The year 2020 was the inaugural year for the Strategy and AI team. The team, which started with 12 people, had a laser focus on building the foundation for the capability while, at the same time, starting to deliver measurable value to Levi Strauss & Co. Did they accomplish what they set out to do? We sat down with Dr. Katia Walsh, Chief Strategy and AI Officer, to get her reflections on the year.
What was the goal for the Strategy and AI team in its first year?
We started the year with several key objectives: building out the team with an initial focus on embedding people in the regions to support commercial priorities, identifying initial areas of value and starting to automate processes and create digital assets for the company. By digital assets, I mean the digitization of our information, products, images, practices and flows. Anything digital becomes data. Data makes artificial intelligence (AI) possible — and AI makes digital smart, which, in turn, generates more data, which further fuels AI. This continuous flywheel defines what a digital business is and how it operates.
Then, the global pandemic hit.
How did the team adapt?
COVID-19 brought a whole host of new challenges. Our bare-bones team instantly mobilized to tackle the urgent challenges in the business. We implemented a SWAT team mentality with war-room daily meetings for agile sprints to deliver specific predictions in service of key priorities in the regions and in global planning. I don’t think any of us slept between March and August!
While we worked across the regions to tackle some of the hardest challenges during the pandemic, we were also putting in place the building blocks of a Strategy and AI capability: our people, processes, data and technology. In the U.S., we augmented the seed team members, originally part of the Direct-to-Consumer (DTC) team and expanded their scope to support the full spectrum of the region’s priorities and opportunities. This included optimizing retail, omnichannel consumer experience, planning, pricing, assortment, distribution, real estate and more.
In Europe, we recruited the region’s first data scientists, data product managers and data and machine learning experts at LS&Co. Within seven months, we implemented the first applications of AI in pricing, promotion, planning, allocation and assortment in our retail and ecommerce channels, then scaled them across 17 countries. Then, we took what we had developed here in the Americas region and Europe and scaled it to China as quickly as possible. There, we pioneered an AI-powered approach to micro-assortment in stores — which is now becoming standard across the globe.
Did all this work pay off?
Yes. As a result of all this hard work, Strategy and AI is now fully integrated in LS&Co., and this team is now seen as a crucial partner in the company’s strategies to emerge stronger. This is faster than I’ve ever seen this happen in my career. In just one year, we accomplished even more than our already ambitious goals and aspirations. I’m so proud of this team.
You mentioned the team delivers value to the business. How exactly does this show up?
Together with our partners — e.g., in ecommerce, retail, planning, etc. — we set concrete objectives and measure tangible business gains in revenue, cost savings, margin and profit delivered in partnership with the Strategy and AI team.
For example, we created and implemented an actionable simulator that used predictions we had developed during the initial lockdown in China to form recovery strategies, first for Europe and then the U.S. and other countries in Asia. In the U.S., we partnered with the DTC team to create a replenishment app that predicts PC-13 store demand, so we could save costs by improving our store labor productivity. We also automated what used to be cumbersome manual processes. Some examples include determining whether and how to reopen physical stores so they’d be safe and financially viable in the U.S., saving 20 hours of work per week, and implementing weekly forecasts in Europe, saving planners 40 hours per month.
Working closely with the Americas, DTC and Marketing teams, we also helped generate meaningful growth in revenue, enrollments and app registrations with the U.S. Levi’s® Red TabTM Loyalty program. In that case, we developed fuller profiles of our consumers and applied machine learning to predict future purchases and determine personalized offers. As another example, in Europe, we contributed to more product sales at full price as much as possible by delivering a recommendation engine that calculates optimal promotions, taking into consideration factors like product newness, assortment breadth, and variety of discounts along with depth, messaging and other nuances. This contributed to the LS&Co.’s healthy Q3 and Q4 2020 financial margins.
What are you looking forward to in 2021?
I look forward to continuing to build out the Strategy and AI capability with the people, processes, data and technology that are the foundation of our digital transformation. In 2021, we aim to deliver more value and support all countries and functions of the enterprise, infuse data and AI throughout the business, enable new ways of working and continue automating processes, while also digitizing assets.
Digital, data and AI are the essence of how we will win as a company, and all functions and teams throughout the enterprise and the world are a part of that. I am especially excited about upskilling our talent, starting with digital and AI literacy for planners and a machine learning bootcamp to train our employees in all regions and functions — including retail — to become data scientists for LS&Co. Upon graduation, they may join different roles or return to their current roles and each of these paths paves the way to a digital-, data- and AI-powered LS&Co.
We have 167 years worth of data, a powerful brand, a global footprint, a diversity of channels and track record of innovation delivering value and competitive advantage — let’s harness all this together for a digital-, data- and AI-powered LS&Co.!