Business Strategy

What’s in store for Levi’s?

For the first time in 34 years, Levi’s is a publicly traded company, and in large part, this change comes from CEO Chip Bergh taking over in 2011. Thanks to his efforts, the company has worked to turn around years of severe debt and turned to new technologies and industrial techniques as traditional retail struggles. The numbers look good from a business perspective, revenue was at $5.6 billion for 2018 and they increased their foreign sales on top of having cut down their debt by more than half. However, the denim giant still struggles with marketing themselves in the 21st century.

Struggling with technology

The company is reportedly in the midst of implementing a new enterprise resource planning system (ERP), but there is a clear concern the implementation might have an issue. In 2008, they tried installing a new system, only to experience a complete halt in fulfilling orders for a week leading to a 98% decline in net income for the quarter. ERP systems aren’t the most technically advanced systems, but as a necessity for the business, it should be dependable. If any other company experienced this sort of decline, they’d go bankrupt, but Levi’s has such a strong market share and historic presence that they survived. As a result, it’s not unfair to call them an exception when it comes to this catastrophic incident.

Meanwhile, Levi’s has made a large push in increasing support for their sales by expanding stores, but about 28% of their sales still come from wholesale retailers, none of which are long term contracts. Should either Target or Walmart (the largest of their wholesale partnerships) see their agreements expire, Levi’s would need to be prepared to take on the additional orders without delays.

A lackluster app

Customers are no longer limited to the brands carried in local brick and mortar stores, but Levi’s hasn’t quite caught up to the market shift. Most importantly, Levi’s isn’t meeting customers where they are: mobile. They offer a mobile app, but at the time of writing this, it has a rating of 1.4 stars in the App Store and 1.9 stars in the Google Play store. Based on the reviews, users have experienced a host of issues on both stores trying to get the app to load and not freeze, and even those lucky enough to get it to load mention it crashes a lot or there is no inventory for sale. If Levi’s plans to capture more of the market, they need to start investing in technology which can function the way it is intended and deliver an experience customers can write about positively.

Even if the app does eventually function as intended, Levi’s will need to take advantage of features like push notifications to remind customers of sales or incorporate location based targeted marketing. Along those same lines, they could implement their rewards program into their app and encourage customers to buy from them either in store or online to earn future discounts on products. They already have a rewards program with Levi’s Loop, but it lacks the depth of rewards program like Starbucks. In other words, Levi’s needs to capitalize on their historic brand power and be more intentional on how the reach out to customers.

Levi’s current innovations

Levi’s has made an effort to be innovative in recent years, especially with their Eureka Innovation Lab that focuses on trying new fabrics and techniques. In fact, last year they created a new lasering technique that reduces the production time for jeans in conjunction with design processes that rely on iPads to output more accurate designs to significantly reduce waste. Otherwise, one-off projects like their collaboration with Google in 2016 for technology that was quite literally wearable, while interesting, haven’t brought them any new traction in the market. The innovations Levi’s has made are helping their efficiency, but aren’t driving customers toward them.

Levi’s future

Levi’s has a lot to learn when it comes to technology. The implementation of a bad ERP would ruin nearly any other company, but Levi’s managed to survive. Their mobile app delivers such a poor experience that it fails to convert sales. Their innovative partnerships are barely noticed or quickly forgotten. Nevertheless, what’s apparent is that Levi’s sticks around thanks to relationships with retailers like Walmart, Target, JCPenney, Macy’s and similar companies who sell enough of their product that it offsets their inability to implement good technology.

Unless you are Kleenex, Clorox, Tylenol, or another brand that consumers treat as synonymous with the product itself, your company can’t afford to make the mistakes Levi’s has. Selecting an ERP and implementing it well is essential to managing inventory and fulfillment. Connecting with your customers through mobile creates loyalty and unity with your brand’s message. Gathering data about how your customers engage with your brand and where they feel you fall short is crucial in making the right decisions for the future.

Is there room for improvement in your company? We can help you reach your next milestone. Let’s chat.

By Vaughn Hunt