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1. Men’s denim sales have been healthy so far this year…
According to NPD Group data, men’s U.S. denim sales have been surprisingly resilient this year despite the economic storm buffeting retail sales. For the 12 months ended in July ’08, men’s jeanswear sales increased 5.3 percent to $5.42 billion.
Our men’s sales are as strong as ever,” noted an upbeat Steven Birkhold, CEO of Diesel USA. “Our comp-store sales have been up in the mid-double digits in our own stores. We are managing through a difficult economic climate, but we think the fashion customer will continue to buy. But they are focused on what is differentiated in the market. They want products that don’t look like everybody else’s.”
At G-Star, U.S. sales are up 30 percent year-to-date, according to Deepak Gayadin, the Dutch brand’s executive vice-president for North America. “I think the reason we are performing well is our balance between price and quality,” he explained. “I think that is one of the key things this coming season: You have to be innovative in design and competitive in price.”
However, at upscale retailer Bloomingdale’s, which operates 33 apparel stores, men’s fashion director Kevin Harter noted, “After five years of double-digit increases, denim is leveling off, but it’s still a very important business. We’re not seeing those robust increases in men’s denim, but it’s holding its own.”
2. …But the retail climate for 2009 looks uncertain at best.
The onslaught of bad economic news has continued unabated for months, depressing consumer confidence and spending. Last week the stock market dipped below 10,000 for the first time in five years; September same-store sales figures declined precipitously at many retailers; the MasterCard SpendingPulse index declined 7.7 percent for September; and foot traffic in malls fell steeply in the month as well, according to RetailMetrics.
None of this can bode well for denim sales, particularly premium brands. “I hear all the sellers saying business is great, but all the retailers are crying,” pointed out Thomas George, owner of three E Street Denim stores in the Midwest. “So there’s a disconnect there.”
George said he is waiting longer to finalize orders and his feeling is that most retailers are doing the same. Asked if there was any danger of being under-inventoried come spring if the retail climate improves, he almost laughed. “I don’t think there is a retailer in the world who is worried about being oversold,” he said. “If anything, they are trying to get out of orders. That’s why so many jeans are being discounted in stores now. We’re at the point where you can get a pair of True Religions for under $100.”
With stores waiting longer to make orders and placing smaller orders, vendors are being forced to take on more inventory risk, noted Michael Egeck, president of VF Corp.’s contemporary sportswear coalition, which includes 7 For All Mankind.
“Quite clearly we are hearing from our retailers that foot traffic is down and that customers are being much more particular in their purchases. Stores are being very diligent in their inventory management and hyper-focused on what is going to work for them next season. In this uncertain environment there have been fewer preseason orders and more reliance on fill-ins, which shifts inventory from retailers to vendors,” he explained.
3. The credit crunch is impacting small vendors and independent boutiques.
With creditors wary of even the smallest risks, factors have been reducing the amount of orders approved. “Even though my retailers want to buy, my factor is not allowing me to ship 70 to 80 percent of my orders,” said Frank Mechaly, founder of M75 (formerly known as 575). “Credit has gotten much tighter. Only 20 to 30 percent of my orders are being approved.”
At the same time, Mechaly and other independent denim makers find that their own suppliers are hesitant to extend credit as freely as before. “To get my fabric or trim or samples, now my suppliers want prepayment or C.O.D. It’s creating a big problem,” said Mechaly.
At L.A.-based denim brand Kasil, founder David Lim is requiring new customers to pay via credit card, and being more careful with existing accounts. “People are paying slower and trying to hold onto their money,” he noted. “We are all crossing our fingers that things get better.”
4. With consumers cautious, some upscale denim makers are offering less expensive product.
For spring ’09, Italian label Energie is introducing lower-priced product in a collection called Energie DNA, a lineup of the brand’s best-performing fits and washes. Fashion denim will retail for $89 to $139; graphic T’s, $29 to $49; and outerwear, $149 to $249. “This is for the new young contemporary market that wants this price point from a brand with a true street DNA mixed with a sophisticated Italian sensibility,” said Chris Hoffman, VP of sales at Energie.
Fashion-forward Blue Blood is also offering new, more affordable product in an effort to attract budget-conscious consumers. “Other premium labels have entered the market with much more aggressive pricing, and accordingly we have been offering an entry-level product too,” said creative director Steve te Pas.
Likewise, New York’s Spurr is offering jeans at $285 for spring ’09, down from its former starting price point of $325. “It’s an effort to increase distribution and awareness of Spurr,” said designer Simon Spurr. He added that while the brand’s sales have not been impacted in New York, with its well-heeled fashion audience and robust tourist economy, the lower prices should help expand the brand in other cities.
5. Conversely, premium denim makers are creating specialized product at higher price points.
For spring, 7 For All Mankind is introducing a line of super-premium denim, which it has dubbed the 777 Series. Only 777 units of each style will be produced, and they will be sold in specialty stores, with retail prices ranging from the high $200’s to the mid $300’s. “We see the market bifurcating, with some consumers looking for basic product at a value and others looking for truly innovative product and that special purchase,” said Michael Egeck. Despite the economic conditions, 777 has been very well received and it allows us to have very specialized product for our best stores.”
Similarly, while 80 percent of customers buy jeans from $150 to $180 at G-Star, the brand is offering a line called Raw Listing that features loose-fit, Japanese selvedge denim, priced from $230 to $280.
At Bloomingdale’s, men’s fashion director Kevin Harter hasn’t seen price deflation yet in denim. “I don’t see our customer trading down in price. They want fashion and newness and that new cool jean. Our sweet spot is still $175 to $250,” he noted. New brands that Bloomingdale’s is bringing in for spring include Raf by Raf Simons, Pratt, Denim & Thread and Blue Blood.
6. With margins tight, denim vendors are cutting costs.
At Kasil, founder David Lim is increasing the amount of American denim in his collection, and cutting back on the use of pricey Japanese and Italian denim, which are impacted by the unfavorable exchange rate. Currently only about 20 percent of Kasil’s production run is in American denim, but for fall ’09 Lim expects that figure to be 60 percent. “We saw some great stuff from U.S. mills like Cone at the last Kingpins trade show,” he noted. “And the prices will help us create better margins for our retailers.”
At M75, Frank Mechaly has stopped doing his own cutting, sewing and washing, choosing instead to outsource those functions to an independent contractor. “It allows me to control my costs much more effectively,” he explained. “I know exactly what my jeans will cost now.” It took a while to get the desired quality, he added, but the move allowed M75 to reduce its wholesale prices to a range of $60 to $90, down from $90 to $110.
7. Looser fits are back in style.
With the return of vintage washes, holes and abrading to directional denim lines, looser fits are also making a comeback, after a few seasons of skinny silhouettes. “Those vintage styles tend to look better with a looser fit rather than a skinny fit,” said Sean Hornbeak, director of men’s at J Brand. “I think we are moving back to a more masculine look. It’s how Brad Pitt or David Beckham would wear their jeans—a regular-fit jean maybe a size or two bigger, worn with a belt or letting it hang. I think people are realizing that only very skinny people should wear skinny jeans.”
Added Spurr’s Simon Spurr: “I think the early adaptors are moving on from the skinny leg. We’ve been in that trend for a while, and now that Middle America is adopting it, the fashion mavens are moving on.”
For those skinny-jeans enthusiasts who can’t imagine themselves in any other silhouette, remember that all trends go out of vogue. “The last time we had the very skinny silhouette, in the ’60s, it gave way to the bell-bottoms of the ’70s,” Spurr pointed out.
Blue Blood’s Steve te Pas also sees a movement toward anti-fits. “The skinny silhouette is still most modern, yet those who are the trainspotters are now after a more cultivated outline,” he said. “The carrot fit is subtly emerging as an influence, but a lot softer than its initial styling. Dropped crotches, a lengthening of pockets, and pleats are all apparent amongst the cognoscenti.”
The looser silhouette can also be attributed in part to the women’s market, where celebrities have been sighted wearing slouchy “boyfriend” jeans—and where the women’s market goes, so goes the men’s market eventually, noted observers.
“I saw Heidi Klum wearing our men’s Arc jean and she looked amazing,” said G-Star’s Deepak Gayadin.
8. Intense vintage washes and novelty styles are gaining in popularity, even as clean, classic jeans remain a staple in wardrobes.
As in fits, with skinny, straight and even boot-cuts all appealing to different customers simultaneously, a wide range of competing washes and finishing treatments are being pushed by directional brands.
“Men are wearing jeans 24/7 now, so different styles are all appropriate to the same guy,” said E Street Denim’s Thomas George. “One day he’ll wear a skinny, clean pair of jeans with a tight T-shirt and great sneakers. The next, he’ll wear a loose, vintage wash with a flannel shirt and jean jacket. Then at work he’ll wear a softly used medium wash with a tailored vest and a mandarin-collar shirt,” said George, who clearly has a second career waiting for him as a stylist.
However, George also pointed out that heavily worked jeans tend to be more appropriate to the men’s market—and those kinds of vintage washes and repaired styles are doing best in his stores, despite the higher prices. “The better-grade product is selling better in men’s than in women’s,” he said, pointing to Prps, Double RL and AG Adriano Goldschmied as some of his best performers.
“I think there are two trends going on simultaneously, with guys looking to staple brands like A.P.C. and Spurr for clean, dressy denim. But on the flip side those guys are looking for novelty and interesting pieces for different occasions,” said Spurr. “So we’ve done some turquoise jeans and a bleached-out jean, which is very splotchy and identifiable.”
At Diesel, the repaired and destroyed look never really went out of style, and for spring it is offering the Bastonati style, which in Italian translates into “to beat the living daylights out of”—providing a pretty clear picture of the jeans. They retail from $220 to $380.
Colored denim and tuxedo styles are a selling point at Ben Sherman for spring. “There is a shift in the market toward more-formal styling, but we’ve prepared for this with sharp coated fabrics and trouser styling,” noted Kelly Dawson, senior denim designer at Ben Sherman, highlighting a coated tuxedo style in gray broken twill.
In a technology-based innovation, Kasil is introducing a $189, water-resistant jean in stores this holiday season, using a proprietary wash treatment. “The important thing is that the treatment keeps the denim breathable and soft. It looks like a regular pair of jeans, but spills will bead up and slide right off,” explained company founder David Lim. “It’s great for going out or places like Portland, where it rains a lot.”