Industry Voices: Mill Execs on the State of Denim, Part 2
Along with the rest of the apparel industry, denim has recently faced some ups and downs due to economic fluctuations and changing consumer behavior. For a window into what is happening on the ground, Carved in Blue is catching up with industry figures—including executives at mills and consultants—to get their perspective.
Here, denim manufacturing leaders from AGI Denim and Soorty weigh in on what they are seeing and the path ahead for the category.
Hasan Javed, director, AGI Denim (Pakistan)
Carved in Blue: From your perspective, how is the denim market currently performing? What are the main factors you see affecting the market?
Hasan: The global denim market is showing signs of improvement over the last few months compared to last year. It has been a roller coaster ride over the past three and a half years, beginning with the Covid-19 pandemic, followed by disruptions in logistics and bottlenecks in the global supply chain, a surge in commodity prices, and finally, inflation. The market needed a breather, and now the macro situation is slowly returning to pre-Covid levels.
We are observing encouraging signs and increased demand for denim. However, challenges persist, and much will depend on how markets address rising interest rates, inflation and the potential threat of a global recession, leading to higher material costs.
Brands are displaying a heightened commitment to conscious consumption, aligning with consumer preferences for sustainable and ethical products. As the industry moves forward, brands are navigating narrower profit margins, driving innovation across the board. This focus on innovation is essential to anticipate and meet evolving market needs, ensuring competitiveness and relevance within this dynamic landscape.
Carved in Blue: How would you describe the level of consumer confidence compared to last year?
Hasan: Consumer confidence has notably improved in comparison to the previous year. Several factors have contributed significantly to shaping this positive sentiment. Manufacturers have also benefited from a significant aspect: the substantial inventory buildup at the retailer level, which is gradually alleviating.
Notably, while there is an evident upward trend in demand, the main determinant affecting this confidence seems to be the pricing of products. Given the prevailing global economic challenges, consumers are making more cautious and preference-driven choices. They are increasingly inclined towards conscious consumption, seeking value and sustainability in their purchases.
One notable aspect of this evolving consumer sentiment is the demand for premium products at more accessible price points. This shift indicates a desire for high-quality offerings that align with their preferences and values without overburdening their wallets. This demand for a balance between premium quality and commercial affordability reflects consumers’ discerning approach to spending. In conclusion, while consumer confidence is gradually strengthening, price sensitivity, conscious choices and the pursuit of value underscore the intricate dynamics shaping consumer behavior in today’s economic landscape.
Carved in Blue: Is consumer interest in denim up, down or flat? And where do you see this going in the year?
Hasan: Consumer interest in denim has witnessed a noticeable upswing in recent times. As fashion preferences evolve, the enduring appeal and versatility of denim have continued to capture attention. This trend is expected to remain consistent over the course of the year, propelled by sustainable and innovative product offerings, evolving styles and the gradual resurgence of in-person activities. While there might be a temporary shift away from denim currently, it’s important to acknowledge that denim’s influence is enduring, and it’s unlikely to stay out of the spotlight for an extended period. Thus, there’s optimism that the denim market is positioned to sustain interest and potentially experience growth in the upcoming months.
Carved in Blue: How does Gen Z’s consumer behaviour around denim compare to millennials, Gen X and babe boomers? What does this mean for denim retail?
Hasan: Gen Z’s consumer behavior around denim differs notably from other generations. While millennials and Gen X value brand loyalty and comfort, Gen Z prioritizes sustainability, unique styles and individuality. Boomers, on the other hand, often prefer classic and durable designs. This divergence impacts denim retail by necessitating varied offerings. Brands targeting Gen Z must emphasize eco-friendliness and personalization, whereas those catering to millennials and Gen X should focus on comfort and quality. For boomers, emphasizing timeless styles and durability remains crucial. Adapting to these generational preferences is key to thriving in the denim retail landscape.
Carved in Blue: How well is the denim industry paying attention to and serving consumer wants and needs?
Hasan: The denim industry has a longstanding history of focusing on consumer wants and needs, and this commitment continues to shape its strategies. The industry’s emphasis on innovation to align with market trends and requirements showcases its dedication to serving consumers effectively. As consumer dynamics evolve, the industry’s proactive approach to offering innovative products is noteworthy, indicating a commitment to staying attuned to changing preferences.
The efforts to address personalization, inclusive sizing and diverse styles further highlight the industry’s responsiveness to varying consumer tastes. However, there remains a recognition that continuous efforts are essential to fully meet consumer demands, especially in areas such as ethical practices, pioneering designs and integrating technology for seamless shopping experiences. The positive trajectory of industry progress affirms that while significant strides have been made, ongoing adaptation and evolution are crucial to consistently cater to consumers’ evolving wants and needs.
Carved in Blue: What could the industry do to move more wallet share toward denim?
Hasan: The industry could implement several strategies to capture more wallet share toward denim. Firstly, emphasizing denim’s versatility and timeless appeal through creative marketing campaigns could entice consumers to view denim as a wardrobe staple. Collaborations with influencers and celebrities can amplify its popularity. Secondly, offering customization options, such as personalized fits or unique washes, would cater to individual preferences. Additionally, highlighting the sustainability efforts and ethical practices within denim production can attract eco-conscious consumers.
Ebru Debbag, executive director, global sales and marketing, Soorty (Pakistan)
Carved in Blue: From your perspective, how is the denim market currently performing? What are the main factors you see affecting the market?
Ebru: The denim market is not at its best, and there seems to be a profound struggle between knowing what the market should do and [what it] ends up delivering due to decreased revenues. There is a dilemma in acknowledging and feeling the responsibility of delivering better products, both in terms of innovation as well as circularity, and then there is the price pressure from retailers and brands during inflationary market dynamics. Price remains to be a major discussion topic as well as the coming legislations and its impact on the supply chain.
Carved in Blue: How would you describe the level of consumer confidence compared to last year?
Ebru: The consumer confidence is a reflection of the sales, right? In that case, I do not think that the consumers are convinced to buy more of what they already have, and unless the value chain acts to deliver innovation I think we will have to still be working in a stagnant market.
Carved in Blue: Is consumer interest in denim up, down or flat? And where do you see this going in the next year?
Ebru: The consumers are always interested in denim, and who could resist a great pair of jeans? It is what is being offered that makes the difference to move the market dynamics. We are working with so many different options in development and have so much diversity to offer and we would like to see the innovation that we deliver to scale so that we can generate further consumer interest.
Carved in Blue: How does Gen Z’s consumer behavior around denim compare to millennials, Gen X and baby boomers? What does this mean for denim retail?
Ebru: Gen Z are known to drive the resale market and shop vintage and thrift, but are they more aware of the impact of fashion on climate change when we still wake up to one wildfire after another? Most Gen Z would complain about fossil fuel use, and they would go and shop “cheaper” products as they also do not have enough funds. I think this is an important decoupling that the market has not been able to resolve. We are manufacturing mostly for the Gen Z and building our collections looking at lifestyles, tribal communities, fringe trends and offering the best of our infrastructure and raw material matrix to develop processes with lower impact and products that use less resources and remain attractive as well. I think the brands and the retailers are not making use of what the supply chain has to offer for their customer base. The Gen X tend to be driven by their needs and wants, and they are after products that can have an impact in their lives—mainly driven by a solid story of comfort, performance and sustainability.
I think denim is important for all generations in its own beautiful way, and there is a dream for everyone and hence so many different segments in the industry as well. Most brands and retailers have launched their secondhand sales platforms, started omnichannel communication and marketing, are teaming up with competition, declaring climate targets, and I believe these are truly valuable perspectives which need to be reflected on the product at scale as well.
Carved in Blue: How well is the denim industry paying attention to and serving consumer wants and needs?
Ebru: I think the denim industry is very progressive when it comes to serving customers’ wants and needs, however I think we need to insist more on delivering only what is better rather than getting into the only price-based sales discussions. The product is there and needs to be delivered to the market.
Carved in Blue: What could the industry do to move more wallet share toward denim?
Ebru: Innovate and be courageous to deliver the better products to the market.
See part 1 here.