The phenomenal growth of the denim wear market over the years is attributed to the fact that denim jeans have become a necessity and wardrobe staple for many across the world, as it has now transcended the boundaries of casual attire and can be worn on social and even official occasions. Over the years, denim has also revealed its capability to overcome age and gender barriers. However, lately it is seeing a slowdown in both the traditional markets of the US and EU, which currently account for 27% of world denim market, more so in the US due to multiple reasons. At the same time a recent research report by Global Information Inc predicts that future growth in the denim wear market will come not from the traditional markets, but from Asian markets, like India and China.
US takes a beating in jeans market from ‘substitutes’…
Ownership of denim jeans reached a peak in 2005-2006 due to the premium denim trend propelled by celebrity endorsements and the robust market; however with recession hitting first the US and now EU markets, the spending power of an average consumer has declined considerably, leading the retailers and brands to restore to cost-cutting measures (thinner fabrics, changes in fibre content, etc.) to meet consumer pockets, resulting in significant performance issues and dissatisfaction among consumers.
Denim consumption is also largely influenced by celebrity styles… Today there has been a deficit of new ideas to keep the market going, which has also resulted in a relative slowdown in growth for the traditional markets. Celebrity fashion in denim has got stuck in the distressed mode and no fresh cult makeover for jeans has been seen in a long time; old ideas are being rehashed in the name of fashion, arresting the momentum of growth. For revival of interest in the denim market a strong fashion icon in denim is the need, supported by an improvement in the buying power of the consumer.
In the meanwhile, another significant development that has hit the denim market is the growing affiliation for other bottom options. Consumers are now looking more towards active wear/sports inspired clothing for comfort dressing, which was previously the niche of denim. In the recently concluded Back-to-School season, there was a noticeable shift from jeans to leggings and tights among girls.
VF Corp, a leader in the denim wear market which has brands like Lee, Wrangler, 7 For All Mankind and Rock & Republic under its umbrella, noted the decline due to continued challenges in the US mid-tier channel and the ongoing unfavourable women’s denim trend. Following the trend closely, Marshal Cohen, Chief Industry Analyst of The NPD Group, feels that the ‘athleisure’ love affair could have a lasting effect. “Trends today don’t come and go, they come and linger. So if the consumer has migrated away from denim, it’s going to be very hard to win them back,” he predicts. In summers, good old casual jeans are threatened by cargo shorts, which are now a staple for all age groups and genders.
Europe registering growth in denim: ShiftS from premium to mass market; Increases volumes…
In Europe, which was always a more high-end market, the focus of jeans has shifted from premium to mass fashion, as consumers struggle to make ends meet, resulting in a healthy recovery for European denim imports in 2013, after a major dip in 2012. According to a recent study “European imports of denim in 2013” conducted by Jean-François Limantour and published by Texworld, EU denim imports registered growth of 4.4% in value and 8.6% in volume in 2013 from the top 10 suppliers, accounting for 497 million pairs. Turkey, Bangladesh and China in almost equal shares, with Bangladesh holding 21%, account for 62% of total imports.
The four markets of US, EU (25 countries), Canada and Japan together imported 1560 million pieces in year 2015. (540 million pieces EU + 480 million pieces US + 398 million pieces Japan + 142 million pieces Canada)
While Turkey is feeding the premium market with average price at ¤ 13.98, Bangladesh and China are dominating the mass market with average prices of ¤ 5.50 and ¤ 4.97, respectively. Interestingly, in 2013 the average price of imported jeans in the EU dropped from ¤ 7.78 in 2012 to ¤ 7.48, a decrease of 3.9%. This clearly signifies the increase in more ‘value for money’ merchandise.
Global growth will come from China and India…
Denim is a favourite topic for market research and many global agencies have predicted a bright future for the category on a global platform. According to the Global Lifestyle Monitor survey, the average number of denim garments owned per global consumer increased nearly 20% in last five years, with the most growth in jeans and skirts.
In terms of proximity, Turkey is to the EU (US $ 1100 million at US% 14.75 UVR) what Mexico is to the US (US $ 950 million at US $ 8.68 UVR). Matching them in value and volume are China and Bangladesh in both the continents…
With the traditional markets slowing down, new pockets of retail growth are emerging. CBRE Global Research & Consulting, a major retail research firm predicts that the Asia-Pacific region will account for just under half of the world’s retail sales in 2016, and amongst the most popular products would be denim wear, predominantly jeans. Even though, the region is among the latest to join the denim craze, the market is fast growing and in India alone the domestic market of denim products is growing at 15% CAGR.
China is another growth market and the upswing in the denim business in China has caused many brands to reinterpret their designs, and marketing strategies as the quintessentially American apparel item takes on a whole new life. Despite movement, industry watchers caution that the Chinese have not yet grasped the West’s obsession with denim and are looking for ‘value for money’ products. The general perception is that while Chinese shoppers have no problem paying thousands for a new handbag, they don’t know why anyone would pay a premium for “workwear items” like denim. Despite the rider, experts share that the concept of dressing in China has changed towards less formal looks and this will bring a rise in the sales of denim and casualwear. Of course, China has many popular local brands and the competition for international brands is going to be cut throat.
Another emerging region with great potential for growth is Africa. According to a recent Economist Intelligence Unit (EIU) report entitled “Africa: Open for Business,” real GDP growth for Sub-Saharan countries Angola, Kenya, Nigeria and South Africa was forecasted to hit 5% a year from 2013 to 2016. A booming middle class of brand conscious and aspirational consumers who show their status through an outward expression of their wealth through the brands that they consume, is projected to be the key driver for growth in this region. According to EIU, the growth in the denim market could be around 3-4% over the next five years. Other potential growth regions are Middle East, Eastern Europe and Latin America, which offer hope for value growth.
