Almost everyone has their own Levi’s story. From your first day to school till graduation, hanging around with your friends or maybe your first kiss. My first experience with Levi’s was at my first (enjoyable) job, as a salesman in a small retail store. I was 18 years of age and had no clue about clothing brands and how to dress well. A few weeks into the job, something interesting happened. I sold three Levi’s 501 to a middle-aged man. This sale learned me two huge important lessons:
1. You can actually make money by talking to someone (alright, selling is a little more complicated)
2. The power of a brand
The second point is the talking point of this article. In my conversation with this middle-aged man, I noticed a few things. This retail store had a huge wall, full of different denim brands. The wall had five rows filled with 26 different models of jeans. When the man arrived at Levi’s part of the wall, he stood still and touched the denim. That’s a salesman’s queue. After explaining the different fits and letting him try on a few models he asked: ‘How many washes do you have of the Levi’s 501?’. I replied with: ‘Three different washes sir, would you like to try them on?’. The man answered me unbothered: No need, they are always good, I take all three. That was one of the easiest sales I ever made.
This fashion icon has been around for quite a while. The fashion and retail industry is notorious for being really hard. Products need to develop at a rapid rate to keep up with fashionova’s lust for novelty. The fashion items literally change like seasons. That makes one wonder, how does Levi’s stay on top?
Cali, Gold, and denim
Let’s start at the beginning of this iconic fashion brand. Have you ever heard about the California Gold Rush? It arose after gold was found there on January 24, 1848, and persisted until 1856. Do you know what was the most lucrative product at that time? At least for most workers, not gold. For the vast majority of miners, the Gold Rush was basically a bust. But for merchants on the other hand, who could serve those gold-seeking miners, they had a golden opportunity indeed.
All those minders needed various products. Products like housing, food, equipment, and clothing. Lots and lots of clothing. You can imagine that you wear out clothes quickly when you search for gold. This is where our antagonist enters the stage.
Levi Strauss was a German immigrant who arrived in San Francisco in 1853 to open Levi Strauss & Co. This was at first a wholesale dry goods business to cater to Cali’s exploding population. It took another 20 years for the real breakthrough for Strauss.
Jacob Davis was a tailor from Latvia and he bought denim fabric from Strauss. From the fabric, Davis made tents, wagon covers, and pants. As sales were doing great, Davis wrote to Strauss to help him patent and market his invention: Denim jeans strengthened with copper rivets. They received a patent for the invention in 1873. Almost 150 years later, jeans are still widely popular. Levi’s rose to fame as a hearty all-American brand. But since its humble beginnings, the jeans manufacturer hasn’t always struck gold.
Rising market demand after WWII and competition
Levi’s has struggled to maintain the public’s loyalty. For the first 70 years, it was the go-to denim brand for America’s working class. Levi’s dominated the jean market until 1913. That’s when rival denim brand Lee introduced its Union Alls. A few decades later, Wrangler rolled out its jeans fashioned with felt seams and deeper watch pockets. Those were the perfect jeans for the modern-day cowboy, these jeans made anyone say: ‘ Yee Haw’.
While the competition was heating up there was a major event that would spike global interest in jeans, it was World War II. American soldiers wore casual pants around Europe when off-duty. You might think, why is that so important? At that time Europe mostly had a real formal way of dressing. Men were wearing hats and suits, ladies wore suits, coats, and scarves.
This inspired consumers in Europe to maybe try something different, like jeans. When the soldiers left Europe, jeans stayed around. Denim transformed from a strictly functional use to a fashion statement. We got the big screen to thank for that. We already had John Wayne making jeans more popular with his cowboy characters in popular Western movies. But denim’s real breakthrough came from 1950s Hollywood movies and the teenagers who watched them.
Old skool influencer battle and unexpected rival collaboration
When James Dean was wearing jeans and a leather jacket in Rebel Without A Cause, he kicked off a new fashion trend. Those jeans, hat’s and leather jackets were of course very, very rebellious. Unfortunately for Levi’s, Dean was wearing jeans from their rival jeans company Lee. In reaction, the jeans brand started to grace the legs of famous stars in other popular movies. Jeans became a symbol of sexy rebellion to America’s teenagers. The growing popularity helped Levi’s nationwide expansion.
The denim train slowed down in the early 1980s. This is when Levi’s began to struggle. Although Levi’s firmly cemented itself as an iconic American brand, they lost their way. The company fell behind in fashion trends. In the ’80s designer jeans from Calvin Klein and Jordache came into vogue. These jeans had a new kind of sex appeal that Levi’s 501 was lacking. Consumers bought these new models for nearly 50% higher prices.
Meanwhile, Levi’s competitors were joining forces. VF Corporation merged with Wrangler’s parent company Blue Bell. That meant that both Levi’s competitors Wrangler and Lee were under the VF Corporation umbrella. In 1984 Levi’s revenue plunged 78%. That made Strauss’s descendants decide to take a huge debt (1.6 billion dollars) to buy back the majority of the company. Levi’s was taken private and freed of the pressures of Wall Street.
Levi’s privatized and on the attack, was it enough?
Once privatized, Levi’s went into the next gear and acted fast to compete in the tough denim market. It started investing in marketing and technology and started a new casual business brand in 1986 named Dockers.
Dockers focused on non-denim trousers, which not only gave Levi’s a better diversification but also cut into VF Corp’s sales. In 1990 denim popularity took a flight again, which made sales peak in 1996 at $7.1 billion. As a result, the company was paying its debt years ahead of schedule. And everyone knows what businesses do when they have no more debt. Exactly, borrow more money to grow even bigger. At least that was what Strauss’s descendants thought. They borrowed another 3.3. billion dollars to buy back the rest of the company.
But the brand was still struggling to stay relevant. It missed the baggy jeans trend of the 90s and other trends. Cheaper alternative brands like Gap ate into Levi’s sales in the 1990s. The denim market became even more restless with new scaling competitors like Diesel and True Religion at the beginning of 2000.
Put down on their knees, Levi’s sales fell every year from 1997 to 2002. Levi’s was thinking about selling Dockers and teased going public again. When sales stabilized in early 2007 it was for a very short time. The financial crash devastated the garment industry. Basically, people had less money to spend, so consumers would wear their ‘’old’’ clothes longer.
Falling behind on the outsourcing ladder
Marshal Cohen, Chief Industry Advisor NPD Group, said hopeful words in an interview with CNBC: ‘They can ride out the storm. They’re not worried about being the first and the trendsetter, they’re worried about maintaining their volume and their core customer business and achieving growth within the new customers.’
So basically Cohen says that not every trend should be followed by a company. Levi’s chose (not always with great results) to stick to their brand. That all-American image of Levi’s has been put to test a few times. In the 80s and 90s other jeans companies started outsourcing their production to countries with cheaper labor. Not Levi’s, oh no, all-American remember. This allowed competitors to slash prices while luring away customers from Levi’s.
After a stubborn battle, the jeans company realized it couldn’t keep up with the competition this way. It had to change its ways. Along the line, it started closing a few US manufacturers but held onto others. That came to an end in 2004 when a spokesman told CNBC News, ’We tried to do our best to maintain manufacturing in the United States, but we have to be competitive to survive as a company.’ Nowadays, the vast majority of Levi’s all-American jeans come from China, Vietnam, Mexico, and some other places.
Debts, declining sales, and washed-up reputation
So from the year 2000 Levi’s faced massive debt, declining sales, and a washed-up reputation as an all-American icon. Things didn’t look pretty at all. But in 2011 things were about to change when Chip Bergh became CEO of Levi’s. Bergh soon understood the challenges presented to company. After a lot of research and finding the right people for the job, there came a four-part strategy.
- Build our profitable core
- Expand for more
- Become a leading omnichannel retailer.
- Achieve operational excellence
It was obvious that Levi’s needed its core. 80% of the cash flow came from men’s bottoms- jeans and Dockers. This part of Levi’s business has a high market share but relatively low growth. The core is hugely important for the corporations finances.
It was time to give the ladies some attention. Levi’s had a very low market share in women’s clothing. Bergh recognized they also had low sales in developing markets such as Brazil, Russia, India, and China. At that time most of Levi’s goods were sold in department stores. In their own retail stores, they have higher margins on sales and control the experience. That’s why Levi’s invested in their own stores and web shop. Last but not least, the jeans maker needed to become more data-driven, cut costs, and drive cash flow. This is obviously the plan in a tiny nutshell. But how has it worked out for Levi’s so far?
Investing, innovation, and exploration
From this lab, Levi’s top creative designers created the new women’s denim line, which they launched in 2015. Consumers loved the stretch and comfort but mostly, the way they looked in the new designs. Since Levi’s women’s relaunch Levi’s experienced 11 quarters of consistent growth. Sales have increased from less than $800 million to more than $1 billion annually.
Another big branding investment made in 2013 was buying the naming rights to Levi’s Stadium. This is the home of the San Francisco 49ers, from the NFL. The contract cost 220 million dollars for 20 years. At first sight, this might seem like a stupid idea, but it’s really not. The people who attend concerts and NFL games are Levi’s core customers. Bergh believes this will bring Levi’s back to culture.
Around the stadium, you have their mascots and even the cheerleaders are seen rocking Levi’s shorts. In 2016 the Super Bowl 50 was played in Levi’s stadium. Some experts calculated that the brand exposure from that week alone was worth a significant portion of what Levi’s paid for the naming rights.
‘If a seasoned brand dwells too much on its history, it can feel old and dusty. But if you disregard your history, you’re walking away from one of your strongest assets’, Chip Bergh, CEO of Levi’s. That is some next-level branding. But what about their digital campaigns?
Levi’s growth and digital campaigns
Before we hop into the digital campaigns of Levi’s it’s necessary to understand how much the brand has grown in many ways. Where they sold mostly denim jeans before, they now have a wide variety of products. T-shirts, sweaters, jackets, hats, you name it. They even did a collaboration with Jordan to make an epic denim shoe.
Apart from what most people think if you buy jeans for more than $100 it doesn’t mean the profits are better than one of a t-shirt. This product expansion made Levi’s less dependent on their men’s jeans sales. As Levi’s diversified their product range it was time to expand even further.
The business started in San Francisco but now operated throughout the world. Levi’s has its manufacturing in almost every country. What they do have in every country is an organized distribution channel reaching out to everyone who wants Levi’s. You can find Levi’s in:
- Levi’s official website
- Wholesales and retail stores
- Various online e-commerce portals
- Franchise stores
Unfortunately for people who want to become Levi’s franchisers, as it doesn’t allow franchises in every part of the world.
A strong sense of freedom and equality
Campaigns increase brand awareness, and Levi’s uses their core values to engage their customers. The sense of freedom and equality. They use cultural dilemmas in the world to get to people. With a strong message, people can more easily connect with a brand. According to Levi Strauss & Co. Statista 2021, Levi’s has a humble advertisement budget of around 330 Million Dollars (2020, worldwide).
From television ads to fashion magazines and news magazines, Levi’s has a diverse branding mix. You can find them almost anywhere. If you’re driving to work you might just come across a billboard with Levi’s advertising on it.
Levi’s also continues to improve their branding on the Internet. It makes sense for them to focus on this, there is by far the most to gain. Retailers are bringing in more costs and cutting margins. Especially since COVID-19, where many stores were closed worldwide. A digital strategy is necessary for these modern days. In 2020, 40% of Europe’s Levi’s stores were closed, and 17% globally. Online sales made up 23% of fourth-quarter sales, up from 15% in the year before.
Let’s take a look at some of Levi’s marketing campaigns.
I shape my world campaign
With this campaign, Levi’s wants to inspire women to shape their own world. The ordinary conversation must change. And because one of the goals is expansion, they released the campaign in multiple countries. In every country, there are different problems, and Levi’s responds to these.
India: A compelling song about achieving your dreams.
Mexico: The story of the modeling agency that’s redefining how Mexico sees beauty.
Russia: Standing up for domestic violence
Global Anthem: Is an ongoing, global initiative dedicated to recognizing the achievements of women everywhere
When you look at the 1-2 minute campaigns, you can quickly see how Levi’s appeals to the different segments within their target audience. They target specific problems going on in a culture.
Another great example is the campaign called “Live in Levi’s“. Here you can clearly see how clever product placement, immersive music, and culture create a sense of belonging. In Levi’s favor.
Remember what CEO Chip Bergh said? Levi’s is at its best when they are close to culture.
To combat over-consumption Levi’s introduced a film called: Buy Better. Wear Longer. In this short film, Levi’s inspires the youth to make sustainable consumer decisions, while looking great, in Levi’s. The youthful crew gives the message more power. Often when one thinks of sustainability they take it more seriously when they see the vibrant youth ready to live their lives. hopefully in a healthy world.
Gaining ground in China: We are original
Levi’s wants to expand its business all over the world. China is a huge country with lots of growth potential. There was only one problem, Chinese millennials couldn’t care less. They liked Lee. That’s why I like this digital ad campaign particularly: “We are original’’. This concept has been rolled out in China to reach younger generations. The challenge for Levi’s was that Chinese millennials believed the brand was unrelated to them. So instead of telling Chinese consumers that Levi’s is so unbelievable ‘’original’’ and cool, Levi’s decided to hand over control of the ad display to its fans.
And like Jen Sey, Global Brand President of Levi’s, said after getting asked how to stay relevant for every generation in an interview with Salesforce, ‘Adopt teenagers I think would be the best one’ – Jen Sey, Global Brand President of Levi’s
In China Levi’s has lost its denim leadership to rival Lee. How do you establish true brand recognition among China’s younger generation? Well, they definitely found a way. Just like almost everyone in the world, people like social media. However, it could be a ‘’complicated relationship’’ of course. Chinese youngsters also chat, take photos of food and videos of their parties. Levi’s persuaded Chinese consumers to be ‘’original’’ themselves.
Truly being original meant making every part of the ‘’We Are Original’’ campaign original. From models to, ad copy and even music. This made the ads no longer just ads, they became authentic expressions of individuals, a.k.a. original.
How did it work? Using Tencent’s QQ database, OMD selected millennials’ favorite song, which in their opinion embodied Levi’s brand spirit. Once the target audience played any of these songs, they could unlock Levi’s images as backdrops to the ad campaign.
This campaign was designed and run by Levi’s target audience.
But that’s not all of it. The brand gave their audience the power to invent their own statements about originality. Inspired by their favorite songs to pair with their Levi’s image, they become highly shareable. That’s exactly what happened. They shared their original story with friends on WeChat. With expressive images, an original copy, and a song.
Every message became an original story by its own creators. Levi’s invited the youth to become stars in their own story. Okay, maybe I am exaggerating, but I think it’s a smart strategy. You can imagine the hype effect behind this engaging ad campaign. Like a delta of domino stones, the ads were being shared.
In just two weeks, over 2.6 million Levi’s ads were created by millennials. Plus, an additional 2.9 million online engagements (likes, shares, and comments). The click through rates on these fan-created ads were 50% higher than other Levi’s display ads. Overall sales boosted by 15 percent year-over-year, while website traffic grew 14%. Fueling a huge 45% annual increase in total online sales in China. Chapeau.
What’s next for Levi’s
Chip Bergh believes the company is making good progress. They are paying their debt, almost 5 years of growth, and doubled the value of the enterprise. 2017 was the strongest fiscal year, generating an 8% revenue increase, while the brand grew 9%, with 4,9 Billion dollars in sales. That’s the highest sales target since 1999. But it’s not so high as Levi’s peak in 1996 of 7,1 Billion dollars in sales.
In his final words in a Harvard Business review article, he says: ‘I believe we can grow beyond our historical peak of 7 billion and someday be a 10 billion dollar company, as I once assumed the company was. Levi’s lost a generation of consumers in the early 2000s, but today our customers are younger than ever and gaining momentum as we bring them back.
In the coming 10 years, we will see if the strategy of Levi’s can keep up with the murderous competition. As long as Levi’s is in the middle of the culture, Chip Bergh believes, they will succeed.
