Levi’s piloted the store concept in Europe and Asia, and opened the brand's pinnacle NextGen store in China in the heart of Shanghai's popular shopping district on Nanjing Road last month.
“Though early days, we're seeing stronger than anticipated traffic and higher than expected conversion of youth and up market consumers, elevating the brand in the market,” president and CEO Charles Bergh said during the retailer’s recent earnings call.
Bergh said the retailer expects to open about 30 more doors through the rest of the year in Taipei locations, most of which will be digitally enabled. In the U.S., he said the company recently opened NextGen stores in Century City and Scottsdale Fashion Square and will open two additional NextGen stores this fall.
“We make our best impression with consumers through our Levis stores and we've been transforming them from traditional stores into an immersive omnichannel brand experience,” said Bergh. “And while sales remained down versus prior year, we're mitigating ongoing traffic declines by driving meaningfully higher conversion. We're elevating the brand stature as we roll out multiple store formats globally, including our NextGen stores, which offer leading customization techniques and enhanced digital features to drive storytelling and sales.”
Additionally, Bergh said Levi’s is making “good progress” on leveraging data analytics and machine learning in more aspects of its business.
“The ways we deploy artificial intelligence (AI) go well beyond loyalty and mobile,” he noted.
In stores, “AI is enabling local stores in China and the U.S. to better curate their assortments by predicting demand based on the specific profile and preferences of consumers in the vicinity of each store, which will thereby optimize the profitability of these smaller mainline doors.”
Additionally, by the end of this year, all e-commerce and store promotions will be AI-powered across 17 countries in Europe, he said.
Levi’s revised CapEx estimate for 2020 remains at $160 million and the retailer is putting two thirds of the investment towards technology and its digital transformation in areas such as AI, data analytics, an ERP upgrade, e-commerce, and omnichannel initiatives.
Levi’s also plans to reinvest roughly half of an expected $200 million cost savings to fuel investments that are driving growth and drop the remainder to the bottom-line, EVP and CFO Harmit Singh said.
“Beyond 2021, we anticipate our strategies and execution will drive a structurally stronger business,” he said.