WASHINGTON — Levi Strauss & Co. is making an aggressive push for the Millennial customer, investing in new marketing programs that encompass the music, entertainment and sports worlds, as part of a turnaround story aimed at putting the iconic denim brand back at “the center of culture.”
That was the underlying message from Chip Bergh, president and chief executive officer of Levi Strauss, who highlighted the brand’s new direction at the American Apparel & Footwear Association’s summit here and in a separate interview with WWD.
“We have withstood the test of time,” Bergh told an audience of apparel and footwear executives. “We’ve kind of seen it all. We’ve been through the Gold Rush, James Dean, the Berlin Wall falling, to Steve Jobs in Silicon Valley.”
But along the way Levi’s “lost its mojo,” falling to around $4.1 billion in sales in 2001 from a peak of $7.1 billion in sales in 1996, he noted. Sales stand at about $4.5 billion today.
Under his stewardship, Bergh said he is putting Levi Strauss back on the right track where it belongs, “at the center of culture” and with the young consumer, and is starting to see a big return on investment.
Here, in an interview, Bergh talks about Millennials, the new direction for Levi’s women’s denim and the impact of the ath-leisure trend.
WWD: Talk about your success in addressing the ath-leisure trend that grabbed headlines (with some stories even declaring the death of denim). How will you go forward and find your niche?
CHIP BERGH: I don’t want to say ath-leisure will someday go away. It’s clearly a trend, a big dynamic. When I am traveling, you go through an airport, you just do the random check on how many pairs of Levi’s I am seeing, how many pairs of tights I am seeing. It is clearly a trend.
When we really got what was driving it, it is all about comfort and stretch…We innovated around stretch and really got our fit right. Now we can give women stretch and the comfort that they are looking for — a soft hand feel while also giving them style. Our hope is in this casualization that we can meet their need for soft, for stretch, for comfort and give them the style that they are looking for. [Since] we launched our new women’s collection [last July], our business has grown double digits.
WWD: What is the outlook for it this year?
C.B.: We’re very optimistic about our women’s line. Our women’s business is significantly underdeveloped versus our men’s business, which is the opposite for most brands. For most brands, the women’s business is bigger. It is two-thirds to one, one-third [men’s to women] very roughly speaking. It represents a significant upside.
WWD: Do you have a goal of making [the ratio of men’s to women’s] 50-50?
C.B.: We have a goal to grow it faster than our men’s business because the opportunity is so much bigger. I don’t want to give away the full plot. It is about accelerating the growth on our underdeveloped women’s business.
WWD: How is the U.S. market? Is it saturated? Will you see more growth here?
C.B.: We don’t have a 100 percent share here, so we’re not saturated yet. I won’t rest until we get to 100 percent market share.
The U.S. is our biggest market. We report three different regions — the Americas, Europe and Asia. Our Americas business is about 60 percent of the total and the U.S. is obviously the biggest part of that. It’s our biggest business. It’s our most important business. It is home court for us. So for a lot of those reasons we need to be successful here. It is our most challenging market today.
The business skews very dominantly to a wholesale business here. We do have a couple of hundred outlet doors and about 35 or so mainline doors. But we’re very dependent on our wholesale business here, particularly the big wholesalers….And no surprise…some of these wholesale customers have been challenged over the last 12 to 24 months.
WWD: Do you have any plans to expand [doors] this year?
C.B.: Yes, we are opening in both [outlet and mainline stores]. We just opened a new store in Brooklyn about four months ago, right before the holiday in early November. We weren’t in Brooklyn. This is the kind of brand that should have been in Brooklyn five years ago. We’ll open a couple more doors in the U.S. In the last fiscal year, we opened 91 net new doors globally. We will do about 60 to 70 net new doors this year.
WWD: What is the biggest market for expansion outside of the U.S.?
C.B.: We’re very optimistic about Asia. If you look at our business, all publicly reported through the end of last fiscal year, which ended in November, we’re growing at very healthy rates in both Europe and Asia. That’s largely being driven by our retail network. Asia skews very heavily to retail. About 75 percent of our business is retail in Asia and I’m very optimistic about Asia. We’ve got big growth aspirations in China, Greater China, as well as other parts of Southeast Asia. We have a small business today, for example, in Indonesia. It’s one of the most populated countries in the world, and so there is significant upside growth over time in a market like that…We also still have opportunities in Europe.
WWD: What is in store this year in terms of reaching Millennials and reacquainting them or acquainting them for the first time, perhaps, with the brand?
C.B.: We’ve been shifting more of our marketing to digital. It’s part of the reason why we did the Levi’s Stadium and how we connect to the younger consumer through sports, through music, through entertainment. So we’re much more present through sports today, more present in music today. These are the things that built this brand through the years. I like to joke if you were at Woodstock, you were either naked or you were wearing Levi’s…That’s when Levi’s was at its very best.