Three loose-limbed models slink into the cramped conference room next to Robert Hanson's office at Levi Strauss & Co. headquarters. On his command, they turn around and show off their backsides. Hanson, president of the Levi's U.S. brand, tugs at oversized belt loops and pokes at generous pockets as he takes a hard look at Type 1, the company's new line of jeans and jackets. He's betting that Type 1 will be this fall's must have in denim fashion.
"Nobody but Levi's can do this," says Hanson, who, along with his designer muse, Caroline Calvin, was brought back from Europe to Levi's San Francisco headquarters last year to reverse the seriously sagging fortunes of the company's brand in America. "It has a bold, confident stature that doesn't say, Levi's is back. It says, Levi's is leading."
Levi's as a sexy trendsetter? Levi's as the sexy icon for the young and hip? Although it is certainly a revered brand, Levi's heritage has often been its own worst enemy. Now Hanson has a plan to blend Levi's iconic heritage with Calvin's fashion sense, and thereby resuscitate the brand. "We've been accused of trying to be everything to everybody in the past," he admits. "This time, we have to be one thing to everybody."
Can Levi's Pull Up Its Pants?
That "one thing" is pure, simple, unadulterated Levi's. Calvin describes it as pioneering, strong, sexy, and authentic. The "everybody" includes some severely underserved audiences for Levi's. Women will get a lot more attention: Hanson hopes to reach them with better fits -- he had 14,000 people try on Levi's to get truer sizes -- as well as with hipper fashion. For men, the strategy will be about creating sexier styles -- a huge move for a company known more for its Dockers brand, the casual uniform for today's everyman.
It's too early to tell whether Hanson's one-thing-instead-of-everything strategy will bring back a brand that's had several failed comebacks in the past few years. The new looks from Calvin, the company's first U.S. creative director, won't really pick up steam -- if they do at all -- until early 2003. But given the depths to which the company's fortunes have fallen during the past six years, Levi's needs the duo to deliver strong results fast.
Levi's overall sales (including Dockers) have plummeted 40% -- from $7.1 billion in 1996 to an estimated $4 billion by the end of this year. The company shut down six plants and took a $150 million charge in the second quarter of 2002 to pay for closing them. Then in August, Moody's Investor Service, a debt-rating service, downgraded Levi's $2.1 billion debt (some of which is publicly traded, although Levi's is a privately held company) further into junk-bond-status land.
The Puddle of Innovation
Against that gloomy backdrop, Levi's president and CEO, Phil Marineau, brought Hanson and Calvin back from Europe to replicate the magic that they had performed there. Marineau, a former PepsiCo executive, was hired in 1999 by the Haas family, which controls Levi's, to bring the brand back.
The duo -- who jump seamlessly in and out of each other's conversations to add bits of detail -- had pulled off what seemed virtually impossible in 1998, when Hanson landed in Brussels to take over the struggling brand. He reacquainted himself with Calvin while she was sitting on the steps of Levi's European headquarters, penning her resignation. He persuaded the former designer for hip Eurobrand Marithe Girbaud to stay, and during the next three years, they turned Levi's from a musty old American brand into a reenergized icon worn by the cool cognoscenti. Hanson and Calvin created and then hypermarketed a premium line called Levi's Red, which sold in high-end specialty stores as well as in a red-velvet-curtained boutique inside Levi's flagship store in San Francisco. "We weren't celebrating a dusty brand, but reveling in its future," Hanson says.
Levi's rolled out the Red line in the United States last year after a limited release in 1999, and it became the best-selling denim line at Barneys New York, the upscale retailer that had never carried Levi's before. But for the hypercompetitive U.S. market, Hanson knows that he has to do a whole lot more than invent a $100-plus line of jeans for trendy urban dwellers.
"At Levi's, innovation has often gotten stuck at the top," Hanson says. "The ideas were puddling, not cascading." Calvin jumps in: "We decided to splash around in that puddle."
Those splashes have spawned Type 1, which draws inspiration from the successful Levi's Red line. Pure Blue -- which will come out at the same time as Type 1 early next year -- culls ideas from the company's extensive jeans archives. But where the Red and Levi's Vintage Clothing (LVC) lines sell for more than $100 (sometimes up to $1,000 for vintage replicas), Type 1 and Pure Blue sell between $35 and $95, in keeping with Hanson's plan for a brand for everybody.
The Levi's Triangle
Hanson can explain his strategy to you -- or he can draw it. He pulls out a pen and paper, draws a triangle with a dotted line down the center, and then divides the whole triangle into thirds. At the pinnacle are the brands Red on one side and LVC on the other. They're located at the top because Red and LVC are Levi's most expensive lines, and they are meant for trendsetters.
Underneath the Red and LVC brands, in the middle of the pyramid, sit Type 1 and Pure Blue. Red inspires Type 1, and LVC inspires Pure Blue. Both Type 1 and Pure Blue -- a gutsy bet on a look that simulates the blue created by optical whiteners -- are brands that are meant to appeal to trend adopters who want cutting-edge clothes on a limited budget.
At the bottom of the pyramid, Hanson still has work to do. But this is, of course, the place where such stalwarts as Levi's 501s and 550s live, so he has to be sure to tread carefully. "I want to create jeans for everyone that are equally distinctive," Hanson says. "But I always remember that we're about pants that were built for miners. I've got to keep that integrity and soul."
Sidebar: The Brand Sanctuary
Getting to the true heart of a brand can be the most difficult task that a turnaround team faces. But a second task can be just as difficult, according to Caroline Calvin, Levi's first U.S. creative director. Once you've determined the brand's heart, you need to treat the rules that protect that brand as "a sanctuary."
"When you don't have those rules, all you see are the market rules," Calvin says. "You are constantly asking about what the market wants you to do instead of what your brand wants you to do."
And that kind of market-following behavior can lead to brand whiplash. "You'll end up changing and following -- and who wants to be a follower?" Calvin asks.
So what are Calvin's rules? Some elements are simple: the arcuate, or V stitching on the pockets; the five pockets themselves; the metal shank buttons; the red tab; and the leather patch with the image of two horses pulling at a pair of jeans.
Others are deeper, more emotional, and can't be defined by the components of a garment. "We have them in our head and heart," Calvin says. "Levi's is social, it's sexy, it's innovative."
Sidebar: Brand Rules
Listen to Robert Hanson, president of the Levi's U.S. brand, for just a few minutes, and he'll hammer home three big ideas that he believes should drive any brand-rebuilding strategy -- or any company looking to grow.
1. Build brand fame. It's not enough to have a brand that people know. Hanson believes that brands as powerful as Levi's should be iconic and mythic. To restore Levi's to its rightful place in the pantheon of brands, Hanson showcases Levi's in stores the way that you would display fine wines or museum pieces.
2. Steal from yourself. Hanson never worries about relying too heavily on Levi's heritage. "Everyone else has knocked us off. We haven't knocked ourselves off often enough," he says. He and Caroline Calvin spend hours trolling the company's archives, which house their favorite pairs of jeans. For example, there's a 1933 version that has "perfect whiskering" -- the worn-out creases made from the squatting position that miners frequently assumed as they worked. Those whiskers have shown up in new versions of jeans made to look old. Hanson's two new lines, Type 1 and Pure Blue, both steal ideas from the past.
3. Think about the view from 2050. When reenergizing Levi's staff, Hanson steers clear of three-year plans. Instead, he talks about what Levi's will be remembered for in the year 2050. He wants his staffers to think about the legacies that they want to leave -- not about tomorrow's sales numbers. Having a legacy will help them know what to do today, 5 years, and 10 years from now, he says. "I want the jeans that we create today to be in the Smithsonian in 50 years," Hanson says. "That's our challenge inside this company: to have an impact on American culture."