Globalization is dead, says Levi’s boss Business

Levi’s chief executive has declared globalization “dead” after months of supply chain chaos and rising transportation costs.

Chip Bergh, managing director of the 169-year-old denim brand, said: “Everyone knows about the supply chain issues that have had a huge impact on our business over the past nine months or so, but the other thing that happens is the geopolitical forces.

“I think globalization is dead, and this trend where it [apparel] the industry has a habit of seeking the cheapest manufacturing base in the world for the past two centuries, I think it is coming to an end.

The first Levi Strauss was a Bavarian immigrant who moved to California and went into business in 1853.

Levi’s classic “501” line became a wardrobe staple in the 1980s and early 1990s. The company now sells its products in 110 countries.

She decided to move production from America to the Far East in the early 2000s.

Mr Bergh told the World Retail Congress in Rome: “The name of the game today, from a business perspective, is supply chain resilience and agility.

“When you miss sales because a ship is parked outside and can’t get to port and unload containers, and you leave money on the table because the consumer can’t buy the product, it’s a big commercial problem.”

He said rising cost pressures and inflation were due to the pandemic, supply chain bottlenecks and labor shortages in some parts of the world.

Mr. Bergh added: “We have now realized that [goods] being produced in the lowest cost countries and putting the product on a ship and shipping it to the other side of the world and not getting it to the shelves in time has a cost,” he added .

“We’re going to see more manufacturing move closer to market because of the importance of that agility and responsiveness and the certainty that the product will be on the store shelf when you need it.”

He also warned that businesses that do not embrace “digitalization” as part of their post-pandemic modus operandi will “die”.

“If you’re not a tech company today, you’ll be dead in 10 years. We’re a apparel company, but we’re quickly becoming a tech company,” he said.

“The rapid shift to digitization goes beyond e-commerce and the development of these digital capabilities for the consumer. There is so much of our business that can be digitized, from how we design products to how we manage product in-store.