Retail has struggled significantly during the lockdown period and Levi Strauss & Co has been no exception, its Q2 earnings this week show, with revenues tumbling 62 percent, forcing the company to make dramatic moves towards a digital transition, while laying off 700 people — 15% of its workforce.
They also reflect the urgent need among retailers to modernise how they go to market, handle data and make use of stores. Levi’s CEO Charles Bergh told investors that for the company the push was a threefold one: Continuing to build customer connections, second, boosting e-commerce and omni-channel capabilities and third, “accelerating the pace of digitizing the company and leveraging AI and data”.
An earnings call gave a snapshot: “We are applying a data-driven approach to determining appropriate promotion levels. As just one example, during a major e-commerce promotion event in Europe we were able to amplify revenues, units sold and profits four times what we did in the previous year.
“We are also using AI in our U.S. stores to ensure we are optimizing margins in fulfilling orders in the most efficient ways. And we are using AI to enable personalized benefits in our newly launched loyalty program.”
Other digitalisation strategies including launching certain collections exclusively on Levi’s app, the company said.
CFO In IT, we rebalanced our portfolio by cutting discretionary and non-urgent projects while accelerating our digital transformation to drive a better consumer and employee experience. We are also broadly maintaining our ERP rollout plans as we believe this would help digitize all processes.
The company’s tumbling revenues match those of many others reliant on bricks-and-mortar sales. As with its fellow retailers, the e-commerce side of its business has boomed, growing nearly 70 percent in the month of June, even as storefronts opened their doors slowly around the world.
During a quarterly earnings call CEO of Levi Strauss Charles Bergh explained these online successes in further detail: “Just for perspective, our e-commerce business used to be about 5% of our total revenue.
“It’s now tracking at 9%. June was 13%. On the question about who the shopper is, during Q2, 70% of the e-commerce shoppers in the US were new to e-commerce, so we are picking up incremental new users during the quarter.”
Levi Strauss Second Quarter
The comments show how much work there is to do on the e-commerce side.
Levi Strauss’s gross profit meanwhile crashed to $170 million compared to $700 million in the same quarter in the prior year.
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Research by global advertising and marketing company Wunderman Thompson Commerce has revealed that just 16 percent of UK customers see themselves returning to their old ways of shopping once lockdown eases.
Online purchasing claimed 60 percent of all shopping in lockdown, compared to 43 percent before Coronavirus.
Amazon and Tesco were the clear winner in the report, with Amazon accounting for 35 percent of all online shopping; 20% of those surveyed admitted they expected to buy things through Amazon post-lockdown, despite 21% of people expressing discomfort at Amazon’s dominance.
Tesco meanwhile saw a growth of 23% improvement in perception, in comparison with Sainsbury’s and Morrisons, which both saw a 12% set rise in positive perception.