Client Profile - After all these years, is Levi’s washed up? - The future looked profitable, but then the American icon hit a slump when styles morphed. Aimee Grove examines a PR team in full-crisis mode

On June 12, 1996, Levi Strauss & Company chairman Bob Haas announced a new incentive plan for employees. Under it, every worker would receive a bonus equal to a year’s salary if the company achieved its cash flow goal by 2001.

On June 12, 1996, Levi Strauss & Company chairman Bob Haas announced a new incentive plan for employees. Under it, every worker would receive a bonus equal to a year’s salary if the company achieved its cash flow goal by 2001.

On June 12, 1996, Levi Strauss & Company chairman Bob Haas

announced a new incentive plan for employees. Under it, every worker

would receive a bonus equal to a year’s salary if the company achieved

its cash flow goal by 2001.



The story made all the evening newscasts and seemed to reaffirm

everyone’s warm and fuzzy feelings about Levi’s, makers of the world’s

favorite blue jeans and an American icon. There seemed no reason to

doubt that everyone would get bundles of cash. After all, times were

flush - sales were up, 501s were still cool and the company enjoyed an

unparalleled reputation for corporate benevolence and enlightened

workplace culture.



But as 1999 nears a close, it’s a different story in those brick

buildings by the Bay. Levi’s is a company in chaos, and most are blaming

Generation Y. Starting in 1993, teens started to abandon Levi’s famous

five-pocket styles for hip-hop-inspired baggy brands, and market share

in the men’s sector dropped precipitously. In 1998, sales slid 13%, and

its market value has shrunk from dollars 14 billion to dollars 8

billion. To cut costs, the company shut down about 30 factories,

eliminating more than 16,000 jobs since 1997. During the same time

period, cross-town rival the Gap skyrocketed from a dollars 7 billion

company to one worth more than dollars 40 billion.



Accordingly, Levi’s in-house public affairs and communications team has

had to quickly shift from championing the company’s progressive social

policies to damage-control mode. To its credit, Levi’s kept its doors

open to the press, even as hard times hit. In some cases, it bent over

backwards to accommodate reporters. For example, when the company

announced the closure of 11 North American plants in 1998, journalists

were given a detailed breakout of the generous severance package and the

company’s placement efforts.



But while most PR pros and reporters applauded Levi’s crisis

communications, others believe that candor might actually have

backfired. ’I think in some ways Levi has over-communicated about itself

at times,’ points out former San Francisco Chronicle retail reporter

Gavin Power, who later spent four years with the company and now works

on its account for Ketchum.



’It probably would have been better to have forecast out and told the

bigger story once, rather than keep having to come back every six months

with more plant closures,’ says Mike Durand, another Levi’s alumni now

working for Schwab.com.



Whatever its history, more important are the PR initiatives moving

forward now under new CEO Philip Marineau, says senior communications

manager Jeff Beckman. ’We have a new team under new leadership, and we

are in the midst of transitioning from a jeans manufacturer to a

consumer brand-management company,’ he says.



The new team is a lean one. Last July, two months prior to Marineau’s

arrival from PepsiCo, the Levi’s Global and Levi Strauss Americas (LSA)

teams merged, with former LSA VP of communications Dan Chew taking the

helm of the new group. Insiders say at least 15 people have been laid

off since then, leaving just under 20 professional staff on the payroll

- less than half the size of the department five years ago. Earlier in

the year, communications joined community relations and government

relations under the public affairs banner, with VP of global public

affairs Judy Belk leading the entire operation. Chew reports to Belk,

who reports to Marineau.



Since Marineau’s arrival, the ax has fallen in other divisions as

well.



Last month, Levi veteran Gordon Shank was dismissed from his post as

chief marketing officer, and more layoffs are expected as the US and

global divisions are merged company-wide.



No matter how tight Marineau’s ship, though, the rubber meets the road

with sales. Significantly, in a company known for its big-budget TV ads,

much of the attention has shifted to what Levi’s calls ’viral

communications.’ In 1998, Roy Edmonson was brought in to head up Levi’s

Product Publicity and Presence Marketing department, which deals with

promotions and product-specific PR for Docker’s, Slates and Levi jeans

and often works in conjunction with Chew’s team.



Under Edmonson’s charge, music sponsorship and entertainment tie-ins

have taken over as the vehicle for reaching 15- to 24-year-old

consumers.



Over the past 18 months, the company has poured big money into tours for

youth-oriented artists like Lauryn Hill and Sugar Ray, as well as

dressing the actors of The Mod Squad movie. In addition, the team has

employed a variety of local guerrilla marketing agencies to engage in

street-level promotions and giveaways. The focus has been to promote the

new brands like L2 and K-1 Khakis apart from the Levi name.



For PR on the more mainstream brands, Levi’s works with Ketchum, while

Los Angeles-based Bragman Nyman Cafarelli handles product

placement/celebrity-oriented public relations.



It’s too early to tell whether or not the ’viral marketing’ tactics and

new segmentation strategy has worked. Since most of Levi’s lines are

only offered in J.C. Penney and Macy’s, and since the company is halting

its online sales after the holidays, sales are still handicapped by a

lack of availability in places where teens like to shop. Second, much

will depend on how well the new designers deliver hits with the key

consumers for each line.



’They have played it very safe for years, but they are going to need to

take some chances to make it now,’ says Margaret Schell, a publicist for

People’s Revolution, an LA boutique firm that handles fashion designers

catering to a hip, urban audience. Schell’s colleague Kelly Cutrone is

more blunt. ’I think it’s bullshit that Levi’s is dead - just look at

how the vintage Levi’s sell for dollars 800! What they need to do is go

back to what made them cool in the first place - it was all about the

cut.



They should hold a series of very exclusive events for the celebrity

stylists and publicists to meet with Levi designers and see the latest

styles.’



Others believe that Levi’s is durable enough to outlast fashion’s fickle

cycles. As one former Levi’s executive put it: ’You have to remember

that the company is 150 years old. They’ve been through the Depression,

the Big Earthquake and two world wars - I think they will make it

through this.’



But don’t count on those bonuses anytime soon.





Levi Strauss & Co



PR head: Judy Belk, VP of Global Public Affairs, who reports to CEO

Philip Marineau Internal PR staff: 15-20 full-time employees broken

into:



1) Communications: headed by VP of communications Dan Chew and includes

internal/employee communications and external/media relations.



2) Government Relations: headed by Gare Smith.



3) Levi Foundation and Community Relations Agencies: Ketchum handles PR

for Slates, Dockers and Levi jeans, while Bragman Nyman Cafarelli

handles celebrity-oriented PR; other agencies used on a project

basis.



Key Brands: Docker’s, Slates, Levi’s (Silver Tab, Redline)



Ownership: Private - owned by the Hass family, relatives of founder Levi

Strauss



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