Levi Strauss & Co.’s distinction as one of the oldest brands in the nation doesn’t preclude it from evolving, according to CEO Michelle Gass.
“I think why Levi’s has been so successful throughout all of these years is that we’ve been true to who we are. We’ve never been frozen in time; we like to say we’re a brand with a heritage, not a heritage brand,” she said.
Speaking to an audience at the Semafor conference in Washington, D.C. this week, Gass said Levi’s is taking cues from its tech-focused Bay Area neighbors when it comes to harnessing fast-moving technological advancements, like artificial intelligence, to its advantage.
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“I think it’s really exciting for us being in San Francisco… because there’s so much innovation and excitement and energy around AI, so we’re leaning in,” she said. “For brand like ours, it’s important to always stay true to who we are, but think about how AI can propel our future.”
Gass, an engineer by training, said leadership is “rewiring the organization” as it continues to focus more on direct-to-consumer sales. “Historically, we’ve been a business that’s been wholesale, selling to others…That’s how the whole company, over time, has been oriented,” she said. “So as you might imagine for a company that’s been oriented one way, to make this pivot, we’re kind of changing everything up, and AI is helping us rewire all these processes and do it much more efficiently.”
One such development is a recently deployed AI tool being used for in-store operations. Store associates, which the brand dubs “stylists,” have been leveraging a new tool since last fall to help shoppers. “We have our version of a Chat GPT, we call it Stitch; they can ask it anything, and it helps their confidence with consumers,” Gass said.
Stitch pulls from Levi’s internal database of product information and training materials to provide stylists with answers to basically any question they or a shopper might have within seconds. These queries could be related to Levi’s Red Tab loyalty program, processing returns, or even the qualities of selvedge denim; the tool’s knowledge is vast and its applications innumerable, the brand said upon launch.
Today, 50 percent of the brand’s business is DTC. “Our direct-to-consumer business is really fueling growth—that business was up 10 percent on the quarter. We had 16 quarters of consecutive growth in direct-to-consumer both in our stores and online, and there’s so much opportunity,” Gass said.
AI isn’t the only shakeup Gass—who succeeded former CEO Chip Bergh, taking the reins in early 2024—is instituting. She knows the longstanding lifestyle brand has earned a place “at the center of culture,” and is eager to see it remain “relevant to generations of fans.” As such, Levi’s bought an ad during this year’s Super Bowl, something it hasn’t done in two decades.
“And if you see the ad, it really showcases both global and local icons and how we connect with our consumer,” she said. The “Behind Every Original” campaign zeroed in on the instantly recognizable Levi’s Red Tab on the back of its jeans, highlighting style icons, athletes and other tastemakers like musician Doechii, DJ Questlove, K-pop star Rosé and NBA star Shai Gilgeous-Alexander. “I’d say the brand is as relevant as ever,” Gass said.
Levi’s sales quarter wrapped last week with sales up 14 percent on a reported basis. “We had a fantastic quarter. Sales are up… Profits are up. We increased our guidance even in terms of the environment we’re operating in,” she said, acknowledging the remarkably low consumer confidence and cost pressures brands are facing.
“I think we live in a very technical, quantitative world,” Gass added. The bottom line is the bottom line. But innovation is something the brand can’t afford to stop investing in if it wants to continue to hit or exceed its goals, and Gass believes in taking chances.
“One of the mantras we have at the company is ‘Reimagine what’s possible.’ And I think that’s a big reason why we’re thinking we can be something much bigger in this next chapter,” she said. “It is not a time to step back. It’s a time to lean in on the right things.”
