The iconic brand of Levi Strauss

Nowadays, when we think of an iconic brand, we tend to think of a brand such as Apple's iPhone, but there is an iconic brand that has been around much longer, and is popular with many more people from different walks of life worldwide. The original blue jeans made famous by Levi Strauss are universally popular, whether the wearer is richer or poorer, younger or older, keen on fashion or not. And although Levi Strauss conjures up an image of the American west, their jeans are popular all over the world, in both rural and urban settings.

The company was founded in 1853 by a whole- sale dry goods merchant who emigrated to the US from Germany. Levi Strauss made his way to California in the era of the great Gold Rush. Working with a partner who was a tailor, they had the idea of riveted jeans for workwear that, according to company legend, would be sold to gold miners. Levi Strauss jeans were patented in 1873, and the business grew steadily. Denim jeans became popular well beyond people engaged in tough, outdoor work. The market for denim jeans was becoming very competitive, and other companies, such as Wrangler, were also attracting loyal customers. The US was their main market, and sales at Levi Strauss reached a peak of $71bn in 1997. In the years that followed, denim jeans were facing competition from a range of other brands and products. Gap was offering a wide range of casual wear and the advent of new fabrics such as lycra offered a more comfortable fit for users, especially those looking for a combination of fashion and comfortable apparel for leisure activities of all sorts. Were denim jeans losing their appeal? Levi jeans has remained a private, family-owned company for most of its existence. It was listed as a public company in 1971, but was de-listed in 1985, reverting to private ownership. In that period, the manufacturing of its clothing shifted from mainly US factories to overseas factories. By the 2000s, its US factories had almost all disappeared. This was a trend that affected the entire clothing industry in the US, as jobs in clothing and textiles shifted to lower cost locations, mainly in Asia.

Chip' Bergh, who took over as Chief Executive Officer (CEO) in 2011. He had come from theconsumer products company, Procter & Gamble, and set about renewing the Levi Strauss brand, refashioning its appeal to today's consumers. He felt that when consumer brands persist in producing the same products for the same markets, without an eye to innovation, they soon become jaded. The company, he felt, should look to new designs and new, improved fabrics, Stretch fabrics were introduced, and more design appeal was sought. While Levi Strauss's products had always been more popular with men, he set about developing ranges that would be popular with women. He also had an eye on expansion in other markets. It was not long before sales were growing in Europe and Asia, although the US still accounts for 59% of its sales. The venerable old brand faced stiff competition from fast fashion companies such as H&M, which had lower prices and sleek designs. There was also strong competition from the value stores that appealed to highly price-sensitive shoppers. Moreover, retailing was fast becoming transformed by the growth in online sales. Levi Strauss thus had to move with the times. Has it succeeded?

Sales rose to nearly $5 billion in 2017. As a sign of its new-found confidence, Levi Strauss opened its own flag- ship store in Times Square in New York in 2018. Here it offers bespoke tailoring services for customers and a nostalgic step back in time in its on-site Levi Strauss Museum. For most older customers, denim jeans bring back pleasant memories of their own lives. Levi Strauss has worked to depict itself as an authentic brand in a world in which people have become used to throwaway fashion. The idea of spending on something that is authentic and lasting seems especially to have struck the right note with millennial-generation customers, In 2018, the ownership of the company was still mainly in the hands of the descendants of Levi Strauss. But its renewed success has encouraged the family to take the company public again. The company was listed on the New York Stock Exchange in March 2019, and enjoyed a rise in value of 30% on the first day's trading. The new stock was oversubscribed, in a sign that many investors wanted to own a slice of this iconic company and its history. The Wall Street traders on the floor of the exchange set the tone by wearing Levi jeans for the occasion.

I Q1: What are the challenges facing Levi Strauss? (2.5 Marks) Q2 In your opinion, why have the descendants kept the company under their own control all these years? (2.5 Marks)