The Denim Jeans Scenario in the US

Cotton Incorporated Lifestyle Monitor™ survey

cihqThe love affair with denim crosses continents, continues to inspire creativity in products beyond jeans, and shows resilience even in economically uncertain times. In the U.S. alone, more than 9 out of 10 consumers have purchased denim jeans and individuals own an average of seven pairs. With cotton price volatility in 2011, some retailers and brands substituted other fibers for cotton in denim jeans to preserve monetary margins. Recent research shows that consumers are aware of these changes in denim jeans and are dissatisfied with shifts away from cotton. High levels of cotton fiber content ensure the qualities of comfort and durability that consumers expect for denim jeans to be and feel authentic. Given that fiber prices have normalized and that consumers have voiced their preference for cotton, retailers and brands may want to reevaluate the fiber content in jean offerings.

ci1ci2Price Pressures Decreasing : U.S. import data indicate that denim jeans were among the categories to see the greatest per unit price increases following the unprecedented spike in fiber prices that began in 2010. The average cost of importing jeans increased $1.23 per pair in 2011, relative to the average import cost in 2010. The magnitude of this increase was second only to the average costs for woven shirts (+$1.31). For comparison, the average per unit increase for knit shirts was $0.36 per unit, and the average for the bottoms wear market (e.g., pants, shorts, skirts) was $0.72 per pair. If the surge in fiber prices in 2010 is assumed to explain most of the changes in sourcing costs, denim jeans could be among the product categories that will have the largest decrease in average import costs as cotton prices return to levels near historic averages. Indeed, recent import data prices for men’s and boys’ and women’s and girls’ jean imports have already begun to show predictable declines back toward average prices before 2011.

feed2feed3key1Shifts In Sourcing : Recent changes in sourcing costs have been accompanied by shifts in sourcing locations. These changes widened existing differences in the countries where retailers import jeans for males and females. Jeans for men and boys are largely sourced from Western hemisphere countries. Mexico is the largest single source of jeans for men and boys. Seasonally adjusted data for the first four months of 2012 show that Mexico’s share of the men’s and boys’ jeans market averaged 49%, reaching its highest level since 2005. In contrast, women and girls jean imports primarily come from Asia, with China being the largest single supplier.