Consumers at all price levels have kept the jeans category hopping.

There appear to be signs that the denim craze is waning, but just barely.

Denim has been a key sales driver in almost every consumer channel for a number of years, thanks to explosive growth of premium brands over the last six years. The desire for premium looks has worked its way through the denim food chain. However, sales of premium brands, while still strong, have slowed their growth rate in recent months and some industry observers see things cooling off heading into the crucial back-to-school season.

Still, 74 percent of those surveyed in 2006 said they had bought jeans so far this year, down slightly from 76 percent in 2005.

Department stores are the channel of choice for purchasing denim, according to respondents asked to pick up to five stores where they regularly shop for the category. The share of shoppers heading to department stores for jeans rose five points this year, to 58 percent from 53 percent. The biggest winner was J.C. Penney, which gained three points to top the list at 27 percent. Kohl’s saw the biggest improvement — four points — to 24 percent, while Macy’s saw a 2 percent rise to 11 percent.

Buying remained strong at specialty stores as well; overall, the segment improved four points to 52 percent. The two most popular specialty stores for denim, Old Navy and Gap, did not have gains. In fact, Old Navy kept its top spot with 21 percent of respondents saying they shopped there, but this was unchanged from last year. Gap lost ground from 2005, falling one point to 17 percent.

Retailers are expecting a slow summer for mall-based department and specialty stores, and rising energy prices have continued to be a concern. Lauren Cooks Levitan, a retail analyst with Cowen and Co., recently dismissed the idea that rising prices would have a dramatic impact on back-to-school sales.

“While concerns related to consumer spending and rising interest rates have spurred a sell-off…we continue to believe that these issues will have limited impact on the middle- and higher-income consumers targeted by specialty retailers,” said Levitan in a July 5 report.

This story first appeared in the July 10, 2006 issue of WWD. Subscribe Today.

Eric Beder of Brean Murray, Carret & Co. believes the pace of spending will pick up heading into the end of the summer as new fashion trends stir excitement. This should have a direct impact on denim sales as kids pick up new styles for the first day of school.

“Right now, it is definitely a buyer’s market in the mall,” said Beder in a June 27 report. “We do not expect the cadence of discounting to begin to slow until the beginning of July, with August the heart of the back-to-school selling season and the beginning of fall, which we believe will be significantly more exciting than the dreary spring selling season.”

Discounters fared poorly this year. Only 41 percent of respondents said they bought jeans at a discounter, a decline of 3 percent. Wal-Mart was the top discounter with 30 percent, a decline of two points. Target was the second-place finisher, holding steady at 20 percent, while Kmart came in a distant third, losing a point to come in at 8 percent.

The power of Wal-Mart and its ability to hold consumers should never be underestimated, however. When asked to name the one store where they most often shop for jeans, respondents put Wal-Mart on top with 16 percent

Top five stores when asked: What is the one store you shop most often for jeans?

  1. Wal-Mart 16%
  2. Kohl’s 11
  3. J.C. Penney 10
  4. Old Navy 7
  5. Gap 7
74 percent said they bought jeans in the past year compared with 76 percent in 2005.
Where do you shop for jeans regularly? (pick up to five)
Dept. Stores 58% 53% +5%
J.C. Penney 27 24 +3
Kohl’s 24 19 +4
Macy’s 11 9 +2
Sears 8 11 -3
Dillard’s 8 8
Specialty Stores 52 48 +4
Old Navy 21 21
Gap 17 18 -1
Lane Bryant   6 +1
American Eagle 6 6
Aéropostale 5 3 +2
Discounters 41 44 -3
Wal-Mart 30 32 -2
Target 20 20
Kmart 8 9 -1
Warehouse clubs 4 4
Catalogues 6 5 +1
TV 1 1
Other stores 24 27 -3
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