Levi’s, the great reference of jeans in the world, wants to reinvent its way of selling you

SAN FRANCISCO – The jeans maker’s new collection is on display at the Levi’s store on Market Street in San Francisco. The mannequins are dressed from head to toe in his signature denim (jeans). A black denim jumpsuit is paired with a long-sleeved light blue denim blouse and a hat of the same material. The other has a denim crossbody bag. A wall of blue jean jackets gives shoppers the chance to feel like hippies, ranchers or rock stars, whatever they prefer.

“It’s not just walls and walls of jeans,” Michel Gass said while visiting the store this month, days after becoming CEO of Levi Strauss & Co. The assortment of clothing, which Levi’s is producing at a faster pace than ever before, was comparable to the store’s inventory of jeans.

That day, the gas suit also provided an example of the company’s intentions. She swapped out her iconic black leather jacket, which was her favorite outfit during her tenure as Kohl’s CEO, for a dark Levi’s jacket and matching 90s-inspired long denim skirt.

Gass, 55, wants to make Levi’s not only a brand you think about when buying jeans, but also a place you go first when shopping for shirts, jumpsuits and jackets. The goal is to keep customers coming back more often – because people buy more upper body clothing than lower body clothing – and to attract them to Levi’s stores, its website, and your mobile application.

“When you build a store or an e-commerce site, the consumer wants to discover and buy more than just jeans,” Gass said.

This approach is a key element in transforming the 171-year-old company into a true retailer, rather than a brand that sells its products primarily in other companies’ stores.

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Sales through its direct-to-consumer channels (known as DTC in the industry) grew eleven percent in its most recent quarter, while Levi’s sales through retailers like Macy’s, Kohl’s and Amazon rose two percent. There has been a decrease. The company’s global sales remained stable in 2023 compared to last year.

These are tough maths for Levi as investors are expecting continued growth from it. Revenue last year was $6.2 billion. In January, The company told Wall Street that it planned to increase total sales to between $9 billion and $10 billion over time. He did not set any specific date to achieve this.

However, Gass and his management team are very clear that their stores and the assortment of products they carry will play a key role in achieving that revenue target. Within six years, it wants 55 percent of its revenue to come from its direct-to-consumer business, up from 42 percent now.

“It’s about transforming the company into a denim lifestyle retailer,” Gass said. “This is the big turning point.”

Levi’s stores are not new. It opened its first store in Spain in 1983; First opened in the United States in 1991 in Columbus, Ohio.

However, most of the company’s sales continued to come through chains such as Macy’s or Nordstrom. The way we shop has changed a lot since then. As department stores and shopping malls grapple with growing e-commerce, brands like Levi’s and Nike have created their own direct-to-consumer channels to strengthen their relationships with consumers and gain more control over their brands. Has responded by strengthening.

“You can show the brand and the direction you want to grow,” said Stifel retail analyst Jim Duffy, referring to brick-and-mortar stores. “That’s sometimes hard to do in a wholesale environment, where they often sell brands as items rather than as collections.”

Levi’s currently has approximately 2,300 stores worldwide, of which 244 are in the United States. Last year he broke his own record for starts: 105.

“The consumer is going to buy directly from brands,” Gass explained. “You have the overall consumer trend leaning toward the direct-to-consumer experience, and then we have a new chapter where we’re still underdeveloped in our direct-to-consumer footprint.”

To transform itself into a company that thinks first and foremost as a retailer, Levi’s had to go through some bad experiences. Gas has identified some. Last year, when she was president of Levi’s and preparing to replace longtime CEO Chip Bergh, she visited the company’s stores in fifteen markets. He made six trips to Asia.

On those trips, he saw how the Levi’s business was more developed in other parts of the world. For example, in India the company sells one shirt for every pair of pants. In the United States, one shirt for every four jeans. He wants equality in that ratio.

He also concluded that decisions could be taken much faster. The shirt took fifteen months to develop and distribute, about the same time as the jeans, but much longer to consistently attract buyers and motivate them to return. The company has hired new suppliers and is accelerating timelines.

It also appears to be presenting minimal changes. Levi’s jeans were folded for shipping to fit the way they were displayed at other retailers, but in Levi’s stores they were displayed differently. Employees at Levi’s stores had to fold their pants again. Orders at Levi’s stores are now shipped as displayed by the store.

Levi’s is focusing on training and engaging its store employees through short training videos like TikTok and is experimenting with how artificial intelligence can help store employees be more responsive. Easily answer customer questions (“What is the advantage of Japanese selvage denim fabric?”). It is also improving systems that let distribution centers know when stores have stock of best-selling products. is over, which is a major disappointment for shoppers expecting to find their sizes. Transportation of products from distribution centers to stores has also been rationalized to optimize inventory as per the season.

Today, these types of practices are a safe option for the retailer. But this is the next evolution of a brand that has lost its balance for some time. A decade ago, Levi’s faced an existential crisis of giving relevance to its denim apparel when the youth opted for leggings.

The company found a solution to this. They created stretcher jeans, opened stores in trendy neighborhoods and took advantage of moments like Beyoncé wearing 501-style cutoff shorts during her 2018 performance at the Coachella Festival. It became a publicly traded company for the second time in 2019, bringing the company even more into the spotlight. Last year, Levi’s was the best-selling jeans brand in the United States and worldwide, according to data from market research firm Euromonitor.

At its San Francisco headquarters, a variety of denim pants, jackets and shirts hang on racks. Don Vitale, Levi’s merchandising director, describes the latest assortment as a “denim lifestyle”, where anyone can wear all denim clothes. Pant prices range from $60 to $400 for exclusive selvage pants, with some special collaboration items being more expensive.

The logic is that when Levi’s introduces a new cut of pants, there is a blouse or jacket nearby that they can offer to buyers with which it will match well. “It’s really a strategy for building outfits,” Vitale said.

Still, as it expands its offerings to fill its stores, Levi’s direct-to-consumer business is less profitable than its wholesale business. Gass said it has a “vision” to increase the profitability of its stores and e-commerce platform.

Levi is trying to save costs as much as possible. During its quarterly earnings call in late January, the company said it would cut its workforce by ten to fifteen percent, a move that would save $100 million this year. Gass declined to specify which positions would be cut, but said the company was looking at “reducing layers in the organization.” It also said it would stop manufacturing fifteen percent of its lowest-selling items.

“We are changing the way we work,” he explained. “This operating model will look for all opportunities in which we as a culture can be decisive.”

c.2024 New York Times Company

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