 when the Berlin Wall came down. Miners, cowboys, biker gangs, Hollywood actors, activists, rock stars, protestors, handymen, politicians, professors, angst-ridden youth and the cool crowd, all have worn Levi’s 501 to make their respective style statements.
Not that Levi Strauss and Co. did not adapt the jeans to the times. They began with a single back pocket, button fly, a cinch at the back, buttons for suspenders and a crotch rivet too, an altogether different species from the current form. But they still retain the Arcuate stitch design on the back pockets, the rivets, and the famous leather patch with the drawing of two horses pulling apart a pair of pants which was added in 1886.
The Levi’s crisis
A brand with such versatility and popularity was, of course, a business success too. Though Levi’s was the original denim brand, the denim revolution created several popular jeans brands that emerged as rivals in time. It also could not compete with the new designer avatars of jeans such as Calvin Klein, Tommy Hilfiger and Gap. In the late 90’s, Levi Strauss and Co. was on the decline. Its sales fell drastically, and it had to close factories and stores and lay off nearly half of its staff.
The vast heritage behind Levi Strauss and Co. ironically became its main obstacle as it did not know how to reinvent itself. The jeans did adpat to changing times but the company could not make too many changes because heritage was its main selling point. For the next decade, the sales kept dropping and the company lost market share to rivals, until it hired a brand expert from Procter and Gamble with three decades of experience. In 2011, the board hired Chip Bergh as the CEO who went on to turn the company around with the canny insights he had gathered at the retailer.
Bergh gets to know Levi’s
“As I began doing research to prepare for my first meeting with its board chairman, I was surprised by what I found. I’d guessed that Levi Strauss had revenue of about $10 billion. But in fact its sales had peaked at $7 billion in 1997 and then fallen to $4.1 billion in five years. From 2001 to 2010 they never exceeded $4.5 billion. The more I studied the company’s recent history, the more it looked like The Gang That Couldn’t Shoot Straight,” Bergh recalled, writing in the Harvard Business Review a few years ago.
Bergh was shocked when he asked employee at a town hall meeting how many of them thought the company was performing well. Three-quarters of the attendees raised a hand. “A lack of urgency, of financial discipline, and of data discipline permeated the culture,” Bergh said. He started with changing almost the entire top team that reported to him.
The insight at Bengaluru
During his second month in the job, Bergh visited Bangalore and found the tagline for the next advertising campaign as well as the guiding light for his new job. He asked his people in Bengaluru to set up an in-home visit. P&G relied heavily on in-homes which yielded valuable insights from customers.
The customer he met with was a 29-year-old professional woman from an upper-middle-class family, who lived with her parents and had studied at Cambridge. She had about 10 pairs of jeans of different brands and she talked about what she liked about each pair.
“She had two pairs of Levi’s, and we talked about those last. She pointed to one pair and said, “These are my go-to jeans—the ones I’ll wear day-to-day, like if I’m going to meet a girlfriend.” Then she focused on the second pair. “These are the jeans I wore at university,” she said. “They don’t even fit me anymore, but I can’t bear to part with them because of all the memories.” Then she said something arresting: “You wear other jeans, but you live in Levi’s.” I still get goosebumps when I recall that moment. To me, her words captured the essence of our brand. “Live in Levi’s” became our advertising tagline. That experience is an illustration of how much value can come from listening to consumers,” Bergh wrote in HBR.
The turnaround strategy
After six months on the job, Bergh and his team rolled out a plan consisting of four key pieces — build profitable core (80% of profits came from men’s jeans and Dockers); expand for more (seize the opportunity in women’s clothing); become a leading omnichannel retailer (grow sales in the company’s own stores and online); and achieve operational excellence (cut costs, drive cash flow, become more data driven and financially disciplined).
The new strategy provided funds for investment in the company’s Eureka Innovation Lab. In 2013, it created a revamped women’s denim line. A second big investment was the purchase of naming rights for the San Francisco 49ers’ new stadium—a 20-year, $220 million deal, which was to put the company in the limelight it needed.
Burgh wanted the company to act like a 160-year-old start-up. “We’ve got scale, heritage, authenticity, awareness and global reach,” he told Beeketing in an interview, “But if you’re a multi-billion dollar company that’s existed for over 100 years, you wish you had agility, focus, innovation and optimism of a start-up. That’s why the future will be better than the past.”
Burgh expanded the range to women’s clothing instead of just menswear and jeans. He opened up untapped markets such as Russia, India and China. He launched e-commerce with experimental features such as a virtual stylist, an AI-powered chatbot that helps customers find the perfect pair of jeans. He roped in celebrities in innovative ad campaigns such as for the Levi’s trucker jacket as well as linked the company to contemporary issues such as conserving water. Burgh got popular by saying one did not need to wash one’s jeans for two years.
Bergh’s multi-pronged strategy bore fruit and the company revenue hit a record $4.9 billion in two decades. In 2019, the company filed documents to list itself on the New York Stock Exchange, seeking to return to public markets after more than three decades. The company fetched a higher price than expected.
In November last year, Bergh put his succession plan in motion with the appointment of Michelle Gass to the new position of president, reporting to Bergh. Gass brings direct-to-consumer experience to Levi Strauss and Co., having led the transformation strategy at Kohl’s. Bergh had brought in Gass who had worked with him earlier at P&G.
Levi Strauss and Co. in India
When in several countries, especially the company’s US home market, consumers are battening down the hatches and pulling back on spending due to the fear of recession, there’s a high degree of consumer optimism in India, Bergh told ReTale recently in an interview.
Despite inflation, lifestyle and discretionary segments in the country have seen double-digit growth, driven by pent-up demand, pandemic-related savings and continued casualisation at workplaces, a trend that has helped brands such as Levi’s.
Levi Strauss and Co., which opened its first door in India three decades ago, now has over 400 stores and competes with relatively newer entrants such as Zara and H&M in a market where youngsters are increasingly embracing western-style clothing. While fast-fashion rivals create affordable, copycat versions of the latest trends or designer wear and make them available to shoppers in double-quick time, Levi’s has a different strategy.
“The thing that separates us from Zara and H&M is that we are the opposite of fast fashion — we are slow fashion,” said Bergh. “Just being self-critical, probably we don’t have enough fashion in our line today here in India. But what we have got is a brand that is highly differentiated versus others and so for the people that really want quality denim, they are still going to come to Levi’s.”
The company is trying to push more non-denim clothing and women’s apparel as it seeks to broaden its share of the consumer’s wardrobe.
India is increasingly becoming a talent hub for the retailer globally. For instance, more than a year ago, Levi’s named Sanjeev Mohanty, managing director of South Asia-Middle East and Africa for Levi Strauss & Co, based out of India, as its managing director for the US and Canada. Singh was also elevated and given additional roles in corporate strategy and global retail real estate.