Denim drives discount sales

Discount Store News, August 18, 1997

In the apparel business there are several constants: The retail and vendor market always seems to be more competitive than ever; consumers are buying closer to need; and sales drive store traffic.

Another constant -- perhaps not as time-tested as Avogadro's number or the temperature at which water boils at sea level, but nevertheless reliable -- that applies to the menswear business concerns denim. This steadfast category can be counted on to produce solid year-to-year increases.

For the 12-month period ending in May, consumers spent $5.1 billion on men's jeans, a 6.2 percent increase over the previous year, according to The NPD Group, the Port Washington, NY-based research firm. For the most part, the industry produced those increases without extensive year-to-year price cutting; according to the data, 249.5 million pairs of men's jeans were sold during the year, an increase on par with recorded dollar sales for the period. In fact, the average price consumers paid for men's jeans ($20.60) remained virtually unchanged when comparing May 1995-1996 to May 1996-1997.

Consumers chose discounters, specialty stores and mid-tier operators as their jeans purchasing points, while shoppers eschewed department stores.

Volume at discount stores rose nearly 15 percent during the May-to-May period, driven by Wal-Mart, Kmart and Target. More than 71 percent of men's jeans purchased at discount stores were bought at the Big Three, which pushed their combined volume to over a billion dollars, a 16.5 percent increase.

While not keeping pace with the "marts" and Target regional discounters also produced substantial dollar volume increases -- 10.3 percent. However, they had to cut prices to achieve that end, as unit sales increased nearly 13 percent for this group.

Price pressure has been successfully dealt with at many regional stores. "The men's jeans business is one of the healthy ones," says Hills divisional merchandise manager Rich Toback, who plans "high single-digit increases" for Back-to-School.

Some regional retailers expected the basic five-pocket jeans business to slump but were happily surprised. "We had planned the five-pocket business down," says Mark Minsky, senior vice president/general merchandise manager at Caldor, "but we ended up exceeding plan."

The jeans business is primarily predicated on the strength of classic five-pocket models, but fashion silhouettes and more non-indigo shades are making headway.

"We are continuing to try and expand in fashion jeans " says Toback, who has placed two-fixtures of forward style -- extra wide-leg models and carpenter looks -- in each of his denim sets for fall.

"Fashion denim is already doing very, very well right now in women's. Men's is more of a question mark, but as we get closer to fall, I suspect it will be a winner," Minsky says.

Varying shades also continue to make progress. "We expanded color as a percent to total last fall in our (private label) Fresno and Wrangler assortments, and we will continue to make a visible presentation with it on the selling floor. In some of our denim programs, color can run as high as 25 percent," Minsky continues.

"Color will continue to be important, mostly in neutral shades like olive, rust and earth tones. It represents about 15 percent of the total men's jeans mix and we'll stay with that for now," Toback adds.

While the foundation of VF Corp.'s mass market brands remains composed of five-pocket indigo silhouettes, newer models are also fueling a growth spurt. "We've seen real incremental gains in color and wide leg," says Angelo Lagrega, president of VF Jeanswear, mass market.

Even Wal-Mart, a company that isn't noted for its expertise in the fashion end of the apparel business, is ramping up its more trend-right presentations through national brands and its Faded Glory merchandise.

Meanwhile, mid-tier operations -- NPD groups together Sears, JCPenney, Montgomery Ward, Kohl's and Mervyn's -- continue to flex their denim muscles. With sales of $1.52 billion, these middle market retailers out-sold discounters, which generated $1.45 billion in men's denim sales during the year ending in May, by a slim margin.

The long and short of it

Although there are indications that denim shorts may finish the year on track, through May results show a downward spiral.

Total market sales dropped to $556 million from $565 million for the period. Discount store sales were virtually flat, hovering at about $168 million. But average price points diminished for this tier from $12.36 on average to $11.74 depressing margins.

The Big Three fared far better than regional mass merchants, according to NPD results. Dollar and unit volume rose 10 percent for Target, Wal-Mart and Kmart, as a group. Other discounters saw dollar volume sink nearly 21 percent as units fell nearly six points.

The basic denim short business was probably weakest of all our shorts businesses. Nylon was phenomenal, and Cherokee walk shorts did very, very well," says Caldor's Minsky. "Net, we made up what we lost in denim on other fabrics and silhouettes," he says.