Levi Strauss Growing Global Markets Case Study – Management Assignment Help

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Levi Strauss – Growing global markets.

Levi Strauss (www.levistrauss.com) is an iconic American company with a rich history of profitable growth, quality, innovation and corporate citizenship. Their story began in San Francisco, California in 1853 as a wholesale dry goods business. Levi Strauss invented the blue jean 20 years later. Today Levi Strauss design, market and sell products that include jeans, casual and dress pants, tops, shorts, skirts, jackets, footwear and related accessories for men, women and children around the world under their Levi’s, Dockers, Signature by Levi Strauss & Co. and Denizen brands. With US$5.6 billion in net revenues, and US$283 million in net profits in 2018, and sales in more than 110 countries, Levi Strauss is one of the world’s leading apparel companies, with the Levi’s brand having the highest brand awareness in the denim bottoms category globally.

The Levi Strauss headquarters are in San Francisco, USA. By the end of 2018, Levi Strauss has a global workforce of 15,100 employees. Levi Strauss first went public (on the stock exchange) in 1971. After 14 years (in 1985), it was taken private again by the Haas family, the descendants of the founder Levi Strauss, in a US$1.6 billion leveraged buyout. At the second IPO on the New York Stock Exchange (NYSE) in March 2019, the market capitalization was set at $8.7 billion.

Levi Strauss’s background:

Their founder, Levi Strauss, was committed to integrity, philanthropy and good corporate citizenship. To this day, Levi Strauss continues to operate as a company with these values through an approach Levi Strauss call ‘profits through principles’. It means doing business in an ethical way and ensuring that the people who make its products are treated fairly. It means sourcing in a responsible manner and investing in innovative and more sustainable ways to make its products. Finally, it means using its influence as a successful business with global reach and powerful brands to advocate for social good and to give back to its communities.

Its iconic, enduring brands are brought to life every day around the world by their talented and creative employees and partners. The Levi’s brand epitomizes classic, authentic American style and effortless cool. Levi Strauss has cultivated Levi’s as a lifestyle brand that is inclusive and democratic in the eyes of consumers while offering products that feel exclusive, personalized and original. This approach has enabled the Levi’s brand to evolve with the times and continually reach a new, younger audience, while its rich heritage continues to drive relevance and appeal across demographics.

With a rich history spanning over 165 years, Levi Strauss offers products of exceptional quality at accessible prices. Levi’s is one of the most recognizable consumer brands in the world and the #1 brand globally in jeanswear (measured by total retail sales). Levi’s is an authentic and original lifestyle brand that has expanded beyond men’s jeans into women’s jeans and multiple product categories. Consumers around the world instantly recognize the distinctive traits of Levi’s jeans.

Levi Strauss’s geographic sales.

Its business is operated through three geographic regions that comprise its three reporting segments: the Americas, Europe and Asia, which includes the Middle East and Africa. Levi Strauss services consumers through its global infrastructure, developing, sourcing and marketing its products around the world. Its Americas, Europe and Asia segments contributed 55 per cent, 29 per cent and 16 per cent, respectively, of its net revenues in 2018. Levi Strauss has a significant opportunity to deepen its global presence in key emerging markets, such as China, India, Brazil and Africa. For example, China represents 20 per cent of the global apparel market, Levi Strauss has an established market share position in jeans, non-jeans bottoms and tops for both men and women. In 2018, 20 per cent of its net revenues were from tops (t-shirts etc.), 74 per cent of its net revenues were from bottoms (jeans), and 6 per cent of its net revenues were from footwear and accessories. Levi Strauss’s core business is men’s bottoms. This is not only due to Dockers (accounting for approximately 10 per cent of the net revenues), which is a men’s-only brand, but also the fact that the Levi’s brand has traditionally appealed more to male consumers. The company has been making progress, with its women’s category fueling growth over the past few years; however, Levi Strauss has still a long way to go in profiling itself as a key player in womenswear. The appeal of the Levi Strauss brand has enabled it to license its trademarks (primarily Levi’s and Dockers) for a variety of product categories, including footwear, belts, wallets and bags, outerwear, sweaters, dress shirts, kidswear, sleepwear and hosiery. Licensing accounted for approximately 2 per cent of net revenues in 2018. Levi Strauss’s distribution channels Levi Strauss has a diversified business model that spans its three regions and a robust presence across both its wholesale and Direct-to-Consumer, or DTC channels. In 2018 the wholesale channels (selling through big retailers like Nordstrom and Bloomingdale’s and through wholesales e-commerce sites, primarily Amazon) generated 65 per cent of the net revenues, whereas sales through DTC generated 35 per cent of the net revenues, including 4 per cent through its own company e-commerce site.

Levi Strauss’s market communication Over the last two years, Levi Strauss has significantly increased the level of marketing support for its brands. This disciplined investment in brand-building is a key driver of its financial performance, with its ‘Circles’ TV and online ad being one of the top ten most-watched ads on YouTube in 2017, with over 25 million views to date. Levi Strauss also maintains a leading presence at significant cultural events around the world such as music festivals and sporting events, which have put the Levi’s brand back at the centre of culture. In April 2017, the Levi’s cut-off shorts, worn by Beyoncé during her headline performance at the Coachella music festival, were deemed the ‘ultimate Coachella clothing item’ by People magazine, with Coachella generating approximately 5.8 billion global impressions for the Levi’s brand. In addition, Levi Strauss generates exposure through selective collaborations with key influencers such as Justin Timberlake, with whom Levi Strauss launched a 20-piece capsule collection in the fall of 2018, and with popular brands such as Nike’s Air Jordan. Its second collaboration with Air Jordan in the summer of 2018 generated over one billion global impressions and sold out in minutes. Global market for Jeanswear: Levi Strauss and the competition.

The total global market for jeanswear in 2018 was around US$110 billion, of which Levi Strauss had around 5 per cent market share, which has been stable over the last five years. The world market for jeans wear is very fragmented, which is shown in Table 1. Levi Strauss’s biggest global rival is US-based VF Corp., which is an internationally operating company covering the lifestyle and footwear industry. The group owns more than 30 brands; the VF jeans brands include Lee and Wrangler and other brands include Timberland and Vans. Although Levi Strauss ranks no. 1 in jeans, VF Corp. outranks the company in the global apparal market, benefitting from
its more intense focus on outdoor and sportswear categories.

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