US men's underwear sales on the rise
By just-style.com | 16 January 2004
Retail sales of men's underwear in the US are heading for fast growth in 2004-08, boosted by increasing numbers of men under age 35 and new looks and functionality. Best-sellers will be boxers and boxer-briefs, while sales of men's briefs will continue to lag says the latest research.
The men's underwear market in the United States, certainly in the mass market, is mature and relatively stable. In 1998-2003, growth was slightly higher than the rate of growth in the male population combined with the rate of inflation - a sign of a commodity or necessity market. Total sales of men's underwear rose from $3.6 billion in 1998 to $4.3 billion in 2003.
However, the strongest growth in the period occurred in 2002-03, and there seems to be at least a partial shift towards viewing men's underwear as a fashion or impulse item. According to a new report from Mintel on the US men's underwear market, this has happened in men under age 35 (and also women under 35), and is a combination of their desire for personal expression as well as development of better and more comfortable underwear.
Secondary market drivers include a blurring of retail distribution channels, in which mass market and fashion/designer brands are increasingly sold by the same retail outlets.
Aiding this blurring in the period 1998-2003 has been steadily declining retail prices. As production costs have fallen, it has become easier for manufacturers to deliver high-fashion and high-function underwear at prices that are not dramatically higher than those in the mass market.
Product innovation helps differentiate the market
There are three essential types of men's underwear: boxers, briefs, and boxer-brief hybrids, in addition to undershirts. Undershirts and briefs make up 62 per cent of the market, but by far the greatest growth has come from boxers and boxer-briefs, with each of these segments growing 39 per cent in 2001-03.
The reason for this growth in sales is that men under age 35 consider men's underwear as a little bit more of a fashion item than the previous generation of men. Boxers have more interesting designs, colours, fabrics and other benefits that briefs usually do not have, while boxer-briefs have added functionality, particularly as sportswear or activewear.
From the manufacturers' point of view, product innovation is driving sales higher. Younger men may be more likely to pay a premium price for underwear because an increasing array of benefits has become available, particularly after 2000.
In addition to more interesting colours and designs, performance underwear has taken leaps forward with blends, such as Perry Ellis' combination of silk and bamboo, form-fitting styles, tagless and seamless products, and advances that increase breathability and moisture control. All of these benefits are being offered in ways that are designed to encourage men to look beyond white briefs.
Finally, many specialty/apparel stores, as well as department stores, have started treating men's underwear as hanging fashion items, which automatically raises their profile and encourages men to think about underwear as more of a fashion accessory than a necessity.
Two mass and two fashion brands dominate
Two mass market brands - Hanes and Fruit of the Loom (FTL) - account for the largest share of sales, and by far the largest unit volume share, while the two major fashion brands - Jockey and Calvin Klein - have carved out significant, stable niches in the department store sector.
Previously, these brands rarely crossed paths in the store, but they are increasingly doing so at stores such as Kohl's and JC Penney, particularly Hanes and Jockey.
Private label men's underwear has grown into a unique position in that it tends to be the mid-price brand rather than the price leader. Hanes and FTL have such a strong grasp on the mass market that department stores and national chains have positioned their private label lines between mass offerings and the big brand names. This strategy has worked particularly well, helping private label sales rise from 19.5 per cent of the total in 2001 to 21 per cent in 2003.
Smaller fashion brands have found a strong growth environment as bigger brands change channels. When Joe Boxer left department stores, brands such as 2(x)ist, Nautica, and Sean Jean came in as an alternative to Tommy Hilfiger and Calvin Klein. Opportunities for these brands seem bright in 2004-08, as well.
Retail channels have blurred
The rapid rise of mass merchants and the rest of the discount channel in the late 1990s plateaued in 1998-2003. The discount channel held more than half of men's underwear sales in 1998, but fell to near 40 per cent in 2003. In 2001-03, the big gainers were specialty/apparel stores (especially Old Navy, and also Gap and sports stores) and national chains (JC Penney, Sears, and Kohl's).
Department stores had a difficult period in 1998-2003, but seem to have recovered to near the industry growth rate in 2003.
Who sells what in retail channels evolved rapidly in 1998-2003. Most retailers have found success by broadening their product lines towards the nearest competitor. For instance, mass merchants since 2000 have started carrying higher quality brand names to augment their traditional price-point leading brands (Hanes and Fruit of the Loom).
For example, Kmart lured Joe Boxer from the department store channel in 2001. Similarly, department stores and national chains added new lines of underwear that either approach the prices at mass merchants (particularly Kohl's) or compete with the lower price points in specialty apparel stores.
Adding new brands and wider lines of men's underwear has been successful primarily because there has been enough product innovation to warrant adding new price points - without confusing the customer. A market that grows as fast or faster in 2004-08 than it did in 1998-2003, as Mintel forecasts, should help retailers adjust to the added competition that the blurring of retail channels signifies.
Consumers driven by necessity and value
Age and gender are the most important demographic factors in the purchase of men's underwear.
Most of the differences are quite plainly a matter of under 35 versus over 35. Younger men tend to buy significantly more underwear than older men, and also buy a disproportionate amount of boxers and boxer-briefs - the two items that generally have the most fashion appeal in men's underwear.
Younger men are more likely to buy single items, while older men are more likely to buy large quantities (stocking up) because what they buy is more for necessity and less for fashion.
Department stores and national chains attract almost as many shoppers for men's underwear who are aged 55+ as mass merchants. Given that the 55+ age group is a rapidly growing segment this should be good news for department stores and national chains, but these channels are much less likely to bring in purchasers aged 18-54, who include the heavier-buying and heavier-spending 18-34-year-olds.
Mintel's expects that retail sales of men's underwear will rise faster in 2004-08 than in 1998-2003, with fastest growth likely coming in 2004-05. The increasing numbers of men under age 35, relative to 1998-2003, will be a significant factor, as younger men are much more likely to buy underwear that is above the average price.
In 2001-03, manufacturers have been successful in creating new looks and functionality that appears to have made more men see underwear as something other than a necessity. This trend is expected to continue in the near-term, as more men understand the benefits of performance underwear. Sales will continue to grow fastest for boxers and boxer-briefs, while sales of men's briefs continue to lag or even decline.
Click here for more information on the US Men's Underwear market
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