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Denim News: Denim’s New Direction: Brands, Retailers Feel Pressure on Price

Denim’s New Direction: Brands, Retailers Feel Pressure on Price


Denim's New Direction

Denim proved to be a winning category for retailers throughout the recession and its momentum carried through the holiday season ??” but the warning lights are flashing.

While the better-than-expected sales have been welcome news for brands and retailers alike, December??™s results offered a clear picture of consumers??™ pricing limitations as the new year approaches.

???The reset button has been pressed,??? said Andreas Kurz, former head of Diesel USA and Seven For All Mankind and now president and owner of fashion consultancy Akari Enterprises LLC. ???We are back at the level where we were two years ago, and we have to start over again and with different rules.???

Lawrence Scott, owner of Pittsburgh Jeans Co., has seen the change in his customers. They??™ve continued to buy, but their tolerance levels on pricing have become pronounced and aren??™t likely to change soon.

???Nobody wants ridiculously overpriced jeans,??? said Scott. ???Anything over $300, they??™re really not interested in it right now. Even in the mid-$200 range, you??™re on shaky ground. It??™s going to take a long time to get back to those higher levels.???

And difficult economic conditions may have brought an early end to the vintage and distressed looks seen a year ago.

???I??™ve seen a lot of khaki and cargo looks ??” it??™s going back a little more clean,??? said Candice Gallagher, owner of the Billie Jeans boutique in Cranberry Township, Pa.

Denim's New Direction2Customers are balking at paying upward of $250 for jeans that look worn or have holes in them, said Gallagher, adding: ???I think the manufacturers are seeing that.???

???Customers are always asking if we??™re running promotions and they??™re quick to leave if we aren??™t,??? said Gallagher. ???We??™re relying a lot on my loyal customers.???

That said, shoppers have been drawn to denim leggings, which are generally cheaper.

Scott and Kurz said the holiday season solidified the $100 to $175 price zone as the denim industry??™s clear sweet spot. Kurz noted Joe??™s Jeans shifted its assortment to offer more styles at its opening price point, while Rock & Republic introduced its Recession Collection earlier in the year. New entrants to the market, said Kurz, are going straight to the $150 price point.

???Everyone is trying to cover this price point,??? said Kurz.

During a conference call on Wednesday to preview December comparable-store sales, due out next week, Stifel Nicolaus retail analyst Richard Jaffe offered further warning about consumers??™ mind-sets heading into the new year. Consumers might have salvaged the holiday season, but Jaffe believes they??™re likely to retreat once again and focus on saving. This could make spring particularly challenging for retailers that have already cut their costs and reduced inventories. ???The game??™s gotten much harder for these retailers,??? said Jaffe during the conference call.

Scott is expecting to see similar behavior from customers at his store.

???We??™re playing it safe still. We??™re keeping inventory tight and not keeping the huge inventory levels that we used to,??? he said.

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–Nikki Cho Russo

Posted Dec 04 2009 in Uncategorized

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