Dive Brief:

• Macy's on Thursday announced the launch of a "modest clothing brand" dubbed the Verona Collection, featuring a selection of ready-to-wear pieces including dresses, tops, cardigans, pants and hijabs in a variety of colors and fabrics.

• The collection springs from the department store's minority- and women-owned business development program, The Workshop, founded in 2011 to further vendor diversity, according to a company press release.

• The release follows the development of hijab designs last year from Nike and American Eagle Outfitters.

Dive Insight:

Many apparel retailers are looking to the Middle East for overseas growth, where in many areas a young and growing middle class includes fashion-forward women interested in apparel that allows them to conform to their traditions with style. Verona founder Lisa Vogl said that her Macy's collection, which includes maxi dresses, cardigans and hand-dyed hijabs, in some cases accented with asymmetric buttons and featuring a layering look, was developed after her own search for fashionable yet modest clothing. That makes the effort "more than a clothing brand," she said in a statement.

"It's a platform for a community of women to express their personal identity and embrace fashion that makes them feel confident on the inside and outside," she said.

Macy's isn't alone in working to cater to this segment. Retailers like Spain's Mango and DKNY are increasingly appealing to fashionable Muslim girls and women, with collections released ahead of the holy month of Ramadan, for example. Muslims in the U.S. tend to be young, educated and upwardly mobile — a.k.a. a retailer's dream. The potential in the Middle East was also underscored last year by Amazon's acquisition of Dubai-based Souq, which operates in Egypt, Kuwait, United Arab Emirates and Saudi Arabia. 

As the U.S.'s Muslim population has grown — Islam is expected to become America's number two religion by 2050 — retailers and designers are increasingly paying attention to this demographic. That makes Muslim women and girls a growing niche. The styles favored by many religiously observant women can have a spillover effect as well. Modest swimwear, like that designed by Orthodox Jewish women, is catching on among some women who aren't interested in the garb for religious reasons, but rather, just prefer the look or the opportunity to cover up. 

Nike, Macy's and American Eagle's entry into this category demonstrates how powerful a niche this could be and flies in the face of the current political climate in the U.S. But it's not without controversy: last year, Nike released a powerful ad showing some women wearing the piece as they run, ice skate and participate in other sports, which went viral in the Arab world, but also garnered criticism from some.