Some weeks ago, I was asked to fill out a questionnaire, giving my opinion about near-term denim pants retail sales. As my clients will be the first to tell you, my knowledge of marketing is somewhat below Zilch. However, I do have knowledge of the global industry, and under the circumstances, I thought it more appropriate for me to provide relevant data about the current state of U.S. denim pants (jeans) imports, in the hope that those of you who are marketing specialists may use this information to make your own, more educated conclusions.
All of the data for this article comes directly from the U.S. Government Office of Textiles and Apparel (OTEXA) and is freely available from the OTEXA website. I would also say it is likely the most accurate and complete garment trade data available anywhere in the world.
Now to business.
The Denim Decline
Walking down any street in any city in the U.S., you might think that at least half the people you pass are wearing blue denim pants (jeans), and this may well be true. Perhaps despite the best efforts of the hi-tech distressed denim industry, jeans still last longer than other types of cotton pants, and therefore require fewer replacements. On the other hand, this perception may be the result of some alien induced mass hallucination.
Whatever the cause, I can assure you that once again perception has proven wrong.
The truth is that jeans represents a relatively small and diminishing share of cotton trouser imports. As you can see from the chart below, jeans share of cotton pants as measured by units peaked in 2009 at 35 percent and each year thereafter, ending in year to date June 2014 when jeans share fell to a record low of 23 percent of total cotton pants imports.
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Imports by value show a more optimistic picture (as we will see below) due entirely to substantially rising FOB price, post 2010. Jeans share peaked in 2009 at 41 percent, only to fall each successive year until YTD 06-14 when it reached 29.2%
As we can clearly see from the next graph, U.S. imports of cotton trousers both in units and by value have been trending up during the past three years while imports of have been stagnant or falling.
It is a little early to suggest that Americans have ended their 141-year love affair with jeans. But based on the most recent data, if I were in the denim business, I would not plan on expanding my operation in the near future.
Jeans by Gender
Almost all garment products are gender oriented. Surprisingly, so too are jeans, although we have to examine sourcing data to see just how important gender is.
Men’s jeans imports is dominated by Mexico, which accounts for a 49 percent market share. China with an 11 percent market share is a distant second. Total cotton-pants imports show a slightly different picture. Mexico is still the U.S.’s leading supplier with a 31 percent market share, but both China and Bangladesh are moving up, currently both with 16 percent market share.
Women’s jeans imports show a very different picture:
China is in a dominant position with a 43 percent market share. No one else reaches double digits, and Mexico is second at 9.6%.
I can offer no definitive explanation why Mexico dominates men’s jeans, while China is number one in women’s jeans. Certainly, VF’s operations in Mexico are an important factor. And fashion elements in women’s jeans may favor China, but this is only speculation.
FOB Prices
Men’s FOB prices show consistent increases from 2006 to the present. The declines in 2009-2010 were due entirely to the recession and were offset by substantial increases in 2011. Of all major exporters, only Mexico is showing some resistance to FOB price increases.
Price trends for women’s cotton pants showed declines from 2006, leading to a severe drop in 2009-2010 due to the recession, which was followed by sharp increase in 2011, followed once again by gradual declines. As of YTD 06-14, FOB prices are well below those for 2006. The notable exceptions here are Mexico and Vietnam, and Mexico is most unusual. While on average, FOB prices for men’s jeans are 10 percent higher than for women’s, Mexico has reversed the general price relationship with FOB prices for women’s jeans at a 54 percent premium over made-in-Mexico women’s jeans. My guess is that once again VF Corp. is the determining factor.
They tell us, “To everything there is a season.” Why should cotton pants be any different?
In fact, cotton pants have very definite and extreme seasons, and more interestingly, the season appears to be reversed. While I would have thought cotton pants were predominantly a spring season item (where imports cleared customs January-March), instead of a fall season item (where imports clear customs May-August), that’s wrong.
As we can see from the graph below, M&B cotton pants do not enjoy a strong spring. W&G on the other hand, have a better spring, but shorter fall.
David Birnbaum began his career as a patternmaker in the United States and later managing and building factories in Asia and Latin America. He started Third Horizon (THL), a strategic development organization specializing in garment production and sourcing. His clients included major factories as well as brand importers and retailers.