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A denim dust-up

Premium denim brands are investing in new product and strategies as they battle to differentiate themselves from the high street’s own-label offers which are gaining market share in the UK

The total value of the under-35s denim market fell back by 15% to £297.3 million over the 24 weeks to April 26, according to retail research firm TNS Worldpanel Fashion. Within that, sales of men’s jeans shrank 7% to £127.1m and women’s jeans dipped a huge 20% to £170.2m.

The drop in sales was most dramatic in the branded sector, with men’s branded denim sales down 30% on the previous year and women’s down 29%. These startling statistics have forced premium brands to re-evaluate strategies and bring in new blood to prevent sales being washed out by the recession and own-label offers on the high street. Sales by value of retailers’ own-label men’s jeans on the high street rose 19%, tipping the balance towards own label in the past year, with 59% of men’s denim sales now coming from retailer’s own offers. However, sales of women’s own-label jeans declined 19% over the period.

Sales volumes of men’s jeans remained flat at 5.1 million, but women’s fell by nearly 2 million pairs to 8.8 million.

Tough competition

This is partly because the category has fallen out of fashion in favour of dresses, but also women are hanging on to their old jeans for longer, replacing items on a must rather than a want basis.
For brands operating in the denim sector, these are worrying trends that seem to go above and beyond just the effects of the recession. High street retailers such as Topman, Uniqlo and New Look are creating credible denim offers which shoppers are increasingly open to buying. These ranges might not match the quality of a specialist denim brand, but they work the trends and according to TNS Worldpanel Fashion sell on average for less than half the price of a branded pair.

Aside from competition from own-label offers, denim brands have been caught up in the department store discounting war, particularly as the likes of House of Fraser and John Lewis price match or promotion match Debenhams when it embarks on its Mega Day Sales. The effect of this has been that sales of denim brands at a discounted level have grown
by 14%. Aside from shrinking back overall sales values,this discounting also potentially damages brands in the long term.

Last week, the denim industry appeared to begin a fight back with most of the leading brands confirming significant new initiatives designed to put more clear space between themselves and the high street offerings, by adding more value through design.

Diesel, one of the leading specialist denim brands in the UK, has drafted in former London Fashion Week designer Sophia Kokosalaki to completely overhaul the women’s side of its top-end Black Gold collection for autumn 10. Diesel will pull the range out of New York Fashion Week this September to give Kokosalaki some time to get the collection into shape, ready for a denim-focused relaunch in February 2010. Black Gold has just 41 doors in the UK, meaning it is unlikely to set top line sales on fire when it does relaunch. But the association with Kokosalaki is likely to be exploited as a marketing opportunity too, to help lift sales of the core Diesel ranges, which have faced more competition in recent seasons.

Japanese brand Evisu has also pushed the boat out with a massive hire in denim aficionado Scott Morrison, founder of Paper Denim & Cloth and Earnest Sewn, to reposition the label. And Edwin has drafted in Rey Gautier, formally of the Denim Is Everything brand, as creative director.

Elsewhere, brands are plundering their archives to rediscover what they do best. Levi’s, which posted a 50% fall in net income to US$48m (£32m) for the quarter ended March 1, has created a new global division called Levi’s XX to drive the development and design of new premium collections. The new division will be led by Maurizio Donadi, who joined from Polo Ralph Lauren as senior vice president last week.

The name ‘XX’ refers to the first style of Levi’s jeans which preceded the famous 501 jean. The new division’s product offer will include Levi’s Vintage Clothing, a collection which will draw heavily on the brand’s design archive. Levi’s has thus far declined to reveal details of the range or its target distribution.

Hilfiger Denim, which pulled out of streetwear show Bread & Butter in Berlin this season, is also delving into its archives to launch its spring 10 range inspired by 1960s American and vintage clothing.

Polo Ralph Lauren is also relaunching its Polo Jeans brand for spring 10 in the belief that the market is ready for something new and that its strong brand name can take on market leaders such as Diesel and G-Star.

The women’s market has had a third complication over recent seasons with the rise of new premium US brands, such as J Brand, which have been endorsed as must-haves by countless celebrities. Season after season the US market appears to come up trumps to win what little spend there is at the top end of the women’s denim market. This season Current/Elliott and Black Orchid are vying for the mantle.

Winners and losers

“There is certainly a sense in the premium market that there are real winners and losers out there,” adds James Leslie, co-founder of designer denim independent Trilogy in Chelsea, west London, which opened in 2006 and focuses on selling the likes of J Brand, Citizens of Humanity and 7 For All Mankind.

He adds: “The likes of Diesel and Levi’s, which sit between high street and premium, have got a bit lost in the middle ground and we have been contacted by brands which are trying to move upmarket and get us to revisit their collections. They have been attacked by designer brands doing great fits and great washes and by the high street. But these brands have fantastic heritage, which means they have the opportunity to recover their positions.”

One denim expert, who has worked in the industry for more than 15 years, argues: “You can’t just become the next G-Star overnight and brands should remember that the market has changed. It’s not enough to just have great product any more. You’ve got to support your retailers with stock replenishment programmes, a returns or stock-swap strategy, good margins, marketing support - the list is endless. The brands that are able to deliver all these things will be the ones that hold on to their market position.”

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