Levi's aims for own stores and e-commerce platform in India
By Simone Preuss
6 Jun 2017
US denim brand Levi's is planning on opening own stores and an e-commerce platform in India "soon" according to the company's president and CEO Chip Bergh.
"One of the company's growth algorithms is to try and reach deeper into countries like India," said Bergh according to Times of India. "Our business could be twice the size of what it is now in the next five years. Investments in e-commerce and retail will help us do that."
When Bergh joined Levi's in 2011 and took over the reins after the company lost 3 billion US dollars in revenue over five years, he focused on re-energizing the company's core brands like the 501 and 511 as well as other categories like womenswear and tops.
"Globally, Levi's used to sell four bottoms for every top and now it's three bottoms for every top. In India, it has the best ratio of 1:1, which is for every bottom there is a top sold. So, the company sees an enormous opportunity for the tops business to grow," explains Bergh.
In India, he made sure Levi's cut down on its 150 franchise partners as quite a few operated only one or two stores, making merchandising and fulfillment quite time consuming. Currently, the denim brand has 22 franchise partners in India, which operate a larger number of stores. This has helped channelise more investment into the brand and streamline operations.
Opening own stores in India is still a challenge though as currently, foreign direct investment (FDI) of only 49 percent is permitted whereas anything beyond that requires the government's approval or an Indian partner. In addition, for FDI beyond 51 percent it is mandatory to source 30 percent of the value of goods purchased from India, preferably from micro, small and medium enterprises.
Despite Levi's entering the Indian market more than two decades ago, the brand turned profitable only in 2014 after years of lull. For fiscal year 2015-16, it reported a net profit of around 79 crore rupees (12.27 million US dollars), an increase of 64 percent compared to the previous year. Sales grew by 18.5 percent to 753 crore rupees (117 million US dollars).
Globally, Bergh believes in driving innovation. On the product side, the company has partnered with Google to launch a tech-wearable trucker jacket later this year while on the supplier side, it has narrowed its supplier network to only those with capabilities in design and fabric technology.Photo: Michael Carian via Wikipedia