iStock.com/Jozef Durok
June 14, 2024
Will Levi’s Expansion Strategies in Southeast Asia Drive Success?
Levi Strauss & Co. is making significant strides in expanding its presence in Southeast Asia, leveraging its established markets in Japan, Bangladesh, and Thailand. With a focus on direct-to-consumer (DTC) strategies, product diversification, and sustainability, Levi’s aims to tap into the region’s diverse and growing consumer base.
Levi’s has been experiencing consistent global growth, especially with its NextGen stores, alongside eight consecutive quarters of positive results. According to Sameer Koul, general manager of Levi Strauss & Co. in Southeast Asia, this momentum is largely driven by the company’s DTC-first strategy. By prioritizing direct connections with consumers, Levi’s aims to enhance shopping experiences and expand its product offerings. The company plans to open additional DTC stores in Southeast Asia in the second half of the year, reinforcing its commitment to this approach.
“We will further lean into our DTC first strategy, which will enable us to build deeper and more direct connections with our consumers and help us in delivering immersive retail experiences to our consumers right where they shop. And as I mentioned earlier, as part of our DTC-strategy, we have operations in Thailand and [are] 100% owned and operated, which is testament to the strength of this strategy and the blueprint that we have set for ourselves in the region.”
Sameer Koul, general manager of Levi Strauss & Co. in Southeast Asia, via Retail Asia
Recognizing the diverse consumer preferences in Southeast Asia, Levi’s is actively tailoring its product portfolio to meet regional needs. This includes launching the performance cool line, designed specifically for hot and humid climates. Levi’s has also seen significant growth in its women’s apparel segment, with products like denim skirts, denim dresses, and jumpsuits experiencing double-digit increases in the first quarter, according to Koul. This diversification effort is part of a broader strategy to position Levi’s as a comprehensive lifestyle apparel brand, offering a wide range of products for different demographics and occasions.
Initiatives like the Levi’s Red Tab membership program further boost customer loyalty and engagement. These efforts are designed to build deeper connections with consumers and offer immersive retail experiences in key locations, such as Bangkok’s CentralWorld mall.
Levi’s is not only expanding its physical footprint but also enhancing its retail experiences through an omnichannel approach. Koul highlighted the importance of integrating online and offline shopping experiences, as many customers begin their purchase journey online before visiting physical stores. This seamless retail experience is supported by digital tools that monitor store traffic, sales performance, and customer satisfaction, ensuring timely and effective interventions to enhance customer engagement.
Sustainability remains a core pillar of Levi’s strategy. According to Koul, “Delivering profits through principles has been, is, and will continue to be part of our heritage.”
The company is committed to leading positive change in the apparel industry by moving toward more sustainable and circular products and practices. Revamped tailor shops, such as those at CentralWorld in Thailand, allow customers to repair their Levi’s cotton garments, promoting sustainability and self-expression. Levi’s sustainability strategy focuses on climate, consumption, and community.
Earlier this year, Levi’s cut approximately 10%-15% of its global corporate workforce. Furthermore, the company faces constant criticism for its international working conditions. Despite claiming a commitment to ethical supply chains, Levi’s opted not to sign onto the International Accord for Health and Safety in the Textile and Garment Industry in 2021, arguing adherence to existing guidelines such as those from the International Labour Organization (ILO). This decision is contentious because the Accord offers legally enforceable mechanisms that hold brands accountable, unlike voluntary ILO measures.
By abstaining from the Accord, Levi’s avoids comprehensive oversight and accountability across its supply chain, particularly in countries beyond Bangladesh where labor violations persist. This selective approach limits Levi’s responsibility to address health and safety issues in factories, undermining its professed commitment to ethical practices amid ongoing concerns about worker welfare and regulatory compliance.
Additionally, according to Remake, a global advocacy organization in the clothing industry, “As of 2020, Levi’s reported 50% of their South Asian factories and 57% of their North Asian factories had experienced health and safety issues. Not signing onto the Accord limits Levi’s responsibility to act on enforcing corrective measures in these factories.”
Looking ahead, Levi’s plans to further solidify its position as a leading lifestyle apparel brand in Southeast Asia. Per Koul, the company sees significant market opportunities in categories such as skirts, dresses, and tops.
Discussion Questions
In what ways can Levi’s balance its ambitious expansion plans in Southeast Asia with its commitment to sustainability and ethical practices, especially considering its decision not to sign onto industry-leading initiatives like the Accord?
Given Levi’s significant growth in the women’s apparel segment and its tailored product offerings for Southeast Asia, how might these regional strategies influence its global branding and product diversification efforts?
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Levi’s has already done a lot of the foundational building in Southeast Asia – taking control of the business in markets like Thailand and opening more of its own stores. This was delivering strong growth, though the latest quarter’s results were weaker (partly because of unfavorable exchange rates). To get more out of the markets, Levi’s needs to connect more with customers which is where elevated store experiences in key locations and better digital engagement comes in. Part of this needs to be about making Levi’s more of a lifestyle brand as opposed to a just a denim brand – which is how a lot of Asian consumers currently see it. The big but is that Asia cannot distract from getting the American market (which is by far the biggest) back into growth.
Agreed, but in SEA, ESG, and sustainability are viewed as more of a safety, factory, and workers’ rights issue than on environmental impact and then through the environmental lens.
Not sure how this relates to my comment: I didn’t mention sustainability! Maybe related to David’s discussion / my reply below.
Consumers in nations such as Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, and Vietnam, and the others in Southeast Asia, have always craved Levi’s products because almost no brand is more “western” than Levi’s.
But I very recently met with two very major retail executives from Southeast Asia, and learned more than I can mention right here. But generally speaking, consumers in Southeast Asia don’t share the same emotional concerns that Americans do, nor do they necessarily agree that Americans even have the right information or understanding of manufacturing in that part of the world.
Ironically, and probably accurately, they perceive that Americans simply buy-in to whatever narratives and agendas their own politics and media indoctrinate them too. I know many of us might agree.
For example, Americans will be disappointed to know that this part of the world is much less interested in sustainability and climate change than the west. They feel the topic is much overstated, exaugurated, and over-reacted to in North America.
In terms of ethics, regardless of reports put out by “Remake,” I don’t see much evidence that consumers in Southeast Asia question manufacturing ethics in that part of the world, as Americans do. So, I’m not too sure that is a factor that will make a huge difference either.
But Levi’s has had a bright past, and will have a great future in Southeast Asia because Levi’s understands the market in ways most of us do not. -Db
Consumers in the West do not care for sustainability as much as is assumed. Sure, they say they do in surveys and discussions, but they make their choices mostly based on factors other than sustainability. Let’s be honest, if sustainability was as big an influencer on purchasing decisions as is sometimes made out, then people would buy far fewer things!
Levi’s can balance expansion in Southeast Asia with sustainability by enhancing supply chain transparency, investing in sustainable practices, and setting strict internal standards. Expanding its DTC strategy, opening NextGen stores, tailoring products to regional preferences, and collaborating with local consumers can boost consumer engagement and growth.
Levi’s tailored strategies in Southeast Asia, focusing on women’s apparel and climate-specific products, can enhance global branding and drive product diversification by showcasing adaptability and innovation, meeting diverse consumer needs. To boost growth, Levi’s must enhance store experiences and digital engagement in Asia while revitalizing its American and European market presence.
I hope Levi’s experiences success there, however I do wonder how important sustainability, etc. is to Southeast Asian shoppers. My guess is the “commercial virtue signaling” that resonates in the States falls flat in Asia.
Levi’s has the right vision and strategies to succeed but does need to make a statement regarding their mission of “profits through principles.” Not signing up for the Accord will only make sense if they hold themselves to a higher level and show their committment and progress. DTC, product assortments and loyalty programs check all the boxes, but the real measure will be if they connect with the SE Asian consumer in a meaningful way.
Levi’s has been successfully evolving their brand well beyond denim for years, and their growth in women’s apparel is a testament to this. Gaining a foothold in Southeast Asia and other international markets will not only burnish their brand but also inspire new product lines that could be leveraged in the US other markets. At the same time, Levi’s must also be mindful of consumer preferences and sensibilities about sustainability and ethical practices. Not signing-on to the Accord for Health and Safety is not a good look for a brand that intends to be a global leader.
ASEAN will be the fastest-growing region in the world in the next decade thanks to FDI inflows, infrastructure development, favorable demographics, and the expansion of consumer markets. The area is digitally savvy, with over 150 mobile phones and over 60 internet subscribers per 100 persons. In the next decade, the population will be about 3X the U.S. Levi’s is brilliant to focus on these countries.
Population growth leads to sustainability issues. The ASEAN and China have actively implemented the ASEAN-China Environmental Cooperation Strategy and Action Plan 2021-2025 Framework and coordinated regional environmental and climate change cooperation. China is a major supplier of wind, solar power equipment, and power batteries, driving down the cost of renewable energy usage and helping developing countries obtain clean, reliable, and more affordable energy. EVs are forecasted to have significant growth. Citizens of these countries are more interested in countrywide sustainability rather than personal products.
While Levi’s is a classic American brand, today, it is considered a global brand with little attachment to its American heritage. Most Levi’s are local brands in ASEAN countries, and the people know them. The advertisement is a lifestyle, not a cowboy.
Levi’s will succeed in these markets based purely on their “western” persona. Few brands can make that kind of brand promise with the authenticity that Levi’s offers. So even if sustainability is not important to the vast majority of customers, let’s be thankful that Levi’s is at least making efforts, although maybe not to everyone’s satisfaction. Unfortunately, there will have to be a ecological disaster to two before apparel consumers take notice. Fast fashion and landfills tell us all we need to know about actual concern at the broad based consumer level. And how many factories and brands are announcing that they want to make less and sell less?