Levi's hopes to build more salience among younger shoppers who, it said, are buying fewer but higher-quality products
New Delhi: Apparel retailer Levi’s is upgrading some of its existing stores and swapping old ones with stores in better locations, in some cases close to brands such as Zara and Diesel, as it hopes to build more salience among younger shoppers who, it said, are buying fewer but higher-quality products.
“Sales density and the size of our stores is going to increase with a focus on acquiring better locations. We are doing this across more than 100 stores. As we move ahead into 2021, consumers will see a new network of upgraded stores," Sanjeev Mohanty, managing director, South Asia, Middle East and North Africa at Levi Strauss & Co., said.
“Since we have been profitable even during the pandemic, it allowed us to take the best locations in the market. For example, Ambience Mall in Gurugram had two of our small stores located over two floors which did not create the most premium image or do justice to the performance of the brand. We are closing one of these stores and opening a new and bigger store on the ground floor, seated in the same prime gallery as brands Zara and Diesel. Similarly, we moved to a better location at better rent, facade and size in Banjara Hills in Hyderabad in November last year," he said. In India, Levi's has 450 exclusive stores apart from selling across marketplaces.
India’s apparel retailers faced a stormy year after sales of clothing fell sharply in the aftermath of the lockdown as retailers were left with unsold inventory. For the full year, apparel retailers are expected to report a 40-45% dip in sales, according to November estimates by India Ratings and Research.
Moreover, once the unlocks progressed, consumers veered towards more at-home and comfort wear. Levi Strauss (India) Pvt. Ltd reported a marginal 1.6% increase in total income at ₹1,122 crore for the year ended 31 March 2020, according to financial data accessed by business intelligence platform Tofler. Levi's reports revenues as wholesale sales to franchises. The company’s profit for the year fell 43% to ₹28 crore on account of tax expenses relating to prior years. In the early days of covid cases emerging in India, the retailer suffered with significant inventory pile-up, it said in its filings for the year.
In India, Mohanty said business has returned to 75-100% range in terms of normalcy, at its brick-and-mortar stores.
India’s smaller cities that benefitted with a reverse migration led the recovery. Malls and shopping centres remain the biggest laggard for most apparel retailers. “So, for example, tier 2, 3, 4 town stores have returned to 2019 pre-pandemic level the earliest. However, malls and shopping centres in metros are the slowest to return to pre-covid levels and have the widest gap," he said.
Share of online sales via marketplaces and its own website also helped it cover up for weak sales in top-tier malls. “With consumers moving online, our e-commerce saw outstanding growth, especially from September onwards leading up to Diwali. The contribution from e-commerce has almost tripled from pre-covid level. As we step into 2021, we see e-commerce contribution doubling and that should remain at a steady rate going forward."
Mohanty said online marketplaces are central to the retailer’s direct-to-consumer growth strategy. As a result, it now offers more variety to online shoppers. “The pandemic accelerated our integration with top marketplaces. We are now able to expose a larger assortment to our e-commerce consumers," he said. The retai will continue to deeply integrate and scale its marketplace reach, meaning more exclusive assortments for shoppers online.
"However, bulk of the business is still driven by physical stores," he said, adding that overall, the growth trajectory is “looking positive".