Home > companies > Levi Strauss to launch its global products simultaneously in India

Bengaluru: Apparel firm Levi Strauss & Co. is introducing new products in India at the same time they are launched abroad, continuously shutting underperforming stores and working with fewer, but larger, retailers to grow same-store sales by more than 10% in a weak retail market.

Levi Strauss, one of the world’s most recognizable apparel brands, is betting on denim to drive sales growth despite the growing popularity of fast fashion brands such as Zara, as well as strong competition in denim from the likes of Lee, Wrangler and Flying Machine.

“Our look will remain a classic American look; you won’t find fast fashion in our stores," Levi India managing director Sanjay Purohit said. “What is there is evergreen in that sense. Even our accessories are very curated. Whether it is footwear, belts or innerwear, it has to be fit to be worn with a Levi’s. Denim growth should outstrip overall apparel market growth over the long term. There’s a massive casualization of work wear."

Purohit said the company had changed its product strategy to launching its international products in the country, rather than designing specific products for Indian customers. “Whatever we are doing globally, we are launching that in India at the same time. That never happened a few years ago. This is driving aspiration," he said.

Levi Strauss expects an increase of more than 10% in same-store sales—sales at stores open for more than a year—in the year ending March, Purohit said, declining to give a more specific forecast.

Levi Strauss (India) Pvt. Ltd reported sales of 599.4 crore in the year ended 31 March 2014. It swung to a profit of 49 crore in the same year, compared with a loss of 161.7 crore in the year-ago period.

Apart from the closure of its loss-making Denizen brand, Levi India’s results were helped by closure of unprofitable stores and a significant reduction in the number of its retail partners. The company, which franchises its brand to local retailers, has reduced its retail partners by more than 80% to gain economies of scale and better control over inventory.

“Three years ago, we culled out our weaker franchisees and we’ve now invested in a set of franchisees which have all got more than 10-plus stores with us. We have 20% of the retail partners we had three years ago. Our strategy is: limited number of franchisee partners, invest in them, ensure their inventory is very tight. Our stores here are the latest versions of what our stores look globally," said Purohit.

Levi Strauss is present in 1,500 stores across India, including 400 exclusive stores and multi-brand outlets such as Shoppers Stop and Lifestyle. In a given year, while it adds stores overall, the company continuously shuts unprofitable stores or shifts them to better locations, Purohit said.

“Today we don’t have a single store that is not profitable. In a year, at least one-tenth of our portfolio would undergo some amount of churn. This is very important. Earlier, the number was zero. Every six months, we’re looking at every store and asking whether we have to cull the store or shift location," he said.

Analysts said that denim is one of the fastest-growing categories in apparel and is one of the best-positioned niches considering that Indians are increasingly ditching formal wear for casual or semi-formal clothing at work.

“Denim is best positioned to gain from the casualization of work wear, especially considering that it is so under-penetrated beyond the cities," said Ankur Bisen, senior vice-president of retail and consumer products at consultant Technopak. “Having said that, most of the denim brands are in the 2,000-plus price range. Whereas the mass market resides more around 1,000-1,100. This segment is going to be the biggest opportunity over the medium term for denim brands."

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