CITI: Big Changes Are Coming To The Women's Underwear Market

american eagle aerie

Photo: American Eagle

Major women’s underwear brands like Hanes and Maidenform have been losing market share to private labels over the last four years, according to a new report by Citi analysts Susan Anderson and Kate McShane.Private label brands that are leading the way include specialty retailers like Victoria’s Secret.

Some like Chico’s FAS Inc’s, Soma brand and American Eagle are trying to gain market share by targeting department store customers and by opening retail stores under new brands.

We looked through Citi’s report and put together the latest findings on trends in the women’s intimates¬† market and the secular shift in where women shop for them.

Note: Data is drawn from NPD, and NPD changed its methodology in 2010 so market share losses might not be as big as indicated.

Private label brands like Victoria's Secret and other smaller players are gaining marketshare

All major brands have lost dollar share and unit share over the last four years, while private label brands (companies that make products for sale under its other brands like Limited Brands) have gained share. Private label includes specialty retailers like Victoria's Secret.

Many specialty retailers are trying to gain a foot in the intimate apparel market by opening retail stores under new brands, like Chico's Soma intimates stores and American Eagle's aerie intimate stores.

Source: Citi

There has been a major permanent shift in where women shop for intimates

There has been a secular shift (a long-term trend that changes our mindset) from department stores to specialty retailers.

Each of these brands has different demographics. The Aerie customer targets teen girls, Victoria's Secret's customers are those who are in their '20s and fashion forward.' Soma has been targeting the department store shopper, the Soma customer is over 30 and similar to the department store customer which is a '30s mum with kids at home'.

Source: Citi

Higher than normal prices made Hanesbrands lose market share but this trend is expected to reverse

Hanesbrands Inc lost market share for the first time in the last four years which was because of higher prices and the temporary abnormally high price spread with Berkshire Hathaway's Fruit of The Loom. But the company is expected to regain some market share now that the price spread has normalized.

Hanesbrands does still lead the share in women's intimates which gives the company leverage when negotiating price and shelf space with retailers.

Source: Citi

Here's a breakdown of top brands for women's intimates and socks/hosiery based on dollar sales

Source: Citi

Bras accounted for 45.8% of total dollar sales in 2011

Here's a quick break-down of total dollar sales within the women's essentials category

  • Bras - 45.8 per cent of total dollar sales
  • Panties - 24.8 per cent of total dollar sales
  • Socks - 19.6 per cent of total dollar sales
  • Shapewear - 5.4 per cent of total dollar sales
  • Daywear - 4.4 per cent of total dollar sales

Source: Citi

The women's intimates and socks/hosiery market grew 6% year-over-year (YoY) to $14 billion

The women's intimates and socks/hosiery market grew to $14 billion in 2011, from $13 billion in 2010. The increase was driven by a 7 per cent gain in intimates i.e. bras, panties, shapewear and daywear, and a 4 per cent gain in socks/hosiery.

Within intimates, daywear dollar sales grew 14 per cent, followed by bras at 9 per cent, panties at 6 per cent and shapewear was flat.

Source: Citi

All categories within women's intimates and hosiery/socks except bras saw prices increase YoY

Bra prices were down 2 per cent YoY. All other categories of women's intimates and hosiery/socks saw prices increase.

Prices of daywear increased the most because of their exposure to cotton, followed by socks/hosiery, panties and shapewear.

Source: Citi

Athletic brands have gained market share in women's socks and hosiery

Athletic brands and non-core brands like Nike have gained market share in women's socks and hosiery.

Hanesbrands Inc lost market share due to a decline in its Leggs brand, but maintains the lead share amongst brands though.

Source: Citi

But are women's intimates a dying industry?

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