Levi’s was in trouble. When Chip Bergh joined the iconic brand as CEO in 2011, the company was carrying $2 billion in debt while earning just $300 million a year in before-tax profits. “Our debt ratio was five to one. We were one notch above junk-bond status,” Bergh said on a recent episode of Marketing Matters, hosted by professors Barbara Kahn and Americus Reed on SiriusXM Business Radio.
Pulling the teetering company back from the edge was a tough assignment. But Bergh, who describes himself as “a brand guy,” had a plan. He’d spent 28 years at Procter & Gamble, where he oversaw the firm’s acquisition of Gillette, turned around Old Spice, launched Swiffer, and grew established products such as Folgers and Jif. With Levi’s, Bergh realized, he needed to restructure the company and fix the marketing. He wanted to tap into the longing that once made consumers around the world covet Levi’s jeans as a symbol of American cool. When he was in middle school, that feeling made him beg his mom to drive three towns over to buy him a pair. “If we can make the brand cool again, put it back at the center of culture, have it resonate with young people again, that would turn the business around,” he said.
Bergh went back to marketing basics, trying to figure out what worked before the brand’s fall from fashion grace. His quest led him to the flat of a young woman in India, a well-traveled “denim head” who owned about 10 pairs of premium jeans. Bergh asked her about each pair until she came to the last two, which were Levi’s. The woman described the penultimate pair as her go-to for meeting her girlfriends for coffee or shopping at the mall. Then she got a little teary describing the last pair, which she had worn throughout college. They no longer fit, but she couldn’t bear to toss them. “She said, ‘You wear other jeans, but you live in Levi’s.’ And I was like, ‘That’s it. That is the idea,’” Bergh recalled. “I’ve been saying all along: Everybody’s got a Levi’s story, and it is about living your life in Levi’s. That became the selling idea behind our advertising, and 10 years later, we are still using that line.”
In addition to sharing the company’s rebranding story, Bergh — who retired from Levi’s this year — talked with Kahn and Reed about taking a stand on social issues, leading through the pandemic, sustainability, succession, and the best way to wash jeans.
On Purpose-Driven Marketing
Levi’s has long been an LGBTQ ally and advocate. In 1992, it became the first major corporation to provide same-sex-partner benefits for employees. But it didn’t step into America’s contentious gun debate until early 2016. Retail-store managers in open-carry states were worried about customers who came in with guns. Executives were debating a policy but decided to hold off until after the presidential election. Then it happened: A customer was changing in a dressing room when his gun accidentally discharged, with the bullet piercing his foot. “That was the straw that broke the camel’s back,” Bergh said. “We put this letter out. … Please don’t bring a weapon into our store.”
The backlash was expected, and Bergh received death threats. Then came the Parkland High School mass shooting in 2018. That’s when Bergh and the board of directors decided to “go big or go home.” They established a fund to help organizations mobilize against gun violence and pushed for federal legislation. “We’re not about repealing the Second Amendment or anything else,” Bergh said. “This is about commonsense legislation that would reduce the risk of gun violence in this country.”
On Going Public
After 34 years as a private company, Levi’s went public in 2019 for the second time in its more than 170-year history — to the surprise of many, including Kahn, who incredulously asked Bergh why he made the decision. “I firmly believe that being a public company, we will never have a 15-year stretch of underperformance,” he said. The move saw Levi’s relist with a dual-class structure, which means it still has a few of the benefits of being private, while the company’s namesake family can retain some of their voting control. Bergh said about 100 family members still own stock, now up to the seventh generation removed from founder Levi Strauss.
On Retail Theater
Amid the ongoing crisis for brick-and-mortar retail, Levi’s has done a bit of soul-searching. The company’s department-store clients, including Macy’s, Nordstrom, and JCPenney, play a vital role in distribution. “We don’t reach that many places with 275 stores in the United States,” Bergh said. “We need that wholesale distribution, and we need that shopper in wholesale.” But with the rise of online retailers such as Amazon, Bergh worried that big-box stores are “being nibbled away at from all edges” and said there had to be a differentiated reason for a customer to walk into a store. Upping the in-store experience has been referred to as “retail theater.” For Levi’s, that has meant its tailor shops, where customers can fix up jeans with holes and tears or bring in trucker jackets for customization. “It’s our version of the Genius Bar,” he said.
On the Brand’s Nostalgia
Thrifting is rising in popularity, and that could be a good thing for Levi’s. The company is getting into the sector now with Levi’s SecondHand, an online arm that sells used items. “People love the hunt,” Bergh said. Delving further into the psychology behind vintage clothing, he added that consumers’ willingness to pay a premium for rare items “is something that authenticates the value of this brand.”
On Pushing Through the Pandemic
Just days before the COVID-19 pandemic arrived, Levi’s was global-testing a remote-work strategy. Then the lockdowns came, and it was trial by fire. As the weeks rolled on, Bergh and his team switched into survival mode. They were able to extend health-care benefits to part-time employees. But with stores closed and sales down, layoffs were inevitable. “It was terrifying. It was the first time in my career I didn’t have a forecast,” Bergh said. “We had a high, medium, and low [scenario]. That’s how we were running the business through the pandemic.”
Worried that the brand would lose all the ground it had reclaimed during its revival, Bergh’s team devised a marketing scheme: Livestream a concert from the living room of a different artist each day at 5:01 p.m. and call it the 501 Concert Series, in honor of the best-selling style. “It was magic,” he said. “The creativity that came out during the pandemic was something that I just wanted to bottle up and say, ‘Let’s not lose this.’”
On How to Wash Jeans
True denim heads will say to never, ever wash jeans, especially in a washing machine. Such washing requires a lot of water, and the agitation is rough on the cotton fibers. Bergh said he prefers to spot-clean, but he concedes that sometimes, that’s not enough. What does he do when his jeans get too gross? Hop in the shower while wearing them. “Soap them down, rinse them off, take them off,” he said. “If you buy really good-quality denim, you don’t want to throw them in a washing machine. You’re going to destroy them much faster than they would last, and it’s better for planet Earth.”
On Leaving a Legacy
After 12 years as CEO of Levi’s, Bergh said, it was the right time for him to retire. When searching for his replacement, his staff urged him to “find another you,” said Berg. “I was like, ‘No! We don’t need another me. We need somebody with a different skill set.’” Bergh chose Michelle Gass, the former CEO of Kohl’s, as his successor, noting her “strong retail and digital chops.” He brought her on early to learn the business, so that when she actually got “in the chair,” she could hit the ground running, he said. That most of his original team has stayed in place has reassured him that he made the right move: “I’m totally convinced that she’s going to take the company to the next level.”
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Catch new episodes on Business Radio, SiriusXM Channel 132, on Wednesdays at 5 p.m. ET, or listen to past episodes on the Knowledge at Wharton website.
Published as “Revitalizing a Legacy Brand” in the Fall/Winter 2024 issue of Wharton Magazine.
