Levi Strauss & Co. is placing a major bet on its direct-to-consumer (D2C) strategy, as the company has seen a significant increase in its D2C revenue over the past decade. During the company’s third quarter earnings call on Thursday (Oct 5), Michelle Gass, president of Levi Strauss & Co., said that the company has “more than doubled our D2C revenue” and that they “see a clear line of sight the mid-teens D2C growth rate target of our long-term financial algorithm.”

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A key component of Levi’s D2C strategy is the expansion and evolution of its loyalty program. During the third quarter, the program added nearly 2 million members, bringing the total number of members to 28 million worldwide. This loyalty program has allowed Levi’s to gain access to a wealth of data and insights into customer preferences and behaviors, enhancing the overall shopping experience for members and encouraging repeat purchases.

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However, Levi’s wholesale experienced “softness” as consumers remained cautious of their purchases. This is due to a range of concerning issues, including the impact of elevated gas prices, an increase in delinquent credit card accounts, and consumer confidence taking a hit, largely attributed to concerns about inflation and a pessimistic economic outlook. According to a report by Bloomberg News published on Saturday (Sept. 30), these issues have been impacting Americans even before student loan payments.

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In the third quarter, Levi’s reported $1.5 billion in net revenues, holding steady compared to the previous year on a reported basis but showing a 2% decline in constant-currency terms from Q3 2022. Their D2C net revenues surged by 14% on a reported basis and 13% on a constant-currency basis, driven by company-operated stores and eCommerce. Meanwhile, wholesale net revenues declined by 8% on a reported basis and 10% on a constant-currency basis.

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Levi’s experienced regional variations, with growth in the Americas’ D2C net revenues but a decline in wholesale, Europe reporting modest declines, and robust growth in Asia, particularly China. Levi’s other brands, including Dockers and Beyond Yoga, also saw positive revenue trends.

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In order to continue to grow their D2C business, Levi’s is “working closely with our wholesale partners to ensure they have the right assortment and deliver newness, including lighter-weight denim, more dresses and tops.”

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Levi Strauss & Co.’s focus on their D2C strategy is a testament to the importance of understanding customer preferences and behaviors in order to create a successful business. With their loyalty program, Levi’s has been able to gain access to valuable insights that have allowed them to enhance the overall shopping experience for members and encourage repeat purchases. Despite the current economic climate, Levi’s has seen positive revenue trends in their D2C business, and they are continuing to work with their wholesale partners to ensure they have the right assortment and deliver newness.

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Sources: https://www.pymnts.com/news/retail/2023/levis-puts-its-faith-in-d2c-strategy-with-loyal-shopper-support/