The Jeans market Un-Zipped.

Is the bubble about to burst? When will the Jeans Market slow down? For years Marshal Cohen, chief industry analyst for The NPD Group, Inc., has been asked those questions. This year he sees some reasons for concern.

According to The NPD Group, Inc., leading provider of consumer and retail information, 2006 year end numbers show total jeans sold in the U.S., at retail, are up 3.4% in dollars and 3.9% in units. That is not quite as good as the prior year, when the increase was hovering around double digit growth. The prior year, 2005, posted a 7.7% growth rate for total jeans sales.

And overall sales numbers are only part of the story; looking at the market by wearer segment is even more revealing. Men’s Jeans are still posting healthy growth rates. For the full year 2006, Men’s jeans posted a growth rate of 5.4% in dollar sales. However, sales of women’s jeans are down for 2006, the first time in 5 years sales of Women’s jeans are down. Dollar sales for Women’s jeans declined 1.8%; units are down 2.3%.

What does this mean? What should jeans marketers learn from these numbers? Marshal Cohen says, “When I look at these numbers I know that women are the leading drivers for jeans sales…as goes the Women’s business so goes the Kids and eventually the Men’s market. When premium denim (jeans selling for over $100) took off it was the women’s market that started it all and it grew from there, across all the wearer segments.” adding, “It should be noted that women’s jeans have taken on some stiff competition not only from lower priced fashion denim being sold with similar styling at Mass Merchants and Chain Stores, but also from outside the jeans category.” observed Cohen, “Those new categories: Handbags and Shoes. They have started to become the new ‘must haves,’ the emotional ‘feel good’ purchases for women…I think what we’re seeing is the status handbag becoming this year’s replacement for premium jeans.”

Should we be pushing the panic button? “No, not just yet,” responded Cohen, “but we sure need to watch this very carefully. Many stores have a very substantial denim statement, and while the sales are not going to fall out, they are likely to slow. The biggest concerns I have are for the stores that are in the denim business as a peripheral business. And my second biggest concern would be the premium denim brands.” added Cohen. “As consumers trade over from paying big dollars for jeans that promise better fit, to handbags that deliver a whole new emotional high, and are always the perfect fit…I would say this bubble is NOT about to burst, but it sure is looking like we need to watch the levels of inventory very carefully.”

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