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Close to the consumer: what Levi Strauss thought about life after a pandemic

168-year-old Levi Strauss & Co. (NYSE: LEVI) I have some knowledge about customers. However, that knowledge was tested in 2020 as the pandemic took hold and consumers changed their buying strategies. The company’s executive vice president and COO, Liz O’Neill, said Levi had to make difficult choices to manage before he could overcome the COVID-19 pandemic and think about what the future might look like.

“”[It was a] A healthy triage mode that was walking on this balance beam where corporate profits had to be balanced … [and] We also needed to protect the interests of our partners and the supply chain, “she told a virtual audience on the first day of the National Retail Federation’s Converge 2021 meeting. “In the very early days, we paid the full amount of the order … and we promised to use the reserved raw materials on our behalf.”

Levi’s said Levi’s benefited from long-term relationships with suppliers and strong communication that allowed the iconic denim brand to overcome the pandemic turmoil caused in the supply chain.

“Initial supply and demand matching was very difficult, but I think it’s still difficult. We’ve gotten better at it,” she said.

Only through the early days has reached the second stage of identifying the future needs of consumers.

“”[We realized] This is new normal for a while, then things [could] O’Neill pointed out that Levi recognizes the need to accelerate digitization so that it can be pivoted quickly when needed. This meant rapid development and deployment of omni-channel capabilities.

“All consumers ran to the other side of the ship. Consumers who were shopping online,” she said, which turned out to be a problem for the apparel industry. “The apparel industry is very” touch and feel. ” … That’s our traditional way of working, and we were certainly on the roadmap to digitize our business, but it made a big step forward because we had no choice. “

Levi’s CEO Chipberg told CNBC in January that the company’s fourth-quarter 2020 results were in close agreement with the company’s “best case scenario” that it developed when the COVID pandemic first began. .. Levi reported that the e-commerce business was in the black for the fourth quarter and the full year. Digital revenue accounted for 23% of revenue in the fourth quarter from 15% in the fourth quarter of 2019, an increase of 34% year-on-year. These increases were significant, as 40% of the company’s global retail stores remained closed at the end of the year.

O’Neill said that digitalization became a solution in the supply chain that was suddenly needed to keep up with the growth of online sales, and that it quickly showed its benefits, O’Neill said, speed to market, planning and forecasting. He pointed out the benefits of improvement and sustainability as important points.

“We’ve adopted and used predictive analytics, AI, and machine learning … to allow us to more precisely predict their supply and demand,” she said. “This not only helps us predict, but also frees our team from that heads-down task and moves us further to heads-up. [or forward-looking] work. “

It also increased agility within the Levi supply chain, allowing operators to be more predictable rather than follow-up.

“Historically, the supply chain has been responsive,” says O’Neill. “Now it’s changing and it’s becoming more and more important to try to predict as much as possible. We’re back to the market.”

Although supply chain turmoil continues to this day, O’Neill said his close relationship with suppliers allowed Levi to easily replace materials when needed to keep the production line up and running. Digitization of the Levi supply chain has enabled us to quickly adjust the shipping process and ensure that our products are in the market where they were sold.

One big question that manufacturers face across the board remains unanswered. How close do suppliers need to be to the end consumer? That’s not an easy answer, O’Neill pointed out.

“Is it more expensive to be near or cheaper to go far?” She added that innovation and data are part of the process of reaching that decision. “You can actually take advantage of all these different factors to get closer to the consumer as accurately as possible. [with inventory].. “

O’Neill repeatedly pointed out that all the changes seen in the last 15 months have returned to a single value proposition. How do you bring your products closer to the end consumer and do so in a sustainable way?

There is no definite answer, but she said it was an ever-evolving journey.

“The tools we need are still emerging, but they’re all about leadership, they’re all about people. It’s better than everything. It’s about clarifying the vision,” O’Neill said. The leadership of the company is ” [change] Part of the solution. “

Change is a multi-year process that cannot be done without digitization and requires additional leadership.

“For those who aren’t very familiar with digitization, they don’t know which bus they need to take, they don’t know why they want to take it, so they have to show it,” O’Neill said.

Click here for more modern shipper articles by Brian Straight.

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