Case Study: How did Levi’s come back from failure?

. 2 min read

Levi Strauss is one of the most iconic brands in the world. Launched during the California gold rush, the retailer got its big break in the 1870s, with their invention of the blue jeans. Sales peaked in 1997 at $7bn, but then never exceeded $4.5bn until 2010. The arrival of Chip Bergh in 2011 kickstarted the revival for the iconic retailer. The first action taken by the new CEO was to gain an understanding into the current performance of the company. It became very clear to Bergh that there was a clear lack of strategy and alignment between the various leadership teams. So what did he do? He fired and replaced a large percentage of his leadership team and began to study both the market and the customers. Conducting in-home customer visits allowed Bergh to develop a deep understanding into the lifestyle of the consumer, as well as their likes and dislikes about the product. These visits became the foundation for Levi’s new strategy, which was based around FOUR key concepts. 1) Operational excellence Bergh focused on cutting costs, driving cash flow and investing more in product innovation- with the creation of a new innovation lab in San Francisco. The biggest success to come out of the innovation lab is the growth of the womenswear business. 2) Focus on retail Bergh focused on driving sales in Levi’s own brick and mortar stores and online due to the higher margins and ability to control the experience of the customer. 3) Focus on core product Bergh discovered that 80% of Levi’s cash flow and profits came from men’s bottoms. Bergh doubled down on the growth of this core product. 4) Development of new product Despite focusing on the core product, Bergh recognised that new products needed to be developed in order for the company to grow over a long period. The implementation of this 4-part strategy has delivered almost five years of top and bottom line growth, as well as doubling the value of the company. By Arjun Sondhi Brand & Digital Director BMC Global Services Head of Startup MBA at Rushmore University