California Apparel News

In the jeans business, one used to ask, “How low can hip-huggers go?” Nowadays, the question on people’s lips is: “How high can prices climb?”

Consider Stronghold’s jeans that are made of hand-woven and hand-dyed Japanese selvage denim and wholesale for $500. Serfontaine is designing jeans that are stitched with pure silver filaments in collaboration with an Italian jewelry designer; wholesale prices start at $400.

Some established denim companies also introduced pricier collections. Silver Jeans yielded 1921 Jeans; Mavi offered Nomad; Lucky Brand Dungarees spawned RN; and Blue Cult’s parent company, Blue Pen Inc., created R U Blue. Striving for a more sophisticated look, Von Dutch Originals LLC launched cashmere-blend jeans that, at a wholesale price of $125, are the most expensive in its line.

“This is an emotional market right now,” said Thomas George, who owns renowned retailer E Street Denim Co. in Highland Park, Ill., and marks his third decade in the denim business this year. “There is huge hype.”

The premium denim market seems to be morphing into a phenomenon that blends the fascination with the emperor’s new clothes with the irrational exuberance of an Internet stock. Prices escalate as demand rises from consumers who perceive a certain value. Hoping to cash in, numerous companies are entering the fray. This fall, E Street Denim will introduce as many as eight new lines to its stock of more than 60 brands retailing from the high $50s to $700.

“Certainly denim will be survival of the fittest,” said Ed Mandelbaum, the co-producer of New York–based Designers & Agents. Looking for companies that have something unique about them, he accepts one out of 20 applicants for his trade shows. “It has to be especially critical with the denim because we don’t want a sea of blue,” he said.

Cost of quality

E Street Denim’s George said that, overall, the quality, wash and fit of jeans surpass what was available 10 years ago. As recently as 2001, premium denim prices retailed from $120 to $150, he said. Presently, he noted, “the premium range is someplace from $140 to $150 to over $200.”

No price is too high. Even Stronghold’s top-end jeans, which will retail for $1,100, will attract the denim connoisseur who is going to appreciate the workmanship, details and aesthetic that the jeans have, said Stephanie Seeley, the head buyer for Los Angeles’ American Rag Cie, who ordered the product. American Rag carries about 10 to 12 different denim lines in each of its men’s and women’s denim sections, with retail prices starting at $145.

Seeley explained in an e-mail: “I know everyone keeps questioning, ’When did jeans get so expensive?’ But sales haven’t slowed, and I think we should continue to push the envelope, especially here in Los Angeles, where just about everyone’s wardrobe revolves around denim. I think those who want to be individuals are going to continually seek out a product that is different. In order for that to happen, the designers are going to put more into the pieces, which is going to raise the price.”

Higher prices helped jean sales grow to $14.2 billion in 2004, up 6 percent from $13.4 billion in 2003, according to The NPD Group, a marketing information company based in Port Washington, N.Y.

A.J. Cohen, owner of Local Joe in Bend, Ore., said that, while “pretty aggressive,” the premium denim market “has opened up to the general public a lot more because they understand it and want it.” He said consumers are now more used to an opening retail price point of $150 than they were a year ago. He said the majority of his business lies in jeans retailing from $129 to $199 and predicted that premium pricing will level off at $150 to $225. “When you get over that, it is super-premium,” he said.

Felix Valdez, who handled marketing, sales, and research and development at El Segundo, Calif.–based wash house First Finish before becoming wet process manager for Gap Inc.’s Old Navy division in New York, said the costs for washes have remained the same even though retail prices have increased. He said that, for one pair of jeans, wash houses can charge $2 for a rinse wash; $1 for a resin dip; $5 for candle wax; and 55-cents-a-minute for hand-sanding, potassium spraying and grinding. He said the style, body and fabric can cause retail prices to surge. “If you’ve got the right label, you can mark it up,” said Valdez, who gives the denim boom another two to three years before it wanes.

Beyond premium

Competition is healthy for the industry, in the opinion of Jackie Brander, owner of Fred Segal Fun in Santa Monica, Calif. “It’s going to be an amazing couple of seasons coming up,” she said, adding that the jeans makers are “pushing each other for greatness.”

The quest for innovation drove Mik Serfontaine to design the jeans featuring pure silver filaments. Collaborating with Milanese jewelry designer Ugo Cacciatori, Serfontaine said he wanted to tie the jean to the super-luxury market. Only two years ago, he introduced cashmere denim, which, with a retail price point of $220, had been considered too costly. But Von Dutch now has cashmere denim, and Alexander Wang, a young San Francisco designer who is based in New York, plans to bow cashmere/silk denim cigarette pants, pencil skirts, Bermuda boyshorts and slouchy jeans with wide board cuts ($80 to $100 wholesale) for Spring 2006.

Serfontaine said the premium denim market will be around as long as consumers buy jeans. “That market will keep growing as long as the people in the market will stay relevant,” he said.

For Stronghold’s Michael Paradise, “the only way to be on top of the game is to have no compromise in what you’re making and [to make] only the best.” Paradise said he and co-owner Michael Cassel considered the hype and prices in the premium denim market before jumping in.

“We’re not doing jeans because jeans are hot,” Paradise said. “We’re doing jeans because we know jeans.”

Stronghold’s jean that wholesales for $500 is modeled after pre–World War I garments. Paradise said the company will produce the jean in a limited edition of 100 units, partly to see if anyone will buy it.

Paradise said the premium denim market is undergoing the same phase that the athletic shoe sector experienced when skeptics questioned its $100 sneakers a few years ago.

“The prices are going up, and they’re going to stay up,” Paradise said. “Are people going to stop wearing jeans? I don’t think so.”