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Denim: By the Numbers

A wide and growing range of jeans options is accelerating denim’s retail growth.

From true blue to rich in hue, denim’s delicate balance of styles and price points is clearly working in its favor.

Authentic indigo is gaining traction, even as color, while hardly the dominant story it was a year or even six months ago, continues to provide pop at popular prices. At a wide range of price points, there’s still plenty of room for novelty in areas such as distressed looks, coated finishes, prints and unusual zipper, pocket and hardware embellishment.

 

The novelties might not add up to large volume, but they’re the final piece in a denim market that is enjoying double-digit growth at retail, as women of all ages and incomes participate in a jeans cycle that not only refuses to die but actually shows signs of gaining steam.

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In the 12 months through February, women’s jeans sales in the U.S. enjoyed one of their strongest surges in recent history, growing 12.3 percent to $8.84 billion from $7.87 billion in the prior one-year period, according to data processed from consumers by The NPD Group of Port Washington, N.Y. Impressive on its own merits, that growth is more than triple the growth rate for women’s apparel overall during the same period, as the larger category experienced an increase of 4 percent to expand to $112.84 billion.

Denim’s growing importance in the women’s wear universe is also borne out by trends in units and pricing. Women’s apparel units ticked down 0.2 percent overall in the 12 months ended Feb. 28, to 7.93 billion, as jeans units moved strongly in the opposite direction, growing 5.2 percent to 334 million.

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Those trends lifted jeans’ share of overall women’s apparel dollars to 7.8 percent from 7.3 percent and saw the average price of a pair of jeans, a reflection of consistent demand, as well as residual increases in the cost of cotton and other commodities, rise 6.8 percent to $26.48.

“I always say that denim is the one thing that people are willing to buy if their size changes, whether they’ve gained weight or lost it,” said Marshal Cohen, chief industry analyst for NPD. “There’s movement in the premium market, and there’s been growing stability in the overall economy. We’re entering a ‘need’ cycle. Consumers may have worn their jeans out, or they may have had a size change.”

 

At all price points and in all categories of merchandise in postrecession America, however, Cohen sees one mark of consistency: “Whatever the price, it’s about maintaining the integrity of the brand, giving value in the attributes of the product and making it easily understandable so the consumer can recognize that value. You really have to be able to justify why the product costs what it does, whether you’re talking about jeans or electronics.”

PRICING IT RIGHT

NPD’s numbers show a greater willingness to pay more for fashion. In a reversal of the historic trend, jeans priced less than $25 accounted for a smaller share of dollar sales — 35.6 percent — than those selling for $25 to $49.99, which accounted for a dominant 40.1 percent of volume in the February study. Those places were reversed in the prior-year analysis, when the lower-priced jeans generated 38.8 percent of volume and the next price level accounted for 38 percent.

The premium and sub-premium price zones, however, showed the fastest growth, as jeans priced at $75 and up had a sales increase of 20.3 percent, to $948.2 million, and an expansion in share of total sales to 10.7 percent from 10 percent in the earlier study. The second-largest increase by price tier came from the $25 to $49.99 stratum, up 18.6 percent to $3.54 billion, followed by the $50 to $74.99 layer, which was up 15.3 percent to $1.2 billion, translating into a 13.6 percent share. By contrast, the under $25 category was up 3.2 percent.

Analyst Janet Kloppenburg, president of JJK Research, notes that different players are having success at different points along the price spectrum, singling out American Eagle Outfitters at under $50 and Express at over $50.

“A lot of people are doing OK at $75 to $110 retail, but above that, it gets tough and the air thins out,” she told WWD. “There are niche players in the premium business who are also doing very well — J Brand, Rag & Bone and AG are just a few which are selling well — but, again, people aren’t just throwing down $300 for something they already own.”

She endorsed Guess Inc.’s recent move to balance its jeans pricing to put more emphasis on jeans in the $75 to $95 price range and less on those at above $100, as had been the trend in recent seasons.

“We realize that we have excluded the youngest version of the Guess girl, who is more price conscious than ever,” Paul Marciano, chief executive officer of Guess, said during the company’s first-quarter conference call last month.

Russell Bowers, vice president and chief financial officer of North American Retail for Guess, told a recent investor conference, “Our initial price had gone up about 15 percent, 16 percent over the last two years. And so, in the fall, we’re going to roll back roughly half of that by buying deeper in the entry-level price point categories primarily….So for denim, it’s going to start at $79 where we were starting at $89 in the past and really only had one or two [stockkeeping units] at $89.”

The company said it would communicate the change in price subtly, through social media and through its loyalty program, for instance, to ensure the adjustment doesn’t compromise its brand integrity.

Kloppenburg noted, “They’re coming down from a high, but it’s certainly the right thing for Guess to do. It will give them more visibility and access to a broader audience.”

SHARING IN THE WEALTH

NPD’s data showed a continuing shift of market share to specialty stores in the most recent study and for the first time broke out numbers for manufacturer-owned stores, an important component of Guess’ business, as well as those of several premium and sub-premium players, that appears to only be getting larger.

Specialty stores’ share of jeans sales is slowly moving toward the 50 percent mark, ending the February 12-month period at 42.3 percent, up from 40 percent, with the 2.3 point pickup the largest of any channel covered.

Manufacturer-owned stores accounted for 4.4 percent of women’s jeans sales, up from 3.7 percent in the prior-year analysis and, at 0.7 points, the second-largest jump among the channels. Previously, data from vendors’ stores were included as part of the specialty store group.

Department stores had a 0.6-point pickup in women’s jeans dollar share, while all other channels except the flat warehouse club category — national chains, mass merchants, off-price retailers, direct mail/e-commerce pure plays and “other” — saw their shares decline.

“The lower-end retailers appear to be low on inventory,” NPD’s Cohen said. “They’ve been cutting back on commodities and they’re low on basic jeans. I think there’s an opportunity there, especially as the higher-end jeans market shows signs of gaining more traction.”