06/03/2014 04:04 EDT | Updated 06/04/2014 09:59 EDT

Canadian Denim Sales In Long-Term Decline; Blame Lululemon

STOCK4B via Getty Images

Sales of jeans in Canada are in a long-term decline, and the cause of the trend lies partly with a homegrown phenomenon: Lululemon, and the surging popularity of activewear.

According to data from consumer tracking agency NPD Group, the dollar value of sales of jeans in Canada dropped by 5 per cent in 2013, with sales of kids’ jeans dropping a full 10 per cent. Only Ontario bucked the trend, with denim sales flat for the year.

So what are Canadians wearing instead?

NPD Group reports sales of "active bottoms," which includes Lululemon yoga pants and the many imitators that have popped up in recent years, saw sales leap nearly 25 per cent over the past three years, to more than $1 billion. Sales grew 14 per cent in the last year alone.

Canadians haven’t been this crazy for “active bottoms” since the age of leg warmers back in the 1980s, the Financial Post asserts.

The activewear boom is "eating away at denim sales, and denim is not doing enough to combat it,” writes Marshal Cohen, an industry analyst at NPD.

Story continues below

Biggest Retail Brands In North America

The same trend is visible in the U.S., at least among teens, where market research shows traditional denim retailers like Abercrombie & Fitch and American Eagle are losing customers to retailers selling activewear.

Lululemon may not be the only one to benefit. Numerous fashion retailers are now gunning for Lululemon, trying to steal back some of the fashion market the Vancouver-based retailer has been taking in recent years. Everyone from Gap — which is opening Athleta yoga fashion stores — to Adidas, Nike and Under Armour are now going after the athletic wear market.

Despite a controversy last year over company founder Chip Wilson blaming women’s thighs for the sheerness of Lululemon yoga pants, the company has continued to show strong earnings growth.

Revenue jumped 16 per cent in 2013, and though profits didn’t meet early forecasts, they exceeded the company’s most recent guidance. CEO Laurent Potdevin says the company will continue to invest in 2014 to grow the brand.

But NPD Group’s Cohen says the rise of “active bottoms” isn’t the whole story.

The denim industry is suffering from “a lack of true innovation.” The traditional shifts in jean styles — from blue to black, from low-fit to traditional and back — just don’t cut it in today’s environment, where consumers have more choice than they used to.

“It’s time for the denim industry to take a long, hard look at itself, and figure out ways to innovate,” Cohen writes. “Only then will it begin to invigorate the consumer market.”