There are four major trends shaping today’s retail landscape, according to Chip Bergh, President and CEO of Levi Strauss, who spoke at the World Retail Congress in Rome this month.
In a keynote interview with Susan Hart, co-leader, global retail practice at the executive search firm Spencer Stuart, Bergh said that companies must prioritise sustainability, embrace digital technology or die, fix supply chain weaknesses and face the challenges posed by rising cost pressures and inflation, as the industry moves into post-pandemic 2022.
“There are probably four major trends right now that have been coming together over the past couple of years,” said Bergh.
“I would say the pandemic has probably accelerated a lot of these changes so that they are front and centre right now. They are sustainability, digitisation and ecommerce, supply chain resilience all have been driven largely by the impact of the pandemic. Then the fourth big one that everyone is starting to recognise is the importance of cost pressures and inflation.”
When it comes to sustainability, Bergh highlighted the apparel industry’s negative impact on the planet due to the chemicals and water required to create products. Meanwhile, most clothing ends up in landfill after it has been used. The 169-year-old Levi’s business, which trades in 110 countries worldwide, is working flat out to reduce its environmental footprint, using fibres such as hemp, that are more sustainable and looking for ways to reduce water usage.
“Sustainability has been a strategic issue for us. We weave it into everything we do. We drive our innovation programme around sustainability,” said Bergh.
“Sustainability used to be pretty niche from a consumer standpoint and very Europe-centric. Now it’s truly global and cuts across generations. The young consumer, in particular, is really focused on this. If you ask a teenager today, they will very likely say climate change is top of mind in terms of their concerns.”
On rising cost pressures and inflation, Bergh said some of this was being driven by the pandemic, some of it by supply chain bottlenecks and some by shortages of labour in some parts of the world.
“There is no question that we are seeing our costs going up, everybody is, and that is going to have an impact on our business,” said Bergh.
Turning to diversity, equity and inclusion, he acknowledged that the “brutal truth” was that huge inequalities remained, particularly in the U.S.
The Levi’s CEO also said that “deprioritising” diversity and inclusion in the early days was his biggest mistake and regret of his time with the U.S. denim and apparel company. But he now insisted it was embedded in the company’s culture.
“When I joined the company 10 years ago, the house was on fire,” said Bergh.
“The company had nearly gone bankrupt a couple of years earlier. The brand was stagnating, we weren’t growing, profits were pretty terrible. It was a business turnaround and when we were developing the strategy the idea of focusing on diversity and inclusion came up but I deprioritised it.
“Looking back, it was one of the biggest mistakes I made in my 10 years here as, in my heart and soul, I believe that a diverse organisation will outperform a homogenous one every time.”