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DENIM JEANS A LONG AND RICH HISTORY

Blue Jeans were born in San Francisco during the gold mining era of 1873. If Levi Strauss had
failed to notice the potential demand for strong and sturdy pants, denim jeans would probably not
have evolved into a historic legend. Today jeans have become an indispensable item as it is
available in all varieties looks and washes to suit any attire. What began as a sturdy work dress for
coalminers took the world by storm after Hollywood gave it a cool factor in 1950s. Today jeans
are worn by everyone from the plumber to the working class to the president and also the fashion
industry. No matter the age or gender, jeans have become a wardrobe quintessential for the U.S
consumers.

















OVERVIEW

Denim jeans are a cornerstone of the American wardrobe. Jeans have rooted themselves in
American culture. Consumer fondness for denim jeans stems from their durability and versatility.
Due to longer life span of denim jeans, consumers find a greater value in this product compared to
other clothing. Hence, the Denim Jeans industry holds an advantageous position over other types
of apparel products even under unfavorable economic conditions.
Even though the global economic crisis had a strenuous impact on the U.S apparel industry, the
overall denim industry has regained its momentum faster as compared to other segments in the
apparel industry. In fact import statistics show that the denim jeans industry in the U.S had been
virtually unaffected and remained competitive. This ensures that denim jeans will continue to have
a place in consumers closet as it has become a necessity.
However the rise in cotton price in 2010 and the cost cutting measures (thinner fabrics, change in
fiber content, etc.) have caused significant performance issues and dissatisfaction among
consumers. Denim Jeans are preferred by almost all the Americans mainly because of their
longevity, fit and comfort. With limited disposable income the consumers have become pragmatic
in their shopping approach and as a result the cost cutting measures had affected the sale of denim
jeans due to durability issues.



U.S DENIM JEANS MARKET

According to various sources denim jeans represent an estimate $60 billion global market at retail
price. U.S consumes about 30% of World denim jeans production. Being such an enormous
market, figures related to U.S are of great interest. One such figure that has often surfaced in
various newspapers and articles is about the Per Capita consumption of Jeans in U.S There have
been various figures ranging from 1-7. We try and analyze to get a holistic view in this regard.
Key point to keep in mind is that almost all of the jeans consumed in the U.S is imported from
outside. Premium denim jeans are an exception as they are mostly produced in US. However due
to high pricing, their share of total volume of jeans consumed in U.S is quite low. According to a
report by Cotton Incorporated, 98% of denim jeans available at US retailers in 2010 were imported.

The market value has been calculated after researching several reports by various market research
organizations and Cotton Incorporated Retail Monitor survey amongst other sources. Average
retail prices of denim jeans vary each year. Market research firm NDP GROUP estimated an
average retail price of $24.41 in 2010 and $25.43 in 2011. According to Cotton Incorporated Retail
Monitor Survey the average price for a pair of jeans in 2011 was $37 and in 2010 it was $35.
Information from various blogs suggest an average price in the range of $25-$35 for the last couple
of years. For simplicity an average price of $25 is used for this study. The import values statistics
have been sourced from U.S. Department of Commerce Office of Textiles and Apparel. 98% of
denim jeans available at U.S retail stores in 2010 were imported. The remaining contributes to the
premium U.S denim industry. According to NDP GROUP only 1% of jeans sold in U.S in 2011
cost more than $50. This shows the share of domestically produced jeans in the total volume of
sales is very low. This has been taken into account and the average price of domestically produced
denim jeans is approximated at $50. After all these considerations we arrive at the following figure:



Denim recently celebrated its 141
st
year since its inception. Due to technological advancements
and love for good quality denim, the denim jeans industry has come a long way. However one
change has not been received well by the U.S consumers the substitution of cotton for synthetic
fibers on account of the rise in cotton price in 2010. This is evident from the drop in market value
for U.S denim jeans industry in the year 2011. On average, shoppers expect a pair of jeans to last
about five years, according to Cotton Incorporated lifestyle Monitor Survey. Thus durability and
comfort are an intrinsic part of the decision for purchasing jeans. The market did not react well
when this was compromised.
14.59
14.8
15.72
13.3
12.93
13.44
2008 2009 2010 2011 2012 2013
Denim Jeans Market Value at Retail
($ Billions)
Nevertheless the rise in jean imports and sales thereafter, in spite of the rise in average price for a
pair of denim jeans demonstrates the long standing love affair of the American culture and denim
jeans and establishes that jeans is an integral part of the consumers closet. Consumers find a better
value for a product they know will last longer, therefore price is not the main factor in the denim
jeans purchase decision. It has become essential for brands to capitalize on this trend and provide
good quality denim jeans to meet consumer expectations.

US DENIM WARS IMPORT STATISTICS
U.S is the highest consumer of denim jeans in the world. Since its inception jeans have come a
long way and have become everything from a casual outfit to a fashion statement. US import
market for denim jeans is extremely competitive and is dominated by China, Mexico and
Bangladesh which together contribute more than 50% of total imports by volume.

Source: U.S. Department of Commerce Office of Textiles and Apparel. (OTEXA)

2008 2009 2010 2011 2012 2013
Total imports
(Men/Boys &
Women/Girls
jeans)
(billion units)
561.41 569.30 604.90 511.51 497.66 517.03
Denim jeans import in US (Qty.)




Chinas share in the total volume of denim jeans imports has risen from 14% in 2008 to 30% in
2013. Mexico and Bangladesh have mainted their significant share in the total imports to U.S.




MEXICO
23%
BANGLADESH
10%
CHINA
14%
EGYPT
6%
PAKISTAN
4%
CAMBODIA
5%
OTHERS
38%
Country Wise Quantity Imported By
U.S In 2008
MEXICO
23%
BANGLADESH
14%
CHINA
30%
EGYPT
4%
PAKISTAN
4%
CAMBODIA
3%
OTHERS
22%
Country Wise Quantity Imported By
U.S In 2013
PER CAPITA EXPENDITURE

Now in order to calculate the per capita expenditure on jeans we take a more realistic approach
and calculate the potential consumers in the age group 5 and above.

Population source: OECD statistics
Thus we see that on an average every American consumes almost 2 jeans per year. The per capita
consumption declined after 2010 but it has regained and is showing a positive trend. This is mainly
on account of the quality of denim jeans being restored. Revival of the U.S economy, falling
unemployment rates have also lead to an increase in the disposable income thus increasing the
denim jeans purchases.







2008 2009 2010 2011 2012 2013
Market value at
retail
(estimated in $
billion)
14.59 14.80 15.73 13.30 12.94 13.44
Population in
billion
(age>4)
283.82 286.53 289.14 291.46 293.91 295.14
Total
consumption of
jeans
(approx. in
million)
572.64 580.69 617.00 521.74 507.61 527.37
Per Capita
consumption
2.02 2.03 2.13 1.79 1.73 1.79
Per Capita
Expenditure
$51.43 $51.66 $54.39 $45.63 $44.02 $45.55
MARKET SHARE

Denim, a fabric which was mainly considered to be meant for low class people in 1960s, is
known as a symbol of fashion and style today. The durability, rough and casual look of the fabric
gives it an unparalleled position in the fashion industry. Denim jeans has become an essential part
of everybodys wardrobe, retaining its title as every day wear since last 4 decades. There has
been a drastic change in the trend and the composition of U.S. jeans market since 1960s. Since
then various styles of jeans has emerged, ranging from boot-cut to slim fit, giving birth to the term
designer jeans.

The denim jeans market is highly competitive industry that caters to a myriad of customer
segments and at the same time targets the niche markets. Because of the large number of
competitors and no restriction on entry, the industry has a monopolistic structure. In the last decade
many new brands have entered the market. But there are a few firms that stand out. V.F. Corp. one
of the largest apparel and footwear manufacturer, has various jeans brands under its name, among
which lee and wrangler are the best sellers. The company has 70% share in mens bottom and a
40% share in womens bottom. But the company faces strong competition from sellers like Levis
Strauss, Calvin Klein, The Gap, Old Navy etc. Levis made a revenue of $4.61 billion as of
December 2013, maintaining a market share of 21%.

The market has witnessed the entry of many premium brands in the last few years. Brands like
Seven for all mankind, True Religion, Kate spade and Diesel have turned out to be the major
players in this segment. The growing disposable income of Americans and brand consciousness
among its citizens is making it possible for the premium denim jeans maker to survive and rather
grow. The spike in annual sales for global luxury brand True Religion in 2011 illustrates the strong
demand for luxury denim and the fact that jeans are no longer merely considered as casual wear.
But the premium denim marketdenim priced at $75 and above, which accounts for 7 percent of
all denim sales, is down 18% compared to last year, according to NPD. This calls for some alluring
changes in the technologies.

The companies try to cover almost all retail channels to make denim jeans ubiquitous. The retailer
network spans all key distributional channels - mass merchants, specialty stores, department stores,
national chains and more. To remain competitive in the market many companies also use multiple
channels to source and sell their products. Further analyzing the distribution channel reveals that
specialty stores have witnessed an increase in their sales in women segment and a similar pattern
has been observed in departmental stores in 2012. Mass merchants like Walmart, saw some
improvements in its sales as well as share. According to Cotton Incorporated Lifestyle Monitor
almost 43% of Americans buy their jeans from mid-tier department stores like J.C. Penney, Kohls
Corp etc. Given the tremendous potential of e-commerce, apparel marketers are making increased
investments in internet retailing, with a two-pronged strategy. Improving the overall online
shopping experience, from browsing to buying, is aimed at reducing consumers' hesitation and
improving shopper satisfaction. Moreover, in order to spread brand awareness, companies like
Levis, Lee and Wrangler etc. invests heavily in advertising campaigns on TV, magazines, online
and Radio. Besides marketing they also indulge in promotion activities, public relations, direct
marketing etc. The supply chain within the U.S. premium denim market has been mostly
concentrated within Southern California.




















LOOKING FORWARD

Denim jeans have come a long way and are interestingly treated as both a casual attire and a truly
global fashion item. The comfort style and versatility jeans offer make them suitable for any
occasion. The market value for denim jeans has been on the rise since 2005. As jeans can be
manufactured cheaply and efficiently in emerging markets, the share of imports has been
increasing outstandingly. In fact according to various sources 98% of denim jeans available in
2010 were imported. The financial crisis reduced the consumers appetite for premium denim jeans
and the sales of domestically produced high end denim jeans plummeted to astonishingly low
levels. However the total market value of U.S denim jeans during the recession were almost
unaffected. As a matter of fact, imports from developing countries were on the rise proving that
jeans are an essential part of everyday life.
However the cost cutting measures of substituting synthetic fibers for cotton did not go well with
the consumers and it resulted in a fall in market value for denim jeans in 2011. But the denim jeans
purchases picked up pace gradually showing the consumers yearning for good quality denim
jeans. Thus it has become imperative for brands to capitalize on this trend and match up to
consumers durability standards. The sales of high end denim jeans which had doomed after the
economic instability is also showing signs of improvement due to increase in disposable income
and growing brand consciousness. Even though U.S is the largest consumer of denim jeans in the
world , the sturdiness of denim jeans industry during unfavorable economic conditions and
subsequently, rising demand for high end denim jeans shows the potential for growth and proves
that the long journey of denim jeans industry in the U.S is here to stay. Thus it has been rightly
said:

Jeans represent democracy in fashion.
- Giorgio Armani