Macroeconomic headwinds and difficult conditions in Levi Strauss & Co.’s women’s U.S. wholesale business have made it a challenge, but Chip Bergh, president and chief executive officer of the San Francisco-based jeans giant, is hoping to deliver growth in operating profits and sales this year.
If he succeeds, it would be just the second time in six years that Levi’s has managed the feat and the first time it’s been done in back-to-back years in recent memory.
But Bergh, who recently marked his third anniversary at the helm of the company after a career spent building brands, mostly in the men’s grooming area at The Procter & Gamble Co., sees his mission in more personal terms.
“The biggest opportunity we have with both brands [Levi’s and Dockers] is really reconnecting the soul of the brand back with consumers,” he said during a conversation with Harold Reiter, chairman and ceo of the executive search firm Herbert Mines Associates. “A lot of us in this room grew up back in the day when Levi’s was a ‘had to have’ item in your closet. And we’re going to get back to that.”
For both interviewer and interviewee, the emotional bonds with the Levi’s brand were clear. Bergh, 57, spoke of having his mother drive from their home to Charles Department Store in Katonah, N.Y., because “I was not going to be caught dead going to my first day of junior high not wearing Levi’s.” Reiter had a similar story of somewhat older vintage about traveling to Meier & Frank department store in Portland to get his “back-to-school Levi’s” in the Fifties.
Stories like these — and others collected while conducting in-home research in various locales around the world — inspired Levi’s new ad campaign, wrapped around the tag line “Live in Levi’s,” that Bergh hopes will accelerate the process of re-bonding the brand with its customer base.
He spoke of a brand devotee he interviewed at her home in India — a woman with a college degree from the U.K. living in comfortable circumstances as a member of the country’s upper class — who removed 10 pairs of jeans from her closet, the last two bearing the Levi’s brand. One was reserved for nights out with friends. The other went back to her college days.
“These are the jeans I wore when I was in college,” Bergh quoted the woman as saying. “I can’t even fit into them anymore but I can’t bear to part with them because they are the story of me in college.”
Bergh noted that a series of world-changing events, such as the fall of the Berlin Wall in 1989, are closely associated with the brand. Borrowing a line from James Curleigh, who joined the company as president of the Levi’s brand in 2012, he said, “If you were wearing clothing at Woodstock, it was Levi’s.”
Contradicting some of the speculation at the time of his move to Levi’s, he said that he took the position in San Francisco “not because I decided to leave for the ceo title. I really left to work on one of the greatest brands in the world….It’s a company that had its greatest moments in the Nineties and lost its way and, along the way, the brand sort of lost its way, too.
“When you get to be my age, you start thinking about leaving a legacy and making a mark,” he continued. “I am a brand guy when all is said and done. I’ve spent my career leading and managing great brands and the opportunity to come to a company that had been through some tough times and to make Levi Strauss & Co. great again was just too amazing an opportunity.”
Bergh’s 28-year tenure at P&G was hardly starved for brands with significant penetration and recognition. He managed Gillette, Old Spice, The Art of Shaving, Zirh and Olay Men Solutions and launched the Swiffer brand for P&G’s hard-surface cleaners business in the U.S. while existing brands, including Comet and Mr. Clean, languished. In the early stages of his P&G career, he was involved in marketing and advertising for its Jif and Folgers brands.
Bergh believes that Levi’s ability to survive for 161 years — all but 20 of them in the jeans business — can be traced to a sensitivity to consumers by the founder, Levi Strauss. Once he added the patented riveted jean to the assortment of his dry goods store in San Francisco, he realized he had a strong product, but not the means to distribute it. “If you had to leave the mine for a week to travel down to San Francisco to get a new pair of pants, you weren’t going to be paid for that week,” Bergh said of the genesis of Levi’s wholesale business.
The company last year generated $4.68 billion in revenues, with wholesale accounting for about two-thirds of the total and a combination of owned and franchised stores, about 2,800 in all, and e-commerce sites accounting for the rest.
Although he expects wholesale to be a part of the business, if not necessarily the dominant part of it, for a “long, long time, more and more we are becoming and trying to behave like a retailer.
“Any good brand is going to want to control how it shows up to the consumer,” he said in response to Reiter’s query about the wholesale-retail mix at the company. “And that combination of four-wall retail and the digital experience coming together into one seamless, integrated experience for the consumer is going to be a major way that brands are built in the future.”
He pointed out that, just like the blades and razors business he left at P&G, the apparel and retail businesses are being disrupted by new technology and new business models. “The most innovative retailers and the most innovative brands are going to be the ones getting out in front and figuring out how not to be victimized” by these new forces in commerce of all kinds.
Asked about the differences between working for publicly held P&G as opposed to privately held Levi’s, he noted that most of Levi’s shares are owned by the Haas family, descended from Levi Strauss himself. “At the end of the day, I still have shareholders, but I can go out and have breakfast with them,” he commented. “There’s a lot of family pride. They’re looking for me and my executive team to get the company turned around and back on track and creating shareholder value and reconnecting the company with its heart and soul.”