The global recession may have tempered the fires of consumer exuberance when it comes to denim prices.
While denim continues to be a hot seller, the holiday season showed shoppers at specialty chains such as Abercrombie & Fitch, Gap and American Eagle displaying a distinct aversion to jeans priced at more than $100. Brands have taken note, with a flood of labels targeting this latest sweet spot in the market: $80 to $120.
According to market research firm The NPD Group, the women’s denim market had a head of steam built up as it headed into the crucial holiday season. Women’s jeans sales in the U.S. for the 12 months through November rose 8 percent to $8.5 billion compared with sales of $7.8 billion during the same period a year earlier. Despite the increase, the average price women paid for jeans fell 2.6 percent to $23.38 from $24.01. The bulk of sales came at price points of less than $50, according to NPD’s research. In fact, jeans priced at less than $25 saw a 13 percent improvement in sales to $4.1 billion in 2009 compared with a loss of 7 percent for the same period the prior year.
The men’s denim market, however, appears not to have been able to avoid the pains of the economy. According to NPD, men’s jeans sales in the U.S. fell 2 percent to $5.32 billion for the 12 months through November compared with sales of $5.46 billion a year ago. The number of units sold also fell for a second straight year, declining 3 percent to 227.8 million.
Despite demand for lower-priced items, premium players are finding pockets of strength. True Religion continues to post strong sales results, particularly in its own stores. Adriano Goldschmied said his GoldSign label and partner Jerome Dahan’s Citizens of Humanity label are on pace to exceed sales from two years ago, evidence Goldschmied said proves the right product matters more than price.
Shubhankar Ray, global brand director of G-Star, said the denim market was pushed to a “ridiculous price point” for an item of clothing that traces its roots to workwear. Ray said throughout the recession, G-Star did not have to significantly cut prices of its products as many other premium brands did to chase sales. Echoing Goldschmied, Ray said the reason had to do with understanding its product.
“You have to have an understanding of what you believe is the value sensitivity in your product,” said Ray. “You have to map out where that value sensitivity is. If you get this roughly right, you can deal with the macroeconomic factors, because all you’re really doing then is tuning left or right.”