Interview with Levi’s Usman Chaudry, Marketing HEAD
Please tell us about you professional background?
After completing my Masters in Business Studies from Lahore School, I joined Packages Limited in 2000. I worked in the department of marketing and business development for three years and then joined LSPL as a marketing coordinator in 2003. Currently, I am the Head of Sales & Marketing for Levi Strauss Pakistan (LSPL) managing three exciting brands Levi®, Dockers® and LS Signature. This is my 7th year with LSPL.
What is the present situation of clothing/retail industry in Pakistan?
The present situation is tough both globally and locally mainly due to raw material price hikes. After almost ten years, it will be very difficult for retailers to absorb these hikes and eventually they will have to pass on the increase to the customers.
Being an optimist, I still see a bright future for Pakistani manufacturers and retailers as the dollar rate parity has tilted towards local manufacturing and branding. This is why there has been a steady growth of local brands in the market. Vertically integrated manufacturing units are moving towards their private labels as imports become less relevant. However, I would suggest the manufacturers to ad value in every step of the chain from the procurement to the final sale. Customer service will be the key for survival. I strongly believe that retail sector can plan a pivotal role in the driving growth for our economy as it is driven by population push which is in abundance.
As far as the local textile industry is concerned, the main issue is of value addition in our textile manufacturing trade. Although, it has become a cliché for some time, but I still believe that we have gone for short term gains and not cashed upon our leadership of 90s and early 2000s when competition like India, China, and Bangladesh was struggling. Pakistan was leading the market at that time and then they lost track as instead of producing finished products like shirts or pants, they shifted towards producing raw material (fabric) only. The value addition level has gone down and now the quality of finished products is not up to the mark. The only way out is through leapfrogging in value addition and skill development to produce high quality finished product.
Can you please describe Levi’s operations in Pakistan?
In Pakistan, Levi’s® has been operating for almost 24 years and has been exporting high quality products to the United States and Europe. We get the product sourced from very high quality certified manufacturers. Levi’s® Pakistan started its retail business almost 9 years back with 8 stores and now we are selling our three brands from over 80 locations in all major urban cities.
Levi’s Strauss and Co is a 160 years old company based in California, San Francisco. The major business of Levi’s in Pakistan is exports. Before opening retail outlets, Levi’s was selling all of its products outside Pakistan. We started in Pakistan with Levi’s and Dockers simultaneously and approximately after 7 years we launched Levi’s Strauss Signature.
Levi’s® has been operating for almost 24 year in Pakistan and exporting high quality products mainly to US and EU. We get the product sourced from very high quality certified manufacturers. Levi’s® Pakistan started its retail business almost 9 years back with 8 stores and now we are selling our three exciting brands (Levi®, Dockers® & LS Signature) from over 70 locations in major urban cities.
Levi’s® is a truly a leader in Pakistan with its original iconic brand personality. We strongly believe in providing the finest quality of products to our customers through our customer driven approach which is based on research and development. Globally retail has become a very technical and technology driven industry which is not only about daily till sales collection, retail is about detail in every aspect of operations, it’s a complete journey which starts from the time customer is sitting at home(thinking of buying a pair of denim/top) till the time customer returns home after buying our products. Unfortunately apparel retail has not evolved to the level we expected due to volatile external environment which has slowed down talent development and investment. However with our global leverages and support we strongly believe that we can leapfrog in this arena churn our quality retail leaders.
How much workforce does Levi’s have in Pakistan?
We are directly employing 170 people including the retail team. We strongly believe in developing of talent and resource base in order to provide high quality products and services. Our investment in developing local talent is quiet significant in terms of world class vendor development and employee training programs. With our Terms of Engagement program, LSPL is following one of the strictest criteria of vendor selection in the apparel industry to qualify local manufacturers. Once qualified the vendor becomes a potential world class manufacturer. In the retail side of the business our continuous focus is on quality recruitment, training and mystery shopping programs. We try to separate quality apparel savvy individuals. Globally, retail has become a very technical and technology driven industry which is all about detail in every aspect of operations. Unfortunately, apparel retail has not evolved to the level we expected due to the volatile external environment which hinders talent development and investment. We are at a nascent stage of retail evolution in which talent is scarce and continuous investment is required to sustain quality service.
Who are your direct and indirect competitors? How do you compare yourself with your direct competitors in Pakistan?
Currently we do not have a direct competition in terms of International Denim and Khaki categories for Levi® and Dockers® respectively. However some local vertically integrated brands have entered the market and competing to get some share of standard and premium market which is being catered by our LS Signature brand. Our differentiating factor with competition is our customer driven retailing approach. We at Levi’s® strongly believe that “Retail is all about detail in every aspect of value chain” and research based approach is key to our success.
Does Levi’s manufacture clothes in Pakistan or import from other countries? If yes, what is the annual production capacity?
We have a relatively large sourcing base with a unit turnover of approximately 1.5 million units per annum. The retail side is balanced with local and imported ratio of 50: 50.
What is your target audience in Pakistan?
Our target audience of our flagship brand Levi’s® is mainly male and female who are young at heart and have pioneering spirit to do whatever they want to do in life, no chronological boundaries of age. For Dockers® it’s a call to manhood, directed to men (20+) who are purposeful, hard workers and they get the work done in style. LS Signature brand offers high-quality, fashionable jeans at affordable prices to value conscious customers.
Do you give licenses to various parties to open a Levi’s outlet?
Yes, we are operating with franchise operated and company operated stores.
Do you provide your clothes to normal garment shops?
Yes, for our LS Signature brand we also provide garments through the wholesale channel. For Levi’s and Dockers® it is mainly standalone and controlled presence.
How do you rank different regions of Pakistan in terms of sales? What percentage of your products is for girls?
Most of our outlets are in major cities. We are operating in Islamabad, Lahore, Karachi, Faisalabad, Sialkot, Peshawar, Sahiwal and Rahim Yar Khan. South is the strongest region, however with LS Signature brand we expect to see major boost in Central and Northern parts of Pakistan. Levi’s® women business has significant potential in Pakistan. The new product line based on women’s curve rather than size is set to revolutionize the way women buy their jeans. This new product line is called Curve ID which will be available from Dec 2010.
How do you deal with your counterfeits?
Counterfeit for any brand is an indication that the brand is growing. Brand equity is on the rise. It is very difficult to stop counterfeits. The only solution we have found is to get into those locations where counterfeits are being sold with our LS Signature brand and Factory Outlets. Customers are intelligent enough to know the difference between original and fake. A branded product gives the customer a promise of quality and wearing confidence, which is lacking in counterfeits.
How do you see the government policies for the textile and clothing sector? What suggestions would you like to give to the government?
Due to the current external environment, we cannot depend much upon the government. If you look at other countries the government is playing the role of a facilitator and the drivers are the private sector investors. However, I strongly believe that government should try to invest in R&D and skill development in order to get maximum out of our local raw materials (agriculture) and manufacturing sector.
Tell us about the supply chain of Levi’s? Do you use your own transport system to distribute the products to outlets? Are there any wholesalers involved?
We have a central distribution center based in Lahore. Currently, we are using a third party warehousing transport system to distribute the products, which is more efficient and specialized. We have a POS (Point of Selling) software that creates the demand automatically in accordance with the number of units sold in each outlet and provide basis for forecast of future production.
What are your future plans? Do you have a target set to open a specific number of stores and in which areas?
We have an exciting plan for next three years for Pakistan with major expansion plan for our new global Brand being launched very soon. Levi® and Dockers® network will be also expand in premium super premium locations along with up gradation of current stores formats.
Tell us about your product range under the 3 brands?
Levi’s and Levi’s Strauss Signature both have a core line and a seasonal product line. Core line products are sold throughout the year and seasonal products are only for few months. There is another class with in seasonal lines by the name of High Fashion and Fashion. Levi’s is also offering an exciting line of products for women which includes mainly fashion products. In Dockers currently we are only offering products for men and the product line is casual and Semi-formal.
What is your advice for new investors?
In current volatile conditions, I would suggest that a new small investor should open a franchise of an international brand instead of taking a high risk of opening a new brand in the current circumstances.
As far as big investors are concerned, I think the existing factories which are operating in Pakistan have a greater market share than branded products. If they create a brand of their own, it will be an opportunity for them and competition to all other brands even the international ones.