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Denim by the Numbers

Whether it be bright shades or premium prices, there are indeed hot pockets in the category.

Denim’s got its groove back.

After floundering in the aftermath of the recession — more so than even in the midst of it — women’s jeans availed themselves of a rainbow of colors to hold consumers’ interest and help them justify additional purchases despite the abundance of denim already in their closets.

The color movement remains strong, with stores and brands embracing it somewhat more selectively than in the last few years, and the premium and fashion portions of the market are moving forward with a menu of new and not-so-new ideas, from coatings and prints to new takes on more traditional indigo.

With continued growth of premium jeans exerting upward pressure on prices and even mass- and midtier-market seeing prices lifted by higher cotton and distribution costs in the past year, it’s hardly surprising that sales and the average price of women’s jeans went up even as units contracted.

In the 12 months ended in August, sales of women’s jeans rose 7.4 percent to $8 billion from $7.45 billion in the prior year while units declined to 301.3 million from 310.4 million during the same time span, according to research from The NPD Group. That set the average price for a pair of women’s jeans at $26.57, a full 10.7 percent higher than in the 2010-11 period.

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While jeans priced below $25 underwent a sales decline of 10.6 percent, to $2.8 billion from $3.13 billion, the three higher price categories tracked by NPD registered increases, and none stronger than the 44.4 percent rise in jeans priced at $75 and up, which hit $939.5 million from $650.7 million. The $25-to-$49.99 stratum was up 16.8 percent, to $3.17 billion, and the $50-to-$74.99 category nearly as much — 14.4 percent to $1.09 billion.

“We’ve elasticized the jeans business, just like gasoline,” said Marshal Cohen, NPD’s chief industry analyst. “There may be a smaller market for premium, but people no longer balk at $75 for a pair of jeans. Consumers have bought into the idea that a great pair of jeans is worth the extra money.”

What consumers certainly won’t accept, he noted, is adding to their personal inventories of jeans already represented. So color, which many considered the savior of the denim market in recent years, is no longer the unlimited opportunity it once seemed to be, but instead has served to teach the market a lesson — if you create it, they will come.

“To me, the biggest change is the acceptance of multiple trends at the same time,” Cohen added. “We see different finishes, a move back to blue, prints, coatings, even multiple silhouettes and interest in sustainable and recycled fabrics and models. Denim for the first time in almost a decade had a bit of a challenging period, but a lot of that had to do with other categories catching up.”

Viewed in the context of overall women’s apparel, denim bottoms saw their share of units hold steady in the 12 months ended in August compared to the prior year, at 4.1 percent, while its share of dollars transacted rose to 7.4 percent from 7.1 percent. And denim continued to provide the marketplace with a degree of price insulation — the average price of a pair of jeans was 81.7 percent above the average for women’s wear, up from the 73.6 percent edge enjoyed in the 2010-11 period.

SPECIALTY SURGES AGAIN

With specialty stores strongly focused on denim and many denim vendors starting or rapidly expanding their own retail networks, online and off, specialty stores continued to build on their already commanding market share in the women’s jeans business. Specialty store jeans sales in the September-to-August period rose 15.7 percent to $3.46 billion and their share of the women’s jeans business consequently was elevated to 43.3 percent of dollar volume from 40.2 percent. Market share was flat or down for every other channel of distribution, with the sole exception of department stores, which saw sales rise 8.7 percent, to $1.34 billion, while share moved to 16.7 percent of dollars from 16.5 percent.

The biggest decline in channel sales came from national chains, as J.C. Penney Co. Inc. struggled during the early stages of its transformation, while Kohl’s Corp. dealt with tepid sales generally linked to customers’ lingering economic concerns. Sales at the national chains declined 4 percent, to $1.02 billion, as share declined to 12.7 percent from 14.2 percent.

“With the exception of online, specialty is growing at a better rate than other channels in fashion,” said Cohen. “They’re no longer looking for the widest assortment; they’re looking for the best assortment. A lot of the brands have opened up their own retail and they’re cultivating customers who are brand loyal, both online and in the stores. And the move of brands into retail is more prevalent in denim than anywhere else.”

UNIFORM APPEAL

Among the vendors beginning to make the shift into retail is Silver Jeans Co., which in May disclosed plans for a network of up to 50 stores in the next decade. Michael Silver, chief executive officer of the Winnipeg, Canada-based company, said he expects color to enjoy continued strength moving into spring 2013, although he sees it moving more towards nonjeans silhouettes such as shorts, skirts and capris and other midlength leg styles.

“In indigo and any of the colors people are talking about, one of the constants for us is surface interest,” he said. “We’re printing on color and doing color prints, doing weathered and ombré looks, but we’re also seeing strength in darker denim jeans and some less overt pocket designs.”

Like many companies known for their jeans, from premium to budget, Silver is experiencing strong growth not only in its nonjeans bottoms but also in tops. The ceo said that about half the company’s product offering is now in various tops, with the greatest growth coming in jean jackets and vests in what’s seen as something of a return to the idea of a denim uniform.

“It’s not that far beyond Woodstock, really,” he said. “The market is coming back to that kind of feeling and look in denim — open to all kinds of ideas and treatments. At the same time, it’s a fairly traditional look based on where this market has been.”

In addition to jeans companies that are new to the denim dance, various fashion brands with established contemporary and designer businesses are moving towards the fabric and its various lifestyle expressions, as well as the opportunity it provides for incremental sales gains. In reporting strong third-quarter results that were led by its stable of denim brands, The Jones Group Inc. also lauded the progress of the Jones Jeanswear assortment.

“We continue to believe that denim is a great way to encourage a complete look for the Jones New York brand,” said Richard Dickson, president and ceo of Jones’ branded businesses. “So it’s not just about denim, but it’s what goes with denim. And again not getting too far down the road, but it also speaks to the evolving workplace. Denim is not just sort of a casual lifestyle aspect of our consumer’s life.”

Andreas Kurz, president of Akari Enterprises LLC, which provides consulting services to a number of fashion companies, feels that color has had its day. “It’s been everywhere and at every price point, and now we’re seeing emphasis on surface interest and prints,” he said. “When you’ve seen the prints and novelties, the next part of the cycle is that things will get blander again — away from prints and into denim again.”

He noted that there’s been a “sharp incline” to interest in environmentally responsible denim, whether involving recycled yarns, such as Tencel, or organic components and fabrics.

“It’s kind of happening behind the scenes, but there’s growing interest among brands and consumers,” Kurz said. “The brands don’t want to advertise it and, while the consumer’s interested, she isn’t necessarily willing to pay for it. It’s not exactly at the point that organic food is.”