Intimate apparel is big business on a global scale, and conventional wisdom has it that the category generally outperforms the broader apparel category during economic downturns.

Whether this is myth or reality is a point of contention among industry watchers. However, everyone can agree that lingerie is a vibrant, high-margin category ranging from staples like bras and panties to fashion-oriented luxury items for women across every demographic group.

“Intimate apparel is probably as strong as anything right now and has traditionally fared well during a recession,” says Mike Sandler, chairman of the intimate apparel council of the American Apparel & Footwear Association, based in Arlington, Va. “When pocketbooks tighten up, people are less   likely to make large purchases like dresses or new outfits. Intimate apparel gives them the ability to buy something less expensive that makes them feel good: It’s an affordable indulgence.”

Beyond that, the business is bolstered by the fact that items wear out more quickly — particularly bras and panties, which represent 65 percent of intimate apparel purchases. “There’s a lot of replacement value there,” Sandler says..

Still, statistics from the NPD Group indicate that intimate apparel could use a bit of lift. In the 12 months that ended in April, sales totaled $10.92 billion, 3.4 percent lower than the same period a year ago.

NPD reported that bra sales ($5.79 billion) declined 3.3 percent and panty sales ($3.5 billion) were down slightly over that same period. Shapewear, a much smaller ($718 million) category, experienced the biggest squeeze — 9.2 percent.

Sleepwear, which is listed separately by NPD, outperformed the rest of the intimate apparel market, rising 1.5 percent on sales of $6.5 billion. Nightwear, which accounts for the bulk of sales, was up 2.9 percent, while robes and loungewear dipped 3.9 percent.

Virtually all retailers reported lower sales. Specialty stores and mass merchants — the biggest segments — were down 4.1 and 3.9 percent, respectively. Department store revenues declined 3.5 percent, and even factory outlets experienced a 12.4 percent decline. The only gain for the period (14 percent) was among off-price retailers, a relatively small segment.

Although the economy can work in the category’s favor, it is also its biggest challenge. “Retailers are all being very careful about purchasing,” Sandler says. “They are watching inventory very carefully and are less likely to experiment with new things,” which is likely to result in higher stock outs.

Meanwhile, while China remains a large producer of intimate apparel, it is no longer the least expensive one, so companies are going to Vietnam, Cambodia and back to the Philippines. Additionally, Sandler says, “freight has gone up dramatically and manufacturers are really being squeezed.”

The escalating cost of gasoline could contribute to even higher online sales. However, the pace remains difficult to judge, according to Sandler. “Many in the industry feel that lingerie is a category that consumers look at online but go to the stores to buy.”

What is too sexy?
The question is, which stores do they visit? Victoria’s Secret has a firm grasp on about 30 percent of the market, but even this venerable purveyor of intimate apparel is not immune to market swings: After a relatively weak first quarter, company officials have been asking themselves whether they have veered off course by becoming “too sexy.”

Bemoaning an overabundance of sensuality seems oddly puritanical for a company whose marketing theme was “What is Sexy?” However, as CEO Sharen Jester Turney recently told analysts, “We use the word sexy a lot and really have forgotten the ultra-feminine. … We will return to an ultra-feminine lingerie brand to meet [customer] needs and expectations.” She emphasized the success of the chain’s Pink brand, a $900 million annual business that targets a younger demographic.

With the lingerie business becoming more fragmented, there is no shortage of competitors for the younger set. One of these is Gilly Hicks, intimate apparel stores with an Australian twist, launched by Abercrombie & Fitch. They specialize in moderately priced items that are described as more casual and fun and a less-provocative alternative to Victoria’s Secret for younger consumers, according to industry observers. The company now has five stores in operation and plans call for another seven or eight this year.

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