Levi’s tries on virtual sales service for size
Levi Strauss & Co. is probably no one’s idea of a leader in ecommerce.
But in one stroke, the San Francisco apparel maker might have overtaken its peers.
That might not be saying too much, because clothing chains, including hometown rival Gap Inc., have been notoriously conservative — and inept — at selling merchandise over the Internet. But in Levi’s case, the latest effort is impressive at least for its scope and ambition.
Like Apple, the company didn’t create technology so much as integrate a bunch of new technologies into one service, which it premiered last month on its website, mobile site and Facebook Messenger. Dubbed rather modestly Virtual Stylist, the service incorporates artificial intelligence, natural language processing, social media scraping and, most notably, a way to compare the sizes of Levi’s jeans and pants with those of other brands.
The total effect is an online experience that comes the closest I’ve seen thus far to re-creating a trip to a physical store.
“The goal is to really transform the e-commerce and make Levi relevant to that next generation of consumers, because we know that’s the future where consumers are shopping,” Executive Vice President Marc Rosen, who’s leading the company’s digital efforts, recently told me.
Like all apparel companies, Levi’s had been trying to figure out how to boost online sales as fewer people visit brick-andmortar stores. The company operates about 700 stores, but more than 70 percent of its annual revenue comes from wholesale distribution to other retailers like department stores. In fact, Levi’s top 10 wholesale customers accounted for 30 percent, or $1.37 billion, of its total revenue in 2016.
But department stores, including Macy’s and J.C. Penney, have been struggling to grow sales, which makes it difficult in turn for Levi’s to grow sales. Last year, Levi’s said annual revenue increased just 1.3 percent after falling 5.5 percent in 2015.
Rosen, who previously worked on e-commerce at Walmart, joined Levi’s in 2014. He immediately set out to enhance the basic infrastructure for Levi’s digital operations, including warehousing and online fulfillment.
But he didn’t want Levi’s just to catch up with everyone else.
“If we just (copied competitors), we’re still going to be behind” technology trends, Rosen said. “We’ve got to be driving innovation as well ... not just in designing products but also how we bring products to life for consumers.
“As we got that foundation in place, we got a little bit of breathing room,” he said. “We started to think how are we going to differentiate, what is really going to matter to consumers. And the biggest challenge for a consumer is that it’s very hard to buy jeans online.”
Selling apparel over the Internet has long vexed retailers, more so than any other category, like food or furniture.
In a physical store, consumers can try on clothing in a dressing room. When they order online, they often find the shirts and pants they bought are either too big or too small, regardless of the brand.
“In terms of fit, there is no standardization within the industry,” said Roseanne Morrison, fashion director at the Doneger Group retail and fashion consultancy in New York. “Designer brands cut differently, and sizing is extremely varied.”
According to some industry estimates, 20 to 30 percent of all clothing purchased over the Internet goes back to the retailer.
“It’s becoming a real big problem,” said Brian Kilcourse, managing director of RSR Research consulting firm. “It’s just a really bad deal” for both consumers and retailers.
Consumers have to take the time and effort to send the clothing back. And during that period, retailers have less inventory to sell to other shoppers, Kilcourse said.
The cost to handle each return order — including repackaging, shipping and restocking — ranges from $3 to $12 per order, according to some estimates.
Another problem with buying clothes online is assembling outfits. Unlike a website, a physical store offers consumers an easy way to mix and match apparel and accessories.
“The bottom line is that retailers are now beginning to confront one of e-commerce retailing’s basic issues: It’s less profitable than brick-andmortar,” according to a report by Kurt Salmon retail consulting firm in New York.
“When online sales made up only a singledigit percentage of a retailer’s total sales, this issue was easier to ignore,” the report said. “But as e-commerce sales only continue to grow, retailers will have to confront” these issues.
That’s what Levi’s is doing with Virtual Stylist.
Using bots, the tool starts asking consumers questions like “How would you like your jeans to fit through your hips and thighs?” to explore shoppers’ preferences on leg shape, rise and stretch.
A database technology called True Fit allows consumers to compare how a specific size of jeans made by other manufacturers like Lucky or Wrangler translates into Levi’s sizes. For example, a size 31 Lucky jeans might actually mean a size 33 for Levi’s.
“When that happens in a store, they send you to the fitting room with three or four pairs of jeans,” Rosen said. “How do we take that best experience and replicate that for the consumer online. We know there are all these emerging technologies retailers haven’t put together yet.”
To help consumers create outfits, Virtual Stylist can search social media sites like Twitter or Pinterest for images with people wearing the same piece of Levi’s clothing. Consumers can also set up conversation groups on Facebook to solicit advice from friends.
The company did not respond to a follow-up request for comment on the value of sales the Virtual Stylist has helped close since it was introduced about a month ago.
Levi’s is also working on ways for store employees to retrieve the work consumers store on Virtual Stylist.
Retailers that help make shopping more pleasant will win over consumers. That’s why apparel chains are investing considerable money in remodeling dressing rooms and adding high-tech mirrors.
“The stores that have improved the experience in the fitting room, from attentive sales persons to luxury rooms with threeway mirrors and refreshments, (do) wonders to the satisfaction in the sale of merchandise, eliminating the need for returns,” said Morrison of the Doneger Group. “The more satisfied the consumer is within the confines of the retail environment, the more likely they are to return.”
Levi’s Virtual Stylist can’t offer drinks and snacks to consumers. But the company hopes that the technology can at least give customers a taste of a better way to buy clothes over the Internet.
“We’ve got to be driving innovation as well ... not just in designing products but also how we bring products to life for consumers.” Marc Rosen, Levi Strauss & Co. executive vice president