Innovation Never Goes Out of Style. Digital Transformation at Levi Strauss & Co

Redesigning Levi Strauss for the Next Generation of Digital Native Consumers

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Founded in 1853, Levi Strauss & Co. is not only an iconic American brand, but an exceptionally resilient one as well. In the 70 years since Levi became a staple of youth subculture fashion, it has grown into the world’s largest maker and retailer of denim pants with revenues well into the billions

However, like so many other consumer brands, they were blindsided by the 2020 pandemic. As revenues plummeted in Q2 of 2020, the company realized it was time for transformational change.

 

Digital Transformation 2021

Though 2020 was a difficult year for Levi’s, there was one silver lining. While overall revenues declined, the company’s digital revenue increased by 50% in the third quarter and comprised nearly 25% of total company revenues.

As Levi Strauss CEO Chip Bergh stated, “the pandemic is accelerating retail landscape shifts and consumer behavior in ways that play to the strength of the Levi’s brand. We are doubling down on our digital transformation, incorporating the power of AI and data science, and leveraging our iconic brands to have an even stronger focus on Gen Z and sustainability.”

In order to accommodate the surge in online shopping, Levi’s not only upgraded its e-commerce sites to increase speed and searchability, it also created a number of new e-shopping experiences. 

For example, in partnership with Kohl’s it created a virtual closet experience on snapchat that allowed users to virtually mix-and-match clothing items to create new outfits. It also launched a new virtual concierge service that enables customers to interact one-on-one with in-store stylists from home. To help protect employees while also streamlining the customer experience, Levi’s also expanded it’s Buy Online, Pick-up In Store capabilities. 

Following in the footsteps of Nike, Levi’s is also expanding it’s direct-to-consumer (DTC) business. Though the company has yet to cancel any major wholesale contracts, 40% of Levi’s sales were DTC in 2020 and the company is looking to grow that number to 60% in 2021. 

To support these efforts behind the scenes, Levi Strauss rebalanced its IT portfolio by cutting discretionary, non-urgent projects. This has allowed them to ensure its digital transformation efforts remain fully funded as well as continue its ERP rollout plans and further digitize all processes.

 

Data Science & AI-Powered Innovation

With over 168 years worth of data, Levi Strauss is applying AI to everything from product design to CX processes. 

For example, when online shopping surged in March/April 2020 due to lockdowns, they used AI to optimize shipping logistics. As Dr. Katia Walsh, Levi’s Chief Strategy and AI Officer, recently explained to ZDnet, “Using AI, we devised a machine learning engine that optimized a number of different variables, including what items each store had in its inventory, how far or close it was from the specific consumer placing the order, how much it would cost to ship, whether the item that was ordered was going to have to be discounted later if it went out today, et cetera…

We were able to use data on climate and weather and epidemiology models and financial and market outlooks. So you know how I talked about the three parts of this flywheel; digital, data, and AI. What makes this particularly useful is that it uses more data than before, which gives us more points, more perspectives, more variables, and then we're able to apply machine learning, which then makes the model even smarter and to deliver even better.”

Levi Strauss is also using AI to expand and enhance it’s loyalty program. With AI, Levi’s can offer loyalty program personalized offers based on their past shopping and browsing behavior. 

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