Levi's: Striking the Balance Between Authenticity and Innovation

July 6, 2010— -- Ever wonder about the product your great grandma may have been desperately begging her parents to buy her as a teenager? Though it may surprise you, it could just well have been the Levi's blue jean, invented by old man Levi Strauss himself in 1873.

When we think of products that are synonymous with the brand names they're sold under, Campbell's soup and Heinz ketchup come to mind. But Levi's and blue jeans have gone hand in hand for generations -- and they continue to do so to this day.

At the headquarters of the Levi's empire in San Francisco, the clothing company remains dedicated to preserving and remembering its storied history.

Lynn Downey, Levi's archivist and historian, showed "Nightline" the oldest known pair of jeans in existence. The jeans are wrapped in an unbleached pure cotton fabric and kept in a fireproof safe behind two very high security locked doors.

"They're worth about $150,000, but to me they're priceless," Downey said.

Although those jeans are about 130 years old, they still have the same traditional Levi's characteristics.

"All of these things you see in the jeans, this is the 501; it's the template for everything that came after," she said. "501 jeans were made for laboring men. They were the original American work wear and everything, all these jeans, they all started off as work wear, I always say. They started that way and they're still working because we're a real working archive."

Can you guess which era each pair of jeans is from? CLICK HERE

From the start, the whole point of Levi's has been to offer raw practicality: give the American man, and woman, a pair of multipurpose jeans they can feel comfortable wearing.

Their strategy has been a winner, and even in today's sour economy, Levi's profits are climbing -- from just over $48 million in February 2009 to more than $56 million in February of this year. The company is also pressing ahead with opening its own retail stores nationwide.

"I think to constantly interact with our consumers and to build our brand experience, there's no better way to do that than having your own retail prices," said John Anderson, chief executive officer of Levi Strauss & Co. "It is risky. It's a different business model. What we've learned is operating at wholesale is very different from operating in retail."

Exploring the World of Retail

"Nightline" visited the Levi's plant, where much of the process of making jeans is still done by hand. Here, they're also trying to make this idea of a Levi's retail chain a successful reality.

On an upper floor of the San Francisco headquarters is a make-believe Levi's store -- a lab to determine how to display the goods and how the customers will react.

Robert Hanson, president of Levi Strauss Americas, said it's important to make the customers a part of their trials on how to go further with the retail idea. "They challenge us to get our mind's outside the company," he said

Aside from a make-believe Levi's store, their headquarters include a fabric library, containing more than 5,000 samples from 60 countries.

"We've also got about 2,000 books on the different trims, the zipper suppliers, the threads, button suppliers," said Amy Leonard, a senior vice president responsible for production.

But the challenge of putting all of these colors and fabrics together to create a successful product while at the same time staying true to their traditional past remains. With certain pairs of jeans running customers upwards of $250 nowadays, some may question if Levi's has lost its way by going the way of their more upscale competitors.

But according to Hanson, it's all meant both to keep in touch with the past and still feel fresh in the current world of fashion.

"We think it's liberating actually to work from the truth of what the brand is," he said. "It's a wonderful challenge that we take on every day because fundamentally what we need to do is show up authentically. We're a high quality, perfectly crafted brand that has for 137 years put out beautifully crafted products. But if we don't innovate from that truth, we won't be relevant in the next generation."