Is Levi’s poised to become a consumer-direct powerhouse?
Is Levi Strauss about to do a Nike?
The denim brand has not announced it is ending its wholesale relationships with large numbers of retailers. It has, however, made clear that it sees a bigger opportunity to expand its business by selling its clothing directly to consumers.
Direct-to-consumer (DTC) sales represented about 40 percent of Levi’s total sales in 2020 and the company is looking to grow that to 60 percent this year, CEO Chip Bergh told CNBC.
The brand’s DTC also includes company-operated outlets and other stores. Levi’s has focused on expanding and improving its omnichannel capabilities. The company rolled out ship-from-store, associate ordering and two-day shipping last year in the U.S. and is now taking those services global.
The denim giant is looking for more space to grow and plans to add 40 stores and 200 outlet locations across the U.S. Mr. Bergh said that high commercial vacancy rates provide the company with opportunities to find space at favorable prices.
Creating better experiences in stores and online is critical to Levi’s consumer-direct push.
“We recently saw our largest week of sales from associate ordering, a capability that helps ensure we don’t miss a sale and caters to how younger consumers are shopping, behaviors we expect will stick beyond the pandemic,” Mr. Bergh told analysts. “We’re just scratching the surface as these omni-capabilities scale, they [are] becoming increasingly more meaningful.”
Levi’s use of artificial intelligence technology is helping to “accelerate” its digital transformation, according to its CEO.
“A new product recommendation engine on levi.com now personalizes the individual experience online based on consumer profiles and browsing and purchase patterns showing increases in revenue and conversion,” he said.
Levi’s loyalty program membership grew 35 percent during the first quarter to more than five million members. Mr. Bergh said that revenues coming from Levi’s mobile app has exceeded internal expectations and shown month-over-month growth.
“We are reaching a younger consumer who is engaging with us more times per month and longer per visit,” he said. “We’re using the app as a seamless connector for the online to off-line experience and are piloting new convenience-oriented in-store features like contactless returns and self-checkout.”
- Levi Strauss & Co. Reports First-Quarter 2021 Financial Results – Levi Strauss & Co.
- Levi Strauss & Co (LEVI) CEO Chip Bergh on Q1 2021 Results – Earnings Call Transcript – Seeking Alpha
- Levi Strauss wants to capitalize on commercial vacancies as it expands footprint, CEO says – CNBC
- Nike says goodbye to more longtime wholesale partners – RetailWire
DISCUSSION QUESTIONS: What do you see as the challenges and opportunities facing Levi Strauss as it seeks to expand its consumer-direct business? Are companies such as Nike and Levi’s outliers or do you expect to see an increasing number of brands going direct to consumers and around wholesale middlemen?