Why Levi’s is opening 100 new stores as Covid online sales boom grows

Shoppers are doing more and more purchasing online amid the pandemic, and that has both companies and investors trying to best mix e-commerce and the traditional retail store business moving forward.

In 2008, e-commerce sales made up just 3.6% of total retail sales in the U.S., according to data from eMarketer.

Amazon saw its business grow tenfold in the 2010s, Walmart further established its online platform, new entrants like Wayfair emerged and almost every retail brand ensured it had a digital presence, as e-commerce boomed. By 2020, online sales made up 14% of total retail sales.

The Covid-19 pandemic sped that growth up even more, with e-commerce sales now expected to make up 15.3% of total retail sales by the end of this year, according to eMarketer. That is not expected to slow down — that figure is predicted to increase to 23.5% of total sales by 2025.

“The consumer wants a seamless experience. He or she wants to be able to interact with us in our stores as well as on our website and so building an omnichannel experience has been critical during the pandemic,” Harmit Singh, CFO of Levi Strauss & Co., said at the recent CNBC @Work Summit.

Levi Strauss & Co., which operates approximately 3,000 stores and shop-in-shops in addition to selling its products online and in other department stores and retailers, has focused on scaling up its investments in its digital experience while also keeping a priority on what a customer experiences shopping in person.

In Levi’s 2020 fiscal year, nearly a fourth of its sales came via online shopping, whether directly through Levi’s platform or through the digital presence of its wholesalers. In 2015, online sales made up less than 10% of its business.

Last year, Levi’s introduced a new experiential store in Palo Alto, California, as part of its push towards more direct-to-consumer sales and less wholesale. There are several digitally-focused features of the “NextGen” store, including integration with the company’s app, curbside pick-ups and contactless returns, and an inventory assortment that is driven by local customer data.

Singh said that the company opened 100 new stores last year and has plans to open more than 100 this year. Some of those stores will be the new experiential ones, the company previously announced.

“We scaled up our investments in driving more of a digital experience,” Singh said. “We were able to test things and scale things at speeds we would have not said was possible pre the pandemic, and I think it’s really helped companies like ours because I think we’ve been able to get a lot more agile and been able to deliver the promise that we’ve set out to our consumers.”

The balance between the in-store and online experience during the pandemic also has led to changes in the way Levi Strauss thinks about its distribution infrastructure,…