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Levi’s Chip Bergh on Leadership, Distribution and Scaling Circularity

Chip Bergh, Levi Strauss & Co. president and CEO, was among the honorees at The American Apparel & Footwear Association’s (AAFA) 2022 American Image Awards Tuesday night in New York City.

Bergh, a two-time Rivet 50 honoree and one of Fortune Magazine’s “World’s Greatest Leaders” in 2019, received the “Person of the Year” award from Jack Haddad, president of Haddad Group, who reflected on his first meeting with the Levi’s leader.

“I saw someone who is a relationship person, ready to roll up his sleeves and learn the business and someone who will only surround himself with partners from whom he could gain knowledge,” Haddad said about meeting Bergh in 2011.

After hearing from the leaders of his most important business partners, Haddad said Bergh quickly formulated ideas. “Most of those ideas met a team of naysayers who were quick to point out that those ideas had never worked in the past, and that they were bad ideas. Don’t tell Chip something can’t be done,” he said. “Chip went on to replace all 13 members of his inherited leadership team, and that takes courage.”

Bergh’s leadership has been put to the test in recent years. Citing the pandemic, racial reckoning, massive supply chain disruptions, attempts to overturn a legitimate election, rising inflation, and Russia’s aggression in Ukraine, he said the past two years have been the most challenging of his professional life. “There’s been kind of no shortage of moments here, but it’s tested all of us as pros,” the CEO said.

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The challenges haven’t come without rewards, however, as Levi’s is now the “strongest it has ever been,” thanks to 16,000 global employees showing up and serving customers throughout the pandemic. “Seeing the team step up pushes me to be a better, more empathetic leader every single day,” he said. “I can honestly say that I’m a different leader today than I was two years ago.”

Initially an outsider to the denim world, Bergh is now well versed on the impact that the business of making denim has on the environment.

“Sustainability is core to us—it’s something that we are really focused on,” Bergh told Rivet. “It is also the constraint that drives everything from an innovation standpoint.”

The company published its first-ever sustainability report last year before releasing a 100 percent recyclable version of its iconic 501 jean. Levi’s is also expanding its use of hemp as a cotton alternative. As the No. 1 selling denim brand globally—bigger than the No. 2, No. 3 and No. 4 combined—Bergh said LS&Co. has the power to scale sustainable innovation.

“We’re the market leader but we don’t have 100 percent market share, so every market is an opportunity,” he said. “We recognize that there are huge opportunities from a sustainability standpoint, and we try to drive them. Where we lead others follow, and this is central to who we are.”

The company’s latest efforts, inluding its “Buy Better, Wear Longer” campaign and the Levi’s SecondHand resale business, aim to inspire consumers to harness their power in driving sustainable change.

“Most consumers have awakened to the notion that they bought way too much apparel in the past. Go look at a house these days. The closets are bigger than the room I grew up in as a kid,” he said. “During the pandemic consumers realize that they could buy less, buy better quality, buy more versatile products. And that’s what this advertising is all about—buy better and wear long, which is who we are. Levi’s is quality that never goes out of style.”

That quality of enduring appeal is propping up Levi’s SecondHand, the U.S. buy-back program allowing customers to purchase secondhand jeans and jackets on while also giving customers the opportunity to turn in their worn jeans and jackets in Levi’s stores for a gift card towards a future purchase. Though there’s no data to support the claim, Bergh said Levi’s is likely the “the No. 1 brand in secondhand stores.”

“People pay a premium for vintage Levi’s,” he added.

Resale is just one of the many ways Bergh has seen Levi’s business change and adapt during his 10-plus years as CEO.

“When I joined the company, 58 percent of its business was in the U.S. and 48 percent of it was U.S. wholesale. Today our U.S. wholesale business is about half of that as a percentage of our total business and our total business is much bigger,” he said. “We were only 21 percent direct-to-consumer. Today we’re 40 percent.”

Like Nike, which saw direct-to-consumer sales account for 39 percent of its sales in 2021, Bergh said “we’ve been very focused on taking control of the brand, driving direct-to-consumer where we can have a direct relationship with the customer in both brick-and-mortar and e-commerce.”

Though direct sales are a growing and strategic part of Levi’s business, he was quick to point out that wholesale remains an important channel.

“We’re still a very big and important brand for [our wholesale partners]. We drive traffic,” he said. “But we’ve been much more deliberate about our wholesale strategy. The doors that we’re in is a very strategic choice.”