In a recession that has rattled the foundations of the apparel and retail industries, the case for denim has never been stronger.
At this time a year ago, brands and retailers were seeing threats to consumer spending on a number of fronts. As the presidential election entered the homestretch, foreclosure rates continued to rise and the national average for a gallon of gas was speeding toward $4. Consumer spending was already being constrained, but no one foresaw the string of global economic collapse, rising unemployment and retail bankruptcies to follow. Despite this, consumers have kept spending on denim. The value proposition for those who follow and work in the industry is simple: jeans can be worn in a variety of social situations and have one of the longest life spans of any apparel item.
Data from market research firm The NPD Group shows that the women’s denim industry achieved what few other apparel segments could over the last year — it grew. U.S. women’s jeans sales in the channels tracked by NPD totaled $8.03 billion for the 12 months through March 31, a 4.6 percent increase over the $7.68 billion reported in the same period a year ago. The number of jeans sold also increased, rising 6.4 percent to $342.6 million from $322.1 million. In comparison, sales of women’s sportswear fell 3.1 percent to $72.51 billion from $74.81 billion.
“I think what we’re beginning to see is that denim has a life of its own,” said Marshal Cohen, NPD’s chief industry analyst. “I don’t want to say recession-proof, but it was able to maintain whatever growth it had.”
The industry wasn’t impervious to the withering economy, showing notable shifts in where consumers shopped and how much they were willing to spend. According to NPD, the average price women paid for jeans declined 1.6 percent to $23.44 from $23.83 last year. The largest price segment of the market was represented at $20 to $29.99, where sales rose 6.9 percent to $2.34 billion from $2.06 billion. Although still the smallest price segment, jeans retailing under $10 posted the biggest gains, spiking 36.4 percent to $278.4 million from $204.1 million.
Specialty stores remain the channel of choice among consumers by a wide margin. However, consumers were on the hunt for bargains. Outlet sales vaulted nearly 50 percent to $101.3 million from $69 million. Consumers also likely took advantage of heavy discounting at department stores, which saw an almost 10 percent gain in sales to $1.3 billion.
EMBRACING THE NEW REALITY
While the industry has proven its ability to weather the worst of storms, there is little expectation of a quick return to the boom times of 2001 to 2006, which brought a rise for names like Seven For All Mankind and True Religion. The U.S. economy, in particular, has taken a pounding from which it will take years to recover. According to the U.S. Department of Labor, the nation’s unemployment rate rose to 8.9 percent in April. Since the recession started in December 2007, more than 5.7 million jobs have been lost and the number of unemployed Americans has reached 13.7 million.
The nation’s retailers responded to the crisis first by slashing orders and then culling their own workforces. Department stores employed 1.5 million people as of April, a decline of 58,000, or 3.7 percent, from April 2008. Specialty stores had 1.4 million people on the payroll in April, having cut 61,000 jobs, or 4.1 percent, from a year ago. An untold number of independent boutiques have shuttered. Those that have managed to stay open are having significant difficulty obtaining credit.
Making progress in this environment will require brands to exceed consumers’ expectations on price and perceived value. They’ll also have to adjust their own measures as to what qualifies as success.
“Our outlook is that this is the new reality and that we have to be successful within this environment, which means providing value and good product,” said Andrew Olah, chief executive officer of Olah Inc., a U.S. agent for foreign contract manufacturers and textile and hardware vendors targeting denim designers.
Olah believes brands and retailers must provide customers with a reason to buy, more so than ever before. Doing so will require being able to clearly communicate what the enhanced value of the product is. Those that can’t craft that message and deliver it simply won’t make it.
“There’s a lot of opportunity because there’s a lot of jeans being sold,” said Olah. “The issue is why would someone buy them from you. You really have to think about that.”
“If you’re not used to it being bad right now, well it’s not going to be good for a long time,” said Lawrence Scott, owner of Pittsburgh Jeans Co. Scott said great sales days this year would have been considered normal days a year or two ago. He’s found his denim business has settled solidly in the $160 to $198 range. Anything with a retail price point approaching $300 he won’t even consider anymore. That said, Scott said he’s also had little luck with brands that retail below $100.
Boutiques like Scott’s have been the beneficiaries of brands recognizing the need to go the extra mile in today’s environment. Over the last several months, brand reps from labels like Paige Premium Denim, William Rast and Genetic have made the trip to Pittsburgh to host special events at Pittsburgh Jeans Co.
“[The brands] are more willing to do it now,” said Scott. “And, you know, I never asked before. I really have not had anyone turn me down.”
Andreas Kurz, former head of Diesel USA and Seven For All Mankind and now president and owner of fashion consultancy Akari Enterprises LLC, anticipates it will take more than one or two seasons to see a significant surge in denim.
“If they grow single digits, they will be happy and they should be happy,” he said.
Kurz doesn’t see great resistance to high prices. However, consumers that may have purchased two higher-cost jeans are now more likely to only buy one.
NPD’s Cohen also believes denim will have a difficult time regaining its momentum. He anticipates there being more pent-up demand in other product categories like footwear and handbags.
“I expect to see a slight increase in the lower end of the denim market, a slight increase in the upper end and gradual growth in the middle,” said Cohen.
The economic downturn may have been most sharply felt in the premium arena. According to a report put out by NPD in April, sales of women’s jeans priced more than $100 were up 16 percent in 2008 compared with 2007. It’s one of those eye-popping numbers that has spurred hundreds of new brands to flood the market (For more on the latest entrants, see page 14). Still, those numbers miss much of the pain experienced over the last six months.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews