What Levi's New Retail Stores Mean for the Sector
NAI Global | November 25, 2019
CRE’s retail sector is undoubtedly reinventing itself, but that doesn’t mean brick and mortar retail is going extinct. On the contrary, more and more brands are announcing big plans to open up physical store locations.
The latest is Levi’s, who plans to open hundreds of stores by the time 2019 comes to a close.
Let’s explore what this means to retail as a whole.
Why Turn to Physical Retail?
If you’re listening to CRE retail news, you know that the value of brick and mortar stores is a hot debate. So why would Levi’s choose this as their next big move?
It’s all part of the popular clothing brand’s strategy to reconfigure the way they’re doing business. Recently, their wholesale profits are on the decline as the department store concept is struggling to keep above water.
However, the company is thriving in other areas. Direct-to-consumer performance is up 7% as Levi’s remains a popular household brand for US patrons. Levi’s reports that their e-commerce sector is thriving and their sales at full-price stores are also strong.
Experimenting with Small Footprint Stores
As the entire industry is struggling to find the solution to the issues facing contemporary retail, Levi’s might be onto something.
The company has plans for its 100 new stores. Levi’s is looking to test out the small footprint store and see how it competes with their other outlets. Levi’s CEO Chip Bergh states:
"Growing our U.S. direct-to-consumer business allows us to move toward premiumizing the marketplace, and remains one of our important strategies to offset headwinds in U.S. wholesale by continuing to reduce our concentration in that channel."
By testing out the waters as with brand-centric storefronts, Levi’s is establishing themselves as an independent luxury clothier. Stepping away from discount stores and department stores, the company wants to see if consumers will be open to paying full price at small Levi’s locations.
They are switching up their target audience from the discount shopper to the boutique browser, hoping to capitalize on the in-store experience that can only be achieved in physical retail.
How Will This Impact Other Areas of Business?
After looking at the factors motivating Levi’s to open up physical locations, what about their online presence?
By opening up new stores that their consumers can visit in person, Levi’s is adding a whole new layer of consumer experience to their business. These stores will help boost brand awareness and can strengthen their online presence through engagements, events, and promotions.
Levi’s will also be able to jump on the BOPIS train, which has been boosting both physical and online sales for the past year. Giving consumers the option to integrate their online and in-person shopping experiences inevitably drives traffic to their sites and store locations. This convenience-based strategy benefits both platforms - it’s a double win.
Using Levi’s as a module to gauge the retail industry, we can see that today’s business is all about playing it smart. Ultimately, the companies who are actively responding to their data metrics and aligning their strategies with what consumers want are the ones who will survive retail’s changing tides.