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
