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Levi Strauss: the 140-year-old startup

Seth Ellison, Executive VP and President, Europe, Levi Strauss, spoke to Emma Herrod about how digital and focusing on customers has helped to turn around a sleeping giant.

In March 2019, Levi Strauss returned to the stock market in an IPO which saw the jeans brand raise more than $600m (£477m) and boosting its share value by 30%.

The move follows a major transformation of the business from its foundations through to its direct-to-consumer channels. It refocused on its profitable core range of jeans for men in the key markets of the US, France, Germany, Mexico and the UK, while expanding in other regions and product categories including tops and womenswear. At the same time, Levi Strauss focused its sights on becoming a leading omnichannel retailer and achieving operational excellence in terms of systems and processes.

Its transformation has been carried out under the leadership of Chip Bergh, who the then family owned business brought in as CEO in 2011 following years of declining sales. Seth Ellison, Executive VP and President, Europe, Levi Strauss, explains that the company had been in decline for 20 years, was almost insolvent and weighed down by $2bn in debt and had too much inventory. By 1996, he says, “the wheels came off the car”.

Marketing budgets were slashed just as new brands such as 7 For All Mankind were entering the jeans market. “We were being crushed [in the middle] by competitors” as fast fashion companies such as Zara were “coming up from the bottom” while premium brands were moving over the top.

Between 1996 and 2001, Levi Strauss sales plummeted from $7.1bn (£5.46bn) to $4.1bn (£3.15bn).

The first thing the business had to do under Bergh was “to wake up the sleeping giant”. The initial stage of this was to put the leadership team in place and have everyone working to a common strategy, explains Ellison.

From here, the brand went after quick wins to generate cash by fulfilling the orders it already had and concentrating on its core markets. Internally, processes were put in place to ensure that everyone was talking to each other across departments as “execution was critical”. It had to concentrate on things that would make a difference immediately and to work as if it was going to be out of business the next day.

Instead of using market volatility as an excuse not to do things – which was inherent in the business at the time, according to Ellison – the leadership team had to turn the firm around and get it to understand that this was to become the norm. Instead of trying to control what couldn’t be altered, it focused on what could be controlled in order to grab market share. “We went on the offensive instead of reacting to everyone else,” he says.

From this point, the strategy pivoted to investing in new areas, predominantly womenswear and digital. Levi Strauss also concentrated on three consumer segments: customers who had stayed loyal to the brand; those who had left; and a whole generation which Ellison says had missed out on – and never been targeted by – the brand.

Until this point, Levi Strauss had been marketing to women in the same way as men, but Ellison says that once it “started to approach the consumer with a razor sharp focus, things started to move again”.

From being squeezed at the top and the bottom and being told that there was no place in the middle, the brand discovered that this wasn’t true. “We had to be cooler than the ones at the top and understand price elasticity better than those at the bottom to become the first brand of choice,” explains Ellison.

It realigned the brand to be at the “centre of culture”, working with iconic people such as sports personalities, musicians and bloggers. Products and marketing were introduced that “built bridges” to its core target groups. These included denim shorts for people going to festivals and t-shirts for customers wanting to wear the company’s logo.

“Denim was our starting game,” he says, and this also allowed the firm to work across customers’ wardrobes as long as it kept to the brand values and authenticity. “To be Levi Strauss we have to be rock and roll on the outside but function like a Swiss watch on the inside,” he adds. “Delivering on your promises is critical,” and this has to be aligned with the customer experience and not just focused on improving processes.

The company has seen a phenomenal turnaround since its business transformation, with revenues up by 14% last year, a rate of growth which the company hasn’t seen in more than 25 years. “Fans have come back to the brand in droves,” says Ellison, adding that “it wasn’t by accident”.


Today, Levi Strauss operates through 832 of its own stores along with online channels through which it sells direct to consumers from Levi sites and marketplaces, including Zalando, and a wholesale business which sells through the physical stores and online channels of its retail partners.

It is now working on joining up its distribution channels in a way that improves the experience for customers and is helping to change the relationship from a purely transactional one. As part of this, it has also instigated a test and learn culture within the business to ensure that it keeps moving forward as customer behaviour changes.

“We have this giant ecosystem of distribution to deal with and we are really stepping back and asking, ‘How can we create the best possible experience linking those points of distribution?’.” This, Ellison believes, is where the company’s real competitive advantage lies.

Levi Strauss is linking the channels through loyalty, CRM programmes, an AI-powered chat bot and personalisation (which it calls Know Me), and further linking them to product customisation through tailor shops and the experience in the Print Bars and its FLX laser technology, which enables the brand to create almost any look on denim.

Ellison says stores, online, customisation and personalised experiences “are our future”. So the brand is looking at every link in its distribution chain and asking: “What’s our ability to continue to elevate it?” He adds that, “as the customer moves from a transactional to an experiential relationship, and with customers wanting to shop 24/7, how the business leverages technology has to be part of the equation.

“Quality is starting to become more important than quantity,” he says of the distribution points. He also says the company does not know yet what the future of its distribution channels will look like. It is looking at every sales channel and “hoping that we can turn it into an experience”. He adds that the parts that are “entirely transactional will not be part of the future”.

Ellison says Levi Strauss understands that its customers “also want to be with brands that have authenticity and values”. He believes that with its heritage of “profits through principles”, the firm can remain a values-led business and still make money.

The fact that things are moving so much faster and technology has changed everything excites him. Besides the speed, there’s the idea that consumers are brands; they can share ideas and have the ability and desire to give feedback whenever they want to. “It flattens the relationship between the top of your business and the consumers.”

Every person in the organisation becomes more important because they are part of that experience and they have responsibility, he explains. An employee may not have marketing and consumer in their title but – regardless of their role – they need to be thinking about what they are doing to build the brand and create a better experience for consumers.


The impact of these changes is being measured through conversion rates, footfall and how it compares to the rest of the street, the types of consumers buying and cross-channel CRM. In turn, this is helping the brand to measure where it is connecting most closely with consumers.
Visual inspections show how much the business is moving forward with its stores. Each one is measured on the experience, whether it’s something that the company can be proud of and whether it resonates with consumers or is “simply trying to draw dollars”.

New stores and concepts have been opened, from a flagship store in New York through to a made-to-measure couture business and tailor shops customising jeans for customers. Different format stores are enabling it to test and learn with different customer groups and distribution channels, such as the GenZ store which it opened with a franchisee in Rotterdam, Netherlands. Portugal is becoming a proving ground for its omnichannel innovations in Europe and standalone womenswear stores are being opened by a franchisee in the country. Ellison explains that in some countries half of the company’s sales are now in womenswear.

The rollout of mobile devices in stores, on which associates can place online orders for customers, is helping to bring the channels together as well as creating “a whole new set of metrics” around how offline traffic is driving online conversion. A future launch of ship-from-store will add to the online-to-offline metrics.

Ellison points out that omnichannel goes deeper than that, though, since fit is such a large part of the product equation. This has led to Levi Strauss using virtual stylists online to interact with shoppers, and assessing the dressing room experience in store and on-floor navigation.
“There are a lot of moving parts right now and that is both the challenge as well as the exciting part of it at the moment, and there are so many different ways in which we can elevate the experience,” he says.

Levi Strauss is keen on the fail-fast culture adopted by other companies working in digital and omnichannel retailing. The test and learn philosophy extends to store formats, technology and new consumer groups, and the business has started to celebrate failure. “This is something that we are really trying to embrace,” he says, explaining how internally the business is known as the “140-year-old startup”.

Many of the print bars and fitting room mirrors showing slow-motion imagery so the shopper can see themselves from every angle have been developed in this way. “If you truly want to move with the consumer as fast as they are moving, you have to build a testing culture within your business. You can’t be afraid to fail. And that’s something that we are getting used to, we’ve been a business culture getting excited over the wins that we’ve had over the last 6 or 7 years,” Ellison says, adding that “failure tells you that you are pushing the boundaries”.

This cultural change started at the top and business leaders are cross-trained so that each spends a lot of time connecting with other areas of the business. Ellison explains that you need a team that’s not worried about who gets the revenue as there’s a lot of shared profit pools and connected experiences. Matrix working groups and collaboration works across parts of the business as well as across geographies.

Levi Strauss also tries to blend and amplify the best experiences for all consumers, customers, employees and partners, including franchisees and licensees.


Brands today are at a crossroads, believes Ellison. They can follow one of two paths: commoditisation or experience. Each brand needs to pick their path before they are forced into becoming a commodity. Once they become a commodity, he believes that it is a position from which it’s difficult for a brand to change. Over time, he warns, other companies will produce the same thing cheaper or deliver a better service and the brand USP will have been lost.

The other path is about the collaborative experience between the business partners, consumers, customers and employees. All of these experiences need to come together and be amplified, he says, giving as an example how music stars visiting the brand’s offices say that it’s a “cool” brand and employees say “you can’t guess who I saw in the office today”.

This helps to create a “brand heat” at the centre, he explains. He adds that as a brand you have to understand the nuances of the science to create best-in-class service: “But, ultimately, our chance to stay out of the black hole and always have a reason to be is about the experience we create. The experience of retail just has to keep elevating, it has to get better.”

He says that one of the opportunities delivered by the IPO has been the ability to look at and invest in the IT infrastructure that underpins the business. He adds, though, making changes is like “trying to change the wheels on the car while going at 80mph”, as the business tries to balance new things while building the foundations for them at the same time. Bots, advanced analytics and AI are all on the company’s agenda.

Success for Levi Strauss, believes Ellison, lies in bringing together culture, values, style, music and sport, and direct to consumer, all underpinned by great new technology and an obsession with the consumer.

Ultimately, he believes that Levi Strauss “will not be the best at ecommerce, not be the best at retail or the best at wholesale but we aim to be the best at bringing it all together because with all those points of distribution, if we can create the ultimate integrated experience between those areas, that is our competitive advantage”.

And that integrated vision is what saw the Levi Strauss business in Europe grow by 25% last year and generate net revenues of $1.6bn (£1.23bn). Ellison believes its new categories and opportunities give it the potential to top £3bn (£2.3bn) in Europe.

“All geographies, all channels, both genders and all categories have been growing and this says a lot about the brand, the connection with consumers – and it says a lot about the experience,” he adds.

“The biggest challenges are the fact that it’s becoming more difficult to see the road ahead because of social, political and economic challenges in the marketplace.” Brexit, the gilets jaunes and the Catalan independence movements and currency fluctuations are all mentioned by Ellison. “We’d be very naive to think that everything will stabilise over the next 2 or 3 years. In fact, if anything, it may get more challenging.”

There are plenty of places for the brand to get share, create share, innovate and leverage technology such as FLX. “We really believe that when times get tough it’s the chance for the best companies to accelerate away from the rest of the pack and position themselves in a better place for when things turn around. I’m very confident in this team’s ability to react and to separate from the competitors,” Ellison concludes.


Levi Strauss’ ability to offer personalised customised products has led to the development of FLX Technology. Using laser technology customers can choose the exact colour and amount of fading that they want on their jeans as well as the placement and level of wear and tear. It also cuts down on the amount of chemicals required in the production process.

The service, which will launch online in the US in the autumn, cuts a labour-intensive process of 18-20 steps, taking up to 12 minutes per pair of jeans, to a three-step method done in 90 seconds.

The innovation will also shake up the company’s entire business model, from production to distribution and marketing, Marc Rosen, Levi’s President of Direct to Consumer, told delegates at the World Retail Congress. “It’s a change in our business model from selling what we make to making what we sell,” he said.

“In product model it’s a shift from producing finished goods to producing a blank canvas. Consumers will then be able to decide what colour they want their jeans to be, what level of destruction they want and where they want that placed on the product.”

This work could be done in distribution centres, closer to the customer, rather than in factories and he suggested stores would “shift from being a product showroom to become a collaboration studio.”

He added: “If you think about a traditional store, the consumer comes in and sees stacks of finished goods that we finished earlier in the process and made the decision about what they might like.

“Here they’re able to come in and take a blank canvas and design their own product. That elevates the role of our stylists and our tailors. They’re some of the best at customising our product but now they get to share that experience with consumers.

“The tailor shop now moves to the centre of the store so that they can work with consumers to inspire them.

“Finally, in marketing it’s a shift from promoting and clearing what we have, to inspiring consumers with what they can create.”

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