Ben Gilad excerpts from the book "Early Warning"
translation from English by N. Cherenkov and V. Cherenkov
edition and title by Vera Olkhovskaya
Levi Strauss is a company with a history of 150 years and has been a clearly dominant player in the denim and casual business wear markets for many years. Three out of four energetic American men own at least one pair of Levi Strauss khaki Dockers jeans. The company dominated the denim market until the 1990s. For several decades, this brand has been one of the strongest among teenagers and their parents.
Statistics
1990 - Levi Strauss owns 48,2% of the denim market
1998 - 25% of the denim market and over the past 2 years, sales have declined by more than $1 billion to less than $6 billion per year
1999 - the company laid off 15000 employees, closed 30 of 51 factories and increased debts
2000 - Levi Strauss 17% share of the denim market, sales fell to 5 billion.
The Levi's example is a classic case where a leader had a vision that didn't match the reality of the industry. Throughout the 1990s, Levi's continued to produce the traditional Levi's jeans, blue cut jeans with a straight leg and five pockets in standard sizes. The company ignored almost every fashion imaginable, from baggy pants to denim jeans with large patch pockets, carpenter pants, and finally stretch jeans. Haas (CEO) and his entourage either looked down on competitors or simply ignored them. And the number of competitors grew and by the end of the nineties was measured in dozens.
Haas and his associates neglected to change the "strength" of traditional shoppers and change the policies of department stores, which had become Levi's worst competitors by creating their own brands of jeans. In addition, since 2000, young people began to buy jeans in specialized stores, that is, they became lost for Levi's.
How could upper management miss all the signals? How can you ignore a whole decade of falling profits and the complete disappearance of an important market segment (youth)?...
Since taking office, Haas has been obsessed with making the company and its employees more "inspired." More than 80 working groups have been hard at work on a great social experiment to transform the workplace into a more spiritual environment, saturated with the values of love, community and political correctness.
And the pinnacle of Haas's dream was the gigantic project he initiated to reengineer the supply chain of the company's customers.
Target? Reduce the development time of new products from 15 to 3 months, and the restoration of stock from 3 weeks to 72 hours!
This project cost $850 million. Levi's better managers have been doing it for 3 years. The project produced the incredible result of increasing Levi's stock replenishment time from 21 days to 27 days.
Commentary by Olkhovskaya. Despite inadequate management, Levi's has survived and continues to serve the brand's fans.
We can learn from the example of this wonderful company to be attentive to fashion so as not to be left out of life.
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