NAME: John Anderson AGE: 59 PROFILE: President & CEO, Levi Strauss & Co AIM: To capture the emerging market for affordable denimwear without compromising the premium image of the Levi Strauss brand
Levi’s varies in its brand positioning across the world. How do you tackle this disparity? We do position the brand consistently as premium, but how that is defined differs across countries. So what is premium in USA may not be premium in Europe. I agree that relative to Europe we are less premium in the US, because the price bands change. We’re the Number One men’s and women’s jeans brand in 110 countries, so our challenge is to make sure that the brand remains relevant locally and leverages local platforms.
What proportion of your revenue comes from premium and super-premium products versus the more affordable ones? Today, a very small part of our business comes from the affordable segment. But we’ve just launched our brand — Denizen — in four out of our 110 countries. There is a lot of potential for Denizen and a very big opportunity. This is also the first time we’ve launched a brand in Asia, since that’s where the emerging middle class is. So in 10 to 15 years [the revenue from affordable products] will be big, but right now it’s far too early to put a figure on that.
Why did your Sykes brand fail to take off in India? Sykes was not the brand; it was Levi’s Sykes. When we launched Levi’s [in India] we focussed on establishing “originality” and “authenticity” as the brand’s values. Sykes was targeted at the young who wanted their fashion faster. And once the Levi’s brand was established, we decided to fold Sykes under it — merging the old and authentic with the youth factor. But I’m very happy with Sykes, which played a very successful role. We also got a lot of good learning from it, including building our sourcing capability and moving into the non-denim category.
Why did the same happen to Dockers too? We marketed Dockers for a number of years and the brand resonated very well; we built a good business on it. But then came to the question: “Where do we want to prioritise our resources?” We didn’t have the resources or investment capability to focus on three brands, so it was a strategic decision. We may come back with it at a later date though.
We’ve heard that you’re considering a brand rehaul of Signature, possibly even dropping the “By Levi Strauss” from its name. Why? I still believe in the Signature brand and do not see any cannibalisation of the Levi’s brand at all. Over time, we were always happy to have Signature as a standalone brand and are very pleased with what it’s done.
In China, you recently launched the affordable brand, Denizen, which reportedly you will introduce in India too, at a later date. Why do you need a new brand? Levi’s is a premium brand. But there is an enormous middle class within which a huge amount of consumers today aspire for branded apparel. We want to get them into Denizen by offering them affordable and fashionable fits and finishes. Denizen will not be leading edge but it will be up to date on fashion.
You’ve launched multiple brands in India over the years — Levi’s, Dockers, Sykes and Signature. What’s been your learning from them? Philosophically, our brand message should always be the Levi’s brand. Even when building standalone brands based on consumer needs, use help from the mother brand otherwise it gets very complex.
So Denizen and Signature [which exists only in India and the US], are very similar brands at this stage. I would say the name Denizen has more aspiration among consumers than Signature, which is a very common name.
As more and more of what Levi’s sells is “affordable”, your ability to manufacture and source them at lower costs will determine more of your success. But with workers across Asia rebelling against lower wages how long can you offer “affordable prices”? We have very strict sourcing guidelines and criteria that all contractors have to meet. These guidelines are non-negotiable and enable us to have a broad global footprint. For instance, most of our Indian material is made in India. You’re seeing things like large wage increases among brands that don’t treat their contractors fairly. We don’t see it coming to us.
Considering the breadth that your brand spans — from mass market to super premium — many compare you to Nokia, which is now facing trouble from both ends of the continuum: Low-cost phones from Indian companies and high-end smartphones from Apple, Blackberry and HTC. How will you guard against something like that happening to you? My quick answer would be — no, that won’t happen to us. We’re in 110 countries, so we have a global footprint. We don’t centralise, so that we remain relevant to local markets. Our design centres are in Hong Kong, Brussels and San Francisco. We also design and develop new finishes and fabrics in Turkey. So, as long as you bring innovation, you can be relevant.
We want to constantly delight and surprise customers on the price-value equation across all segments. I am paranoid about that. In terms of the Levi’s brand, I think Denizen will take a lot of pressure off Levi’s so we don’t have to take it further down.
A few years ago you had announced an aggressive expansion of your retail distribution, talking about adding 800 new stores in three or four years. Instead, you added only around 200-250. Why? And what lessons have you learnt from that? Our business has still grown very fast in India. But what we learnt was that you cannot expand faster than the distribution infrastructure. Three or four years back I think India itself was far more aggressive in retail expansion, which clearly hasn’t happened because the world got a lot tougher economically. Even then I’m very pleased to say that our dominance today is far superior to back then because we’ve continued to invest in India and continued to develop sourcing. We were probably the only brand that did so.
Last year during the height of the economic slowdown, you started following a differentiated product strategy between your own stores where the minimum priced jeans was around Rs. 1,899 but the same in large format stores was Rs. 1,299. Was that an admission that the Levi’s brand couldn’t compete? I think we were responding to customer needs and have today come out of it in a very successful way. But you know, even in Shopper’s Stop for instance our brands were still premium. Going ahead, we’ll continue to understand what customers at stores like Shopper’s Stop want — it’s called good channel management. The Levi’s “Walking Man” digital campaign featured a man in jeans literally walking across the entire USA. What is the takeaway for digital marketers? We have 150,000-plus Facebook fans in India today. Online is a good market with youth as target audiences because they watch very less TV, they’re online all the time … the Web is their life.
For our Walk across America campaign, no one knew it was Levi’s because we didn’t brand it. The message there is that you can’t force brands down youth, like TV for instance which pushed brands. Instead, they should discover it themselves and then own it, thereby becoming your ambassadors. Another point is that when something goes on YouTube, it’s global by nature. Consumers today operate in a global medium.
Tell us something about the new product you’re launching in India — Curve ID. From research we understood that women find three purchase occasions tough — underwear, swimwear and jeans. Brands have put pressure on them that they should wear the “perfect fit”. We said it should instead be about shape and they should be comfortable about their shapes. So if you have a 32-inch waist, we can fit you in three ways — Slight, Demi and Bold curve.
You don’t have to force yourself into a pair of jeans that the fashion industry forces you to.