India a strategic priority for Levi’s: CEO
On a week-long visit to India to oversee the company’s operations, Charles V Bergh, president and chief executive officer of the $4.7 billion Levi Strauss & Co., met the American denim brand’s franchisees and distributors. Bergh says India is a strategic priority market that he visits every 6-9 months. He spoke of competition in the market and Levi Strauss’s potential in India. Edited excerpts from an interview: nity on Levi’s. We should be able to grow in high single digits or double digits in this market without introducing any new brands. However, as the marketplace is changing, and, given the strategic importance of this market, we are evaluating re-introducing Signature or Denizen or Dockers.
We had all those brands in the market in the past. They were withdrawn because they weren’t profitable, they weren’t creating value. But as we fixed our cost structure globally and as we have got better from a supply chain standpoint and the strategic relationships that we have developed with our suppliers, we could now introduce any of those brands and have a viable, profitable business in India. So we are evaluating them but as I said, I don’t think we need to do that to grow in this market, we have lots of opportunity still in Levi’s.
Yes, we are, on a global basis and in India. In India our business is entirely based on franchise. We have 22 franchise partners here. That is down dramatically from when I joined the company. On my very first trip to India we had stores and about 150 franchisees.
So every franchisee had only two stores. That was not a recipe for success. Franchisees didn’t have the scale or the capability so we focused on narrowing down the number of franchisees.
With 22 franchisees, we have about 400 retail stores. These franchisees have better capabilities, they are able to invest in their business. We are getting a better retail execution as a result.
Over time, India will become more of a trend-setting country. I would say the denim culture that drives trends the most is Japan, which quickly then goes to South Korea and China and then spreads to the rest of the world.
We watch Japan and South Korea very closely. The great thing about India, especially, now in the internet age, is that the consumers are very much in tune with what’s going on in the rest of the world.
What we are seeing is that trends pick up here very, very quickly. I think of a time when this is going to be a trend setting country. We have our designers here. It is the only country outside the US where we do design.