Yet somehow, the super-premium jeans market — dungarees priced $100 and up — has held up well. Executives at high-end lines such as Diesel and Earl Jean said their sales are still trucking along and the intense consumer interest in fashion denim continues to attract new entrants to the category.
While the segment is but a sliver of the overall jeans business, it is growing and has commanded much attention.
According to Port Washington, N.Y.-based NPD Group, jeans priced $100 and up added market share through the first nine months of 2001, representing 2.4 percent of all adult jeans sales in dollars, compared with 1.7 percent in the same period in 2000.
Within that high-price range, it’s been the priciest jeans that have gained the most ground. Jeans $150 and up were responsible for the market share growth and those whose price tags top $200 went from a 0.2 percent chip of the market to 0.8 percent.
Growth at the high end of the market has come at the expense of the status- price tier. Overall, jeans priced between $50 and $74.99 slipped from 11.2 percent of the market to 7.2 percent. Those in the $75 to $99.99 range rose from 1.9 percent to 2.5 percent.
The mass segment of the market saw the greatest growth, with all jeans priced less than $49.99 rising from an already dominant 85.2 percent of the market to 87.8 percent.
High-end vendors and retailers are divided over what the continuing recession will mean for their piece of the jeans market over the months ahead. Most acknowledge that the business is likely to get tougher, as consumers ask themselves whether it’s necessary to shell out $120 for the perfect pair of jeans when an acceptable pair can be had for half that or less.
Others feel that the high-end jeans market has established itself as a valid-yet-affordable luxury category over the past few years, and contend that, as long as the denim fashion cycle continues, there will be business to be had.
For the vendors that have made this rarefied business their stronghold, the reaction is almost one of reservation. If demand drops, they said, they’ll ride it out rather than try to cut prices and risk diluting their prestige.
Thomas George, owner of the E Street Denim boutique in the Highland Park, Ill., a suburb of Chicago, said it will be a challenge to sell high-priced jeans if the recession continues.
“I don’t think the customer feels the jeans are really worth it when they can see the quality of the brands that are established at sometimes half what others are selling for,” he said. “There’s a lot of people that have jeans in the $80 to $85 range that are every bit as good. It just depends on what the hype is.”
Still, George said he’ll continue to stock “tons” of jeans priced upward of $100, from brands including Seven, Miss Sixty, Diesel and Earl, counting on their marketing and design savvy.
“Most of the stuff is hype and smoke and mirrors,” he said.
However, George added that he’ll be a little more cautious about bringing on new high-end lines in the year ahead.
“No longer can anybody that has a name jump in and slap jeans together to retail at $120 plus,” he said. “I don’t think you can do that anymore.”
Colleen Sherin, market director at Saks Fifth Avenue, said she believes her chain’s well-off shoppers will keep buying premium jeans, partly because “expensive” means something different to them.
“That customer will still be the one who will go out and want the hottest pair of jeans to replace the pair that were hottest six months ago,” she said. “At the $100 to $150 price point, there isn’t that resistance. It might be different at the $500 to $600 range.”
She suggested that vendors could offer more value, particularly in jeans that cost substantially more than $100.
“Maybe they could offer more of a customized fit,” she said. “Levi’s has done that. It could be interesting to see some of the denim manufacturers at that price point doing something to be more customized and individual. Then the customer does feel like they’re making an investment and getting something made specially for them.”
Sharon Segal, owner of the Sharon Segal at Fred Segal boutique in Santa Monica, Calif., said exclusivity is the most important value in the $100 and up jeans market.
“Our customers come in and want to know they will be one of the only people in Los Angeles with those jeans,” she said.
At suppliers that have carved out the high end as their niche, executives said there’s little to do but just ride out any market slowdown.
Andreas Kurz, chief executive officer of New York-based Diesel USA Inc., said the company is lowering its sales forecasts for next year, but sees no reason to change its price strategy.
“This time, it seems like the high end is hit more than the low end,” he said of the current recession. “Short term, people may divert their spending into other things. However, we don’t see this to be a permanent change in consumer behavior. It will be tougher, however, for brands that don’t have a strong identity, and the entry barrier for new brands is very high, as retailers are not in the mood for experimenting and would rather bank on what has been working for them.”
He said there’s little that Diesel can do to react to a drop-off in spending on pricy jeans, save work to make its jeans, which wholesale from about $50 to as high as $150, more appealing.
“Many people, when they have a crisis, their immediate reaction is to go back to the safe thing, but that’s a short-term solution. The real way out of any crisis is innovation,” he said. “If the innovation is there, we can sell it. I don’t want to say at any price, but at this point, it is not an obstacle.”
Similarly, at Los Angeles-based Earl Jean Inc., president Joe Krafka said the company can’t do anything to jeopardize the identity of its jeans, which wholesale for $48 to around $60.
“It’s not necessarily a business model that you’re constantly chasing yourself,” he said. “You’re not putting yourself in this repetitive cycle.”
At up-and-coming brands, though, there’s a wariness about getting too focused on super-premium jeans.
“The jeans we sell, that’s our trademark, but we are not banking on our jeans business to bring us along,” said Sam Lugiano, a partner at New York’s DDC-Lab, which is trying to develop its wholesale business. “We’re going to really focus on fashion and the designer sportswear part of our business. We really plan to expand the line into other things than denim and not rely on the jeans.”
DDC-Lab’s wholesale prices range from $60 to $100.
Some in the high-end market believe the psychology of the rich has a more important effect on their business than actual economic forces.
“We’re offering very innovative and new things to a part of the market where, basically, the only thing that makes them suffer is boredom,” said Sal Parasuco of St. Laurent, Quebec-based Parasuco Jeans Co. “That also makes them spend.”