The premium denim industry, once an exciting emerging market, has become more mature and highly promotional, leading to a lag in business in recent years.
At a Sourcing at MAGIC panel in Las Vegas Sunday titled, “Denim Made in the Americas: Creative + Sustainable + Innovative,” industry experts discussed the present state of premium denim, shifting production to the Americas, and what’s next for the market.
Rolando Sierra, Mexico area director at Jeanologia, Vasco Pizarro, marketing director at Pizarro, Kutay Saritosun, senior marketing executive for Isko, Peter Kim, founder and CEO of Hudson Jeans and Jeff Shafer, founder of Agave Denim and Bluer spoke on the panel moderated by Sourcing Journal founder, Edward Hertzman.
“The premium denim sector has definitely gone soft,” Hudson’s Kim said. “And activewear has really cut into our business,” he added, explaining that yoga brand Lululemon’s increased relevance has contributed to that loss of market share. Women once wore jeans to go the market, Kim explained, and now spandex pants have taken that role.
With reshoring being the ever talked about topic it is today, Hertzman turned the discussion to the higher costs of manufacturing in the Americas and asked the panelists whether consumers are even conscious of where their products are made.
Shafer said it depends on the market. “There are definitely some that care and some that don’t,” he said. “The average price-driven shopper doesn’t care.”
For Agave, known for making its product domestically, straying from making goods in the U.S. has been “a disaster” Shafer said. “And not from a price or product standpoint, but purely from a consumer rejection standpoint.”
Some shoppers have come to prefer American made product, but, Kim said, the majority of people have no idea where their products are made. “I think most people just don’t even look,” he said.
Shafer explained, “Where the real downfall has happened is the misuse of the word ‘Premium.’” Denim is often marked premium when the production process was anything but and the reality of the garment’s actual origin is skewed. “The consumer is now generally skeptical about where product is made. Those who care are just a very small percentage and not significant,” he said.
Hertzman questioned Kim about why Hudson Jeans—which makes everything in the U.S.—chooses to produce domestically despite the higher manufacturing costs and the knowledge that most consumers aren’t buying a product based on where it’s made.
“I’ve run production all over the world and found that doing denim here is easier,” Kim said, explaining that quality, available washing techniques and hand processing ability, is where you really start to see the difference in the denim produced.
Hertzman asked whether the notion of a made in America resurgence is realistic beyond just the niche market, or simply hype, and Shafer said that once the world starts figuring out what the true costs of production are, product will be made at its destination and consumed at its origin.
“It [manufacturing] will come back to the U.S., but it will be made by robots,” Shafer said, noting that experts predict 30 percent of jobs will be done by robots in less than 10 years. “With today’s market and retailers’ reluctance to hold inventory, brands have to produce to order, and the only way to produce to order is to produce close to home,” he said.
But sourcing in the Americas over the next five years looks promising, Sierra noted in an earlier panel discussion. For the first time in recent years, Mexico has regained its position as the leading denim exporter to the U.S. and in 2013 exported 24.6 million units. China was the next biggest exporter, sending 23.3 million units of denim to the U.S. last year, followed by Bangladesh with 11.8 million. Sierra noted that while Mexico is still the number one denim exporter to the U.S., currently controlling more than 20 percent market share, Guatemala, the Dominican Republic and Colombia are also viable markets for making denim.
In terms of sustainability, Isko’s Kutay said the concept is very strong in Europe and brands are beginning to demand Better Cotton, or cotton produced under the initiative to make the commodity more sustainable. “Environmental PNLs that measure a company’s impact on the environment are also catching on in Europe, but it’s coming to the U.S. too,” Kutay said. He mentioned H&M’s eco-collection “Conscious,” made from more organic cotton and generally more sustainable materials and said, “The concept is here, it’s just going to take a bit to catch on.”
Sierra echoed that thought saying, “The sustainability issue has become more important. Companies, like Jack & Jones, are asking for software that allows consumers to track how their jeans were produced.”
Vasco Pizarro’s father worked to develop a technique that uses dry ice to achieve a sandblasted look. The Icelite machine uses CO2 to create ice which is stored and then the particles are used to create an abrasion blast, and the process saves up to 70 liters (18. 5 gallons) of water per garment.
The next thing for premium denim will be the marriage between the jean and its activewear counterpart. Diesel has already had success in this space with its Jogg jean, designed to look like denim and function like sweatpants.
Kutay said, “Expect to see denim brands adding activewear lines or activewear brands incorporating denim fabrics in collections. This trend is here.”