From their origins as hard wearing work clothes, jeans have been a constant wardrobe staple. Capitalising on this, jeans brands have sought to innovate the fabric, the fabric finish and the product to continuously refresh consumer interest. But can this momentum be maintained, and what is the potential for this sector over the coming years?

As fashion is a fickle industry, which needs constant change to drive its consumer market, jeans and denim have undergone many moves over the years, from fashion to commodity, back to fashion and back to commodity again. To some consumers and retailers it is a basic; to others a high fashion statement. Branding is an integral part of this.

However, in spite of all the inventiveness of fabric and product technicians - including attempts to broaden the product range into shorts, shirts, skirts, dresses and jackets - denim is still inextricably tied to jeans.

But the jeans market in the developed world is saturated. According to Cotton Incorporated (the trade body for the US cotton industry) the average American owns seven pairs of jeans, and buys two per year. In western Europe that number is more like four owned and one bought because of the wider range of "dress up" garments, says VF Corporation (owners of the Lee and Wrangler brands).

In this situation, only population growth can drive volume sales. The developed world's populations are not growing. Volume opportunities are therefore confined to the developing world which has both a rising population and more money to spend on jeans.

The market 2003
Jeans sales are estimated at 1931 million units per year for 2003. That is one pair of jeans bought per year for every three people in the world. The retail market for those jeans is worth US$54.6 billion. The developed world has 64 per cent of the world market by volume, but that is derived from only 14 per cent of the population.

That leaves considerable potential for growth from the developing world, but only if jeans products can be supplied at prices their consumers can afford.

The market 2010
A new report published by just-style - 'Global market review for the denim and jeanswear industries' - forecasts that for 2010, in volume terms:

  • the developed world will not grow at all, remaining at 1240 million units
  • the rest of the world will grow by 13 per cent to 783 million units

In total this means that world volume growth will be 4.8 per cent, delivering 2024 million units.

Value growth is more difficult, because so much of the consumer trade in the developing and underdeveloped worlds is on the grey or black markets, and certainly not at "normal" retail prices.

Value growth is expected to be effectively zero. In the short term (to 2006) the world market will grow by 1.5 per cent in volume and will fall by 3 per cent in value. This is because of continuing downwards price pressure from retailers in USA and Europe, and the elimination of tariff and quota barriers to low cost imports from the developing world.

Winners and losers
In spite of the brands' fierce arguments to the contrary, some commentators would argue that brands are not losing, but have lost the war. Levi Strauss' sales have been in free fall since 1996, and the company has been effectively handed over to restructuring consultants. Three of the major denim weavers who supply Levi and VF, Burlington, Cone Mills and Galey & Lord, have been in Chapter 11 (insolvency practice for US companies) during 2003.

If brands are losing, who have been the winners? In volume terms, it has been own-label retailers. In the USA, the almighty Wal-Mart and its Faded Glory brand has run away with the value sector, whilst Gap controls a big slice of the mass merchant market.

In France, Carrefour is a big player. In the UK, Marks & Spencer and Next have dominated the middle market whilst Asda (now a Wal-Mart subsidiary) has eaten into the budget price points. In Germany C&A, although a dinosaur, is still big.

Retail hegemony (the control by a very few) is, however usually a short term affair. The big supermarkets are definitely taking market share at the budget value price points. Higher up the scale, a retailer own brand finds it hard to compete with the "must have" fashion label of the season. Polarisation from the middle to both low value prices and high aspirational brands appears to be the fashion.

But all is not lost for the jeans brands. "Manufacturer" brands (or, as it would be more honest to call them, "consumer" brands, as most of them do not manufacture) have a chance to become the label of choice in developing countries.

But their track record in their own developed markets is poor. How they deal with the developing world will determine whether they survive or fall into oblivion.

Price trends
The entire clothing industry in the developed world has experienced low, zero or negative price inflation since the beginning of the nineties. At the moment no one can see this trend reversing because of the final abolition of quotas and tariffs (the Multi Fibre Agreement (MFA) in 2005.

But just-style believes there is a chance that once the final regulatory barriers have been dismantled, a balance may be sought between price and fast fashion service.

Certainly, in jeanswear, being up to speed with the latest fashion and capable of responding is gaining in importance for both brands and retailers.

Where next?
Denim jeans have been written off many times over the last 50 years. However:

  • men wear trousers
  • men wear casual trousers
  • women now wear more trousers than skirts

Casual trouser wearing, and hence jeans wearing will continue. Product development, branding and marketing of jeans will remain under the control of the western world. The supply of both fabric and product will continue to move to lower cost, but technically economically and politically stable countries such as India and China. Countries like Turkey may have peaked.

As far as the retail industry is concerned, polarisation will continue to be the main driver.

For more information on the 'Global market review for the denim and jeanswear industries with forecasts to 2010' click here