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State of Intimates Industry: Innovation Will be Key to Survival

The $17.7 billion dollar innerwear industry needs a wakeup call.

Newness and fresh ideas are on the rise in other apparel sectors like activewear, streetwear, swimwear and casual sportswear, but the lack of innovation and exciting new products that enhance fit, function, comfort and style in the intimates segment continues to take a toll on the overall intimates business. As a result, a lackluster environment has overwhelmed the industry with a glut of inventories and sameness of product, as promotions, markdowns, and cost-efficient strategies in a risk-averse market continue to shrink dollar sales.

The reasons are similar to issues experienced in the denim industry which has relied on fashion colors including trendy indigo hues, and edgy, raw denim designs to refresh assortments. Intimates, a traditionally black, white or nude business, has also embraced a similar approach with key items recolored under the banner of a new brand launch, a new season, or under the guise of a celebrity or designer collaboration.

In order to stay viable, a number of Fortune 500 companies like Hanesbrands Inc. and its newly acquired Maidenform brand, and PVH Corp.’s intimates portfolio which includes the Olga and Warner’s bra labels at Warnaco and Calvin Klein Underwear, have the financial muscle to explore advances in technology that give undergarments a fresh, new spin. Ideas range from lightweight generations of microfibers and heat-sealed seamless applications that create smooth, compression-free silhouettes, to microencapsulated yarn treatments that cool or warm the body, wick away moisture, provide antimicrobial properties and eliminate odor.

But in an industry that’s been downsized by a barrage of bankruptcies and mergers and acquisitions for more than 20 years, investing in research and development and cutting-edge fabric and fiber technology from innovators like Invista Inc. and Hyosung Corp. can carry a multimillion dollar price tag. The costs can be prohibitive for large, public companies that answer to shareholders, as well as independent, midsized firms, and smaller, entrepreneurial operations.

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The lack of innovation rests mainly in the bra and underwear segments which have long been regarded as Teflon-proof businesses during recessions and uncertain economic times. But there hasn’t been much action in the world of intimates since the mid-90s, when Sara Lee Corp. created the Wonderbra phenomenon with a marketing blitz for the brand’s cleavage-enhancing bras, and modern shapewear with a ready-to-wear twist came to the forefront with the Hipslip by Nancy Ganz. Also lending excitement to the category was Victoria’s Secret, which launched its annual Fashion Show Extravaganza, further promoting the idea of sexy lingerie and expanding awareness of lingerie as a fashion accessory.

Retail consolidation, mainly at department stores like Macy’s Inc. and Bloomingdale’s—formerly known as Federated Department Stores Inc.—continued to take its toll on wholesalers in both the branded and private label arenas. And as the number of retail accounts dwindled, vendors increasingly worked with retailers through the creative and design process, often forsaking fashion-forward merchandise for promotional items, and volume and price-driven goods.

Presently, the dilemma remains the same for manufacturers, according to industry insiders. And the absence of creativity and break-through product in intimates is expected to continue into 2015, predicts Marshal Cohen, chief industry analyst at The NPD Group.

Newness, says Cohen, will be led mainly by multipurpose sleepwear and loungewear items that have the look, comfort and performance of activewear. The trend will be spurred by the popularity of athleisure looks among consumers who are seeking casual comfort  in soft, Lycra-blend pants, tops, jackets and leisure dresses that offer dual-purpose luxury at an accessible price.

“It’s kind of scary to see what’s going on,” Cohen said. “There’s a lot of opportunity in the innerwear market for innovation, and the market still has a lot of product and the inherent customer who wants new, exciting product—but the industry just hasn’t done it and hasn’t taken advantage of the wealth of new fabrics and technology out there.”

The athleisure trend is led by several factors: unemployment in a post-recessionary period, debt and tight credit, and a desire for casual comfort as Millennials and a growing crop of college graduates who cannot find jobs seek stylish, dual-purpose items while multitasking from home.

A breakdown by product category by NPD reveals which classifications are growing and which are declining. In the 12 months ended July 2014, overall intimate apparel sales at retail channels had declined in the single digits compared to prior-year figures, which were basically flat.

Dollar sales of bras—a $6.4 billion business which claims a 58 percent dollar share of the total intimates market—dropped 5 percent, while sales of daywear, which include camis and slips, fell 8 percent. The $335.3 million daywear business generates a 3 percent dollar share of total intimates business.

Two other classifications that have traditionally been top segments also posted losses.

Retail sales of shapewear, a $678.6 million category that holds a 6 percent dollar share of the market, dipped 3 percent, while sales of the $3.6 billion panties business—a key replenishment item for decades—were off by 2 percent. Panties retain a 33 percent share of the overall intimates market.

The good news is sleepwear and loungewear, which NPD does not include in the intimates ranking, generated a relatively robust dollar sales gain of 6 percent in the same 12-month period.

So what are innerwear and fiber executives doing to stimulate innovation? An in-depth assessment reveals there are an abundance of emerging ideas in the market that can keep brands relevant and viable, but the industry needs to take a proactive approach rather than a reactive strategy to bolster growth.

Here, executives discuss new initiatives that are driving their businesses.

From the fibers field, Arnaud Ruffin, Invista’s global segment leader for lingerie and bodywear, said reaction was strong to the launch of the expanded Lycra Beauty fiber program for lace and cotton fabrics at the Paris Mode City trade fair in July.

“Invista has been one of the few companies that have actually invested in technologies to bring compelling reasons for consumers to get excited about purchasing apparel. To cite a few, Lycra Beauty, the Science of Shaping, inspires the design of comfortable silhouette-enhancing garments from firm control to featherweight smoothing,” Ruffin explained.

Regarding R&D, Ruffin said Invista develops its innovations by “meeting with gap areas brought forward by the value chain and consumers.”

“We invest in consumer insights to understand their expectations of apparel. We then conduct projects that can engage different resources and areas of expertise,” Ruffin said. “For instance, we are now developing a new fiber for underwear that will raise the bar for its shape retention, comfort and durability.”

In addition to Lycra Beauty, the Lycra master brand portfolio includes Lycra Xtra Life for garment durability, Lycra Sport for active lifestyles and sports, and Lycra Energize for well-being.

Ria Stern, global marketing and brand director at Hyosung Corp., the world’s largest spandex producer with the Creora brand, believes there is untapped potential in the intimates and active markets, but only if manufacturers and retailers would invest in innovation.

“We work with mills, brands, and retailers to innovate new fibers and fabrics to give the consumers a reason to purchase,” Stern said. “There are some new developments we are working on a confidential basis in partnership with some key industry leaders against new consumer innovation platforms.”

Acknowledging that the intimates business is facing a creative challenge, Stern pointed out that Hyosung is taking a laser-focused approach to remedy the problem. “We are seeing opportunities in offering consumers a solution-oriented approach. For example, in our spring-summer 2016 trend forecast, we are promoting a concept where fit and function is key as a core stability when it’s combined with soft touch, complete moisture management and cooling, with our Mipan Aqua X nylon, and Creora color + reenergize treatments,” she added.

Stern further noted that Hyosung’s newest innovations include new fibers for new aesthetics, performance and improved quality. “Key examples include new supermicrodenier Mipan nylon and M3 polyester that are less than 0.5 dpf for unparalleled comfort next to the skin,” she said.

Meanwhile, innerwear leaders are looking to beef up newness and innovation in a variety of ways.

Josie Natori, chief executive officer of the Natori Co., a self-described advocate for new ideas and concepts, said investing in R&D and technology is a priority at the Natori Co.

“You can never invest enough in innovation,” Natori said. “The success of our Natori Yogi bras has pushed activewear to the forefront of our strategic planning, and we are currently trying to figure out how we are going to expand the category into new products. But for now, we are continuing to push the success of our Yogi bra at both retail and through a digital ad campaign we are planning for late 2014 and early 2015.”

Kenneth C. Natori, vice president of Natori, said the need for newness is imminent. “Competition is fierce and there are new players bringing consumers new fashion, technologies and strategies to the market every day. Any brand, including us, that isn’t moving forward is moving backward,” he said.

Natori singled out a top-selling item as a key example, the Happi Coat by Josie, saying, “It’s one of our most exciting innovations—a shorter version of a wrap. The lengths makes them perfect for outerwear, and customers, including a number of celebrities, are wearing them with jeans.”

Guido Campello, the newly appointed CEO of family-owned Cosabella, has a strong viewpoint on innovation, citing the sourcing arena as the key incubator.

“What we are focusing on is not just sourcing raw goods, but creating them from scratch and always asking, ‘Why can’t we do it like this or like that?’ We are never satisfied with what we are shown, but we want our resources to develop what we envision and what is yet to be seen…From how people wear their clothes to how they shop and interact with these products, we need to constantly push for the next big thing,” insisted Campello.

Best selling ideas at Cosabella include a “Run, Play, Breathe” triathalon of sports bras focused on running, sports and yoga, and a maternity Mommie Bra with clips, sling and padding in 20 fashion colors adapted from the brand’s top-selling Sweetie Bra.

When asked whether the industry is investing enough in technology to stay viable, Campello replied, “They seem to invest a lot…What they are not investing enough in is leading the market fashion trend. We are letting [RTW and sportswear]  designers dictate what is needed, and that intimates is just an accessory —Wrong! The camisole should be an accessory to the bra, not vice-versa. Unfortunately, innerwear companies lack fashion sense most of the time.”

Carole Hochman, CEO of  Naked, a men’s underwear brand that specializes in performance, said the company is reintroducing its Silver program of underwear designed with X-static silver-bonded thread that has antimicrobial properties to eliminate odors, regulate temperature and prevent static.

“It sold out at Nordstrom last Christmas and it will be introduced at Hudson’s Bay in June,” Hochman said. “It’s been so popular with consumers that we are reintroducing everything in December and shipping in February…We’ll also be launching new a logo and innovative packaging.”

Hochman added that Naked will be previewing concepts for stretchy sleepwear of cotton and Tencel for women in November, followed by a product presentation of daywear and sleepwear during February market week. A collection of intimates will be introduced at a later date. Naked also plans to enter the men’s and women’s active, swim and sock businesses in 2015.

At Wacoal America, Inc., high-tech fabrics and heat-seal technology will continue to fuel Wacoal’s bra and shapewear  business, said Bob Vitale, president and co-CEO.

Vitale also noted that creative business strategies are playing a role in innovation, citing two examples: the creation of Paris-based Wacoal Europe, which will build growth in the luxe market as well as global brand equity for a wider range of fashion styles, and the acquisition of British bra specialist Eveden in 2012, which will  bolster Wacoal’s presence in the fast-growing full-figure bra market.

“Wacoal Europe product has European-type styling with exquisite laces and embroideries and detailing, all with the advantage and fit of Wacoal quality and fit,” said Vitale. “The exciting part is having this higher-end and more fashionable product that is being sold throughout the entire Western Hemisphere and Australia. Having this entire market to sell to allows us to have a much wider selection of European product that we could have only justified in the Americas alone.”

From a designer’s perspective, Dwayne Hein, senior designer of men’s at the Komar Layering Division, said the retail environment weighs heavily on new product introductions.

“It takes a serious amount of investment money and commitment to understand the return will be years off,” Hein said. “If you let retailers dictate what happens to your products, you will always produce the same products, so they [manufacturers] are always constrained by the limited view of retailers and publicly-traded companies responsible to their shareholders…I miss the fabrics innovators at DuPont, Milliken and Dow.”

However, Hein added, “Victoria’s Secret is possibly so big they can do the R&D and hire people to create innovations. They are able to do this because their core [lingerie] business produces a lot of cash to absorb those hits.”

Regarding innovation at the Komar Layering unit and Cuddl’Duds brand, Hein said there is a new marketing and packaging program with active lifestyle visuals, as well as expansion of its Climate Smart program aimed at varying levels of lifestyle, exercise, and high-compression sports. Komar Layering has recently expanded into socks, hats, gloves, slippers and an exclusive line of flannel bedding at Kohl’s.

Officials at Hanesbrands were not available for comment, but a look at the company’s most recent annual report revealed that innovation plays a big part in building innerwear revenues. In the fiscal year ended December 28, 2013, net sales of innerwear were $111 million higher than 2012, totaling $2.445 billion. “Sales of bras were higher due in part to our Smart Sizes innovation platform. Maidenform contributed $78 million of net sales to the Innerwear segment in 2013,” the report noted.

The Smart Sizes system combines a simplified shopping system that eliminates the complicated cup-and-band combinations of traditional bra sizing with a more comfortable, flexible fit. The Smart Sizes platform has been leveraged across the Hanes, Playtex, Bali, Just MY Size and barely there bra brands.

But despite the plethora of ideas in the market—many of which are not being utilized—the idea of innovation can either be a transparent or opaque proposition.

Looking at the big picture, executives at the annual Sourcing Journal Summit: “Insight & Outlook” in September said opportunities abound for innovation, but it will take creative, out-of-the-box thinking to tackle new initiatives.

A key speaker at the sold-out Summit was Don Howard, executive director of the consulting team Alvalnsight at Alvanon, a specialist in wholesale, vertical retail, design and and manufacturing of women’s apparel. Howard’s advice to the audience was: “We think of innovation in a number of ways. For apparel it’s really looking at what you’re doing and then looking at it differently…A rethinking of what you do instead of looking for innovation externally. When you hear companies say ‘We always did it that Way’ it’s a really bad answer. Instead of bringing in the latest technology, simply upgrade your tools to gain momentum.”