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Designer Separates

Some of fashion's biggest names are increasingly playing dual roles as retailers, moving away from department stores and opening their own boutiques.

March 05, 1998|DIANE SEO

NEW YORK — Ralph Lauren's flagship store on Madison Avenue exudes the luxuriousness of a country estate, with its carved ceiling, wood-burning fireplace and fine antiques.

Guests trying on the designer's pricey frocks in the more-than-ample dressing rooms are treated to a glass of wine or, if they prefer, a cup of tea.

Meanwhile, Giorgio Armani's flagship offers a more contemporary setting, with blond hardwood floors, sales assistants clad in the designer's suits and ample views of Madison Avenue.

Instead of relying on department stores to build their reputations, designers such as Lauren and Armani are increasingly playing dual roles as retailers, providing customers with something they believe retail giants cannot--a complete vision of their "lifestyles."

"Individual designers get a little lost at department stores," said Carrie DeMarte, retail director for Cynthia Rowley, whose funky, urban designs retail from $100 to $400 at department stores and at five U.S. boutiques. "One of the reasons we're moving forward with our own boutiques is to showcase Cynthia's talent and image with her full collection."


While designer boutiques have long been a part of the retail landscape, the trend has exploded recently, as designers increasingly find themselves at odds with department stores over everything from pricing to the growth of private labels. And because consumers now have more fashion choices than ever before, designers feel a more urgent need to showcase their images on their own.

"Before, designers were kings and queens at the department store," said Kurt Barnard, president of Barnard's Retail Trend Report. "But increasingly, designers are finding it difficult to be heard over the din of so many other voices at department stores. They see having their own stores as the only way to grow their companies and, to perhaps put it more boldly, ensure their survival."

This year, dozens of high-end designers are expanding their retail push. Prada is opening 17 stores internationally, adding to the 40 shops launched last year; Hugo Boss will add at least 20 franchised shops in major U.S. cities; Tom Ford of Gucci will open a 14,000-square-foot store in Beverly Hills this fall; and Tommy Hilfiger has flagship plans for Mexico City, London and Brazil, adding to the one on Rodeo Drive he opened last year. Donna Karan is constructing a U.S. flagship on Madison Avenue and plans to open her first domestic DKNY shop in Las Vegas this month.

Fashion designers are flocking to longtime upscale shopping districts such as Madison Avenue and its West Coast counterpart, Rodeo Drive. But they are also hitting other havens for the rich, such as Las Vegas, Houston and Bal Harbour, Fla.

Department stores are watching the trend closely, careful not to assail designers for their entrepreneurial ventures, but also fearful that fashion's elite will continue to foray on their turf.

"It really depends on the magnitude of the expansion," said Terry Lundgren, president of Federated Department Stores, which owns Bloomingdale's and Macy's. "If you're talking about one or two stores that are intended to enhance the image of a brand, I think that's a good thing.

"But when the concept gets carried out to hundreds of stores being placed right outside the doors of department stores, it becomes an issue of too much product availability."

Lundgren said it's difficult to tell whether, for instance, Ralph Lauren sales went down at Bloomingdale's when the designer opened his flagship within walking distance of the department store. But he said it is a bit worrisome to see designers increasingly bypassing traditional retail outlets.

Prada, for instance, has had so much success with its own stores that its department store business has become a lower priority.


"Seventy percent of our distribution is in our own stores," said Prada President Patrizio Di Marco. "Our expansion with outside stores will be by adding doors to existing accounts, but slowly and thoughtfully."

Designers have numerous reasons for wanting to go into retailing, many of which are financially oriented. But they also want to dazzle consumers by projecting the right ambience, music, sales staff and merchandise at their shops.

"It's an ego thing, their way of getting their name out," said Elena Hart, fashion marketing director at Fashion Assn. in New York. "It's a prestige thing to have their own stores, whether they make money or not."

Indeed, analysts say it's unlikely that some designers with flashy digs on Madison Avenue or Rodeo Drive make money at their stores because of high real estate costs. But in an era where brand building has become a must, designers believe having a showplace is one of the best forms of advertising.


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