WSJ: An Established Designer With the Eye of an Upstart

WALL STREET JOURNAL | CHRISTINA BINKLEY

Among the fashion deities and style editors seated at the Thakoon show this week was a besuited gentleman dressed more for the United Nations than New York Fashion Week: Piriya Khempon, the consul-general of Thailand.

"He is like an icon" in Thailand, said Mr. Khempon of designer Thakoon Panichgul. The diplomat appeared in the sea of fashionistas because, he said, Mr. Panichgul could be a diplomatic and economic boost to the country where he was born.

That might sound like a tall order for a 35-year-old designer who is most widely known for the red-and-black dress worn by Michelle Obama at the Democratic National Convention in 2008. But Mr. Panichgul is proving to be a rare sort of designer—one with enough business savvy to have hired a sales staff even before pattern-makers and seamstresses when he started his label six years ago.

For a season or two after his burst of Obama-related fame, Mr. Panichgul seemed to use Mrs. Obama as his muse, and his collections appeared aimed at one high-profile customer who wears a lot of nice dresses.

This week in New York, though, the designer went in an entirely different direction. Opening looks in the collection were white, and tailored—including a stunning double-breasted suit. White was Mr. Panichgul's response to the camel colors being so heavily promoted for fall. "I've been sick of camel for the past year," he said in his studio a few weeks before this show. His dog Stevie, a tiny Yorkie-Chihuahua mix, was yapping around his ankles.

The collection moved on to sexier looks and juxtaposed girlish white cotton eyelet with vampy hook-and-eye enclosures that in some cases ran the length of the garment. That's the sort of thing that has earned the Thakoon label critical praise—its familiar and flattering silhouettes sparked up by unexpected or daring finishing details.

"I'm not an artist, I'm a designer," said Mr. Panichgul. "Designers are supposed to look at culture and solve problems."

These days, Mr. Panichgul is competing for adoration with newer, younger designers such as Prabal Gurung and Joseph Altuzarra. At a time when retailers are chasing the newest thing every season, he is neither the latest flavor nor the famous-as-Kleenex likes of Ralph Lauren or Michael Kors.

Mr. Panichgul works from a studio in New York's SoHo neighborhood, with offices cut out for him and his chief executive, Maria Tomei Borromeo. It's so crowded that when a summer intern arrived on her first day this year, Ms. Borromeo said, she looked around and exclaimed, "This is it?"

That's a step up from the meatpacking district garage from which Mr. Panichgul sold his first collection in 2004—10 garments that he made without telling his family for fear they would disapprove of his new career.

"I went to business school because my mom wanted me to take a scholarship. I didn't want to do business, but I was good at it," he said. His mother, a seamstress, brought him and his brother Kritsada from Thailand to Omaha, Neb., as boys. "Asian parents want their kids to be doctors. You feel that pressure," said Mr. Panichgul, who said he is very close to his mother and brother.

Fashion was his hobby. He adored European minimalist designers Helmut Lang and Jil Sander. School was awkward. "I always felt like a mutt. I was born in Thailand, grew up in Bangkok, moved to Omaha at the age of 11 and had to deal with the friends thing—all that."

After graduating from Boston University, he worked a stint in editorial at Harper's Bazaar, where he says he met Chicago boutique owner Ikram Goldman and others who helped him learn the ropes of fashion. He lived frugally and saved money. "Someone told me I lived like a monk," he said. His mother found out he'd quit his job to launch a line when she called Harper's Bazaar two months later and learned he was no longer employed there.

"It was kind of surprising for me and my mom," says Kritsada Panichgul, a food photographer who has worked with celebrity chef and cookbook author Rocco DiSpirito. "I should have known. When we were kids, we would go to the newsstands and he knew exactly when the new [fashion magazine] issues came out. He would get really excited."

Thakoon Panichgul, who said his mother is shy about her English and prefers not to speak with the press, noted that she swallowed her worries about her son's ability to support himself and has been "very supportive." (As usual, his very pleased mother was at this week's show, bowing shyly as she met guests.)

Mr. Panichgul was completely inexperienced that first year. "He didn't know the prices" of his own collection, said Ms. Borromeo, who joined him that season at Ms. Goldman's prompting.

In those early days, Ms. Borromeo said, Mr. Panichgul "would give me his chair and he would sit on an overturned garbage can."

Robert Burke, then an executive with Bergdorf Goodman's, remembered sitting at a folding card table to write up a small order with the first-season designer. "There are a very few designers who you look at and just know they're going somewhere." Mr. Burke called Thakoon well-priced for the luxury segment, with dresses in the $800 range—well under the $1,200 and up that many designers charge.

Ms. Borromeo declined to cite the company's annual revenues, but said this spring's sales were up 63% over last spring. A secondary line was launched last fall called "Thakoon +", which they refer to in the office as "Addition." Addition reaches a broader audience, with prices that run $195 to $1,000, compared with prices starting at $295 and rising to the sky at the main Thakoon line.

"He's a fresh, young, established, seasoned designer, and only today could you use those adjectives altogether," said Mr. Burke, who is now a fashion-business consultant.

NEW YORK TIMES: Introducing Jack Wills

NEW YORK TIMES | KATIE WEISMAN

Most Americans have not heard of Jack Wills, but that is something the British sportswear retailer intends to change.

Pete Williams, the London-based brand’s chief executive and co-founder, opened shops on the resort islands of Martha’s Vineyard and Nantucket this summer, and a 4,500-square-foot, or 420-square-meter, store is slated to debut in Boston early next month.

With the U.S. economy still teetering, it would seem like a dicey time for a foreign brand to tackle the U.S. retail market. But for a company like Jack Wills, “which has a very specific approach to a college-age clientele,” the timing should be just fine, says Robert Burke, founder of the luxury and fashion consultancy Robert Burke Associates in New York.

“The profile of the customer in these locations fits our brand, which is up market, premium and niche,” Mr. Williams says. “The brand story is all about life while at university, so Boston clearly works as a college town, and the resort towns are where our customer goes on holiday in the summer.”

Mr. Burke notes brands that tightly control their image and their collections, like Ralph Lauren — and Jack Wills — still are seeing sales gains.

For autumn, Jack Wills is stocking women’s wear like tweed riding jackets starting at $379, soft cotton Henley shirts and gathered skirts, while the men’s line ranges from flannel shirts starting at $69 to Fair Isle and fisherman sweaters. It also has home accessories, eyewear, fragrances and limited-edition items like an equestrian jacket selling at $449.

The Wills strategy of opening wholly owned stores also offers “an element of exclusivity,” Mr. Burke says. “If Jack Wills were to be a mall store, it would be much less appealing.” Besides, he adds, the down economy probably means the brand has been able to get the best locations with the lowest rents.

Rose Marie Bravo, the former Burberry executive who is advising the brand, says: “How can they take such a risk? They have a proven success record and have made money doing it this way.”

Last year, turnover at Jack Wills nearly doubled to £42 million, or about $65 million, and 2010 revenues are expected to reach £65 million.

The U.S. expansion has been fueled, in part, by the 2007 purchase of a minority stake in the company by the British private equity firm Inflexion. The investment, an undisclosed sum, also helped introduce the Aubin & Wills collection for customers who “graduate” from Jack Wills and brought Pete Saunders, the former chairman and chief executive at The Body Shop, on board as chairman.

Ms. Bravo describes the Jack Wills strategy as “beguiling and being contrary to all retail and branding principles we have gotten accustomed to.”

Rather than traditional advertising or marketing, the company uses social media to get the word out and has a group of international brand ambassadors it calls “Seasonnaires.”

The team, first deployed at the tony French ski resort of Val D’Isère in 2005, stages special events and gives out free items — like the plastic sunglasses with Jack Wills logos on their fluorescent pink or green arms that were so popular in Martha’s Vineyard this past summer — in exchange for customer information.

Olly Finding, Jack Wills’s international marketing manager, says the Seasonnaires have played a key role in establishing Jack Wills in the right U.S. audience. “When those students get our news via e-mail during the school year, they’ll remember us,” he says.

Rachel Romanowky is one of the Seasonnaires recruited during a 2009 Jack Wills tour at Trinity College in Connecticut, where the 23-year-old is a senior majoring in studio art.

“Trinity is known for being a preppy school, so if students saw the pink and blue Land Rover driving around, passing out free underwear, it immediately piqued interest,” she says.

There are the inevitable comparisons to Abercrombie & Fitch, something the Jack Wills executives loathe — and some industry experts dispute.

“My colleague describes an Abercrombie & Fitch store as ‘teenage angst all bottled up.’ It shows you all the things you aspire to and immediately tells you what you are not,” says Manfred Abraham, the strategy director for the London branding consultancy Interbrand. “Jack Wills is not like that. It invites you to join in the fun.”

BLOOMBERG: At Fashion Week Hemlines Are Up and Down, Just Like Markets

BLOOMBERG | KATYA KAZAKINA

It used to be so simple at fashion shows. When stocks were soaring, skirts rose with them to mini length. When the markets headed down, hemlines dropped to more modest levels.

This year, it’s not so straightforward. Three days into New York’s Mercedes-Benz Fashion Week, luxury retail consultant Robert Burke was scratching his head trying to find anycorrelation between the runway’s different styles and the economy.

“Hemlines are all over the place, very much like the stock market,” Burke, president of Robert Burke Associates in New York, said in an interview.

In the past month, the Standard & Poor’s 500 Index dropped from 1121.06 on Aug. 10 to 1047.22 on Aug. 26, climbing back to 1109.55 on Sept. 10 for its biggest two-week gain since June. The 97 designers presenting Spring 2011 collections this week feature similar ups and downs -- with everything from micro-mini skirts to floor-swooping maxi pieces made with transparent organza and chiffon.

“We are living in a universe where there’s no hemline edict,”Fern Mallis, a fashion industry consultant, said in an interview. “The old adage doesn’t apply any longer.”

Mallis was referring to a maxim known as the “hemline index,” a 1920s theory attributed to the economist George Taylor that suggested a correlation between hemlines and economic growth.

This time around, BCBG Max Azria had some dresses so short that they could have passed for tunics, and others that reached the ankle, clinging to the models’ long-limbed bodies like fancy nightgowns. Meanwhile, designer Prabal Gurungdropped his hemlines below the knee and, on occasion, even below mid-calf.

Higher Hems

In the 20th century, dresses crept up for the first time around 1915, during World War I, said Daniel James Cole, a fashion historian. Around the same time, the U.S. economy expanded for 44 months, starting in December 1914, according to theNational Bureau of Economic Research.

“The hem went up to mid-calf,” said Cole, a professor at the Fashion Institute of Technology in New York. “That was radical, because the hemline of the 19th century was to the shoe.”

The prosperous “roaring twenties” saw the emergence of flappers, who provoked anger by bobbing their hair, smoking in public and wearing knee-length dresses.

The stock market’s crash of 1929 was a defining moment for the economy and skirt heights, Cole said. Both plummeted, with hemlines below mid-calf. The S&P Index dropped 86 percent from Sept. 6, 1929, through July 8, 1932, according to data compiled by Bloomberg News.

Knee-Length

A decade later, on the eve of the World War II, the U.S. economy entered an 80-month expansion which lasted through February 1945, according to the National Bureau of Economic Research. During this time, knee-length skirts became ubiquitous, though the trend “had more to do with conserving fabric for the war effort than with the economy,” Cole said.

As a reaction against wartime’s austerity and fabric rations,Christian Dior’s first fashion collection in 1947 offered luxurious silhouettes with full skirts reaching below mid-calf.

“The hemlines dropped by 10 inches,” said Cole. The S&P fell 28 percent between May 29, 1946, and May 19, 1947.

During the 1960s, the U.S. economy grew for 106 months, making it the second-longest expansion between 1857 and today, according to the National Bureau of Economic Research. Hemlines reached their highest.

Twiggy Miniskirts

By 1966, miniskirts became a must in women’s wardrobes. British designer Mary Quant and teenage model Twiggy helped popularize the style.

“In 1966, you had to wear a skirt that was at the knee or higher, or you’d look ruefully out of fashion,” Cole said.

With the S&P dropping 36 percent from Nov. 29, 1968, to May 26, 1970, hemlines moved back to modesty. On March 13, 1970, Life magazine addressed the style transition with a cover story, “The Great Hemline Hassle.” On Aug. 21, 1970, the publication announced, “The Midi Muscles In.”

A clear correlation started breaking down during the 1980s, with designers offering a greater range of styles and lengths.

“It used to be that short was in and long was out. If you wore long, you’d be embarrassed,” Marshal Cohen, chief industry analyst at NPD Group, Inc. in Port Washington, New York, said in an interview. “Now you can wear long, you can wear short. You can wear your pajamas to work and no one would care.”

Maxi Return

Yet, even now an occasional correlation can be spotted, Cole said. Last summer, after the S&P fell 57 percent between October 2007 and March 2009, he noticed floor-length sleeveless dresses appearing on the streets of New York.

“There’s a whole generation of young women who’ve never worn a maxi skirt in their lives,” he said.

For her Friday show, Nicole Miller abandoned her signature figure-hugging dresses in favor of a flowing, layered look that incorporated several hemlines within a single outfit.

“I was just trying to move away from the tight and short,” said Miller, in an interview after the presentation. “There’s no subliminal message there.”

The Guli collection designed by Gulnara Karimova, a daughter of the President of Uzbekistan Islam Karimov, included ethnic Uzbek fabrics, patterns and embellishments applied to floor-length dresses. Toward the end of the event, a group of models strutted out in traditional striped Uzbek robes. Untraditionally, the robes were untied, revealing bodices -- and no skirts at all.

WWD: Defining the New Luxury

WWD | MILES SOCHA

Luxury for all? Not like it used to be.

So-called aspirational customers — who helped lift the luxury category to unprecedented heights during the boom years — seem to be sitting on the sidelines in the postrecession period: still aspiring, but spending less.

“The concept of luxury has restricted again,” said Concetta Lanciaux, principal of Switzerland-based Strategy Luxury Advisors, describing a shift in consumer priorities favoring heritage luxury brands or — at the other extreme — masstige retailers. It makes business more challenging for players in the middle and products that “look like luxury but it’s not luxury.” For example, designers’ second brands are “not doing as well as before [People] prefer to buy less, but a little bit higher,” she explained.

“There are consumers that overreached, and during the recession they had to go back to a more appropriate spending habit,” agreed Michael Burke, chief executive officer at Fendi in Rome, noting that was particularly the case in the American market, hard hit by the financial crisis. “The market has become more polarized: either it’s entry price or true luxury….The middle has hollowed out.

“You either have to be resolutely upscale, or you’re battling it out on prices,” he continued. “[Luxury goods] is not a democratic product category.”

Pam Danziger, president of the Stevens, Pa.-based research firm Unity Marketing, said scores of American consumers who reached beyond their means into the luxury sphere during the boom years pre-2008 have since simply “dropped out” because of the recession.

Danziger estimates consumers with household incomes in excess of $250,000 — the top 2 percent in the U.S. — spend three to four times more on luxury goods than the next affluent tier, those in the $100,000-to-$250,000 range.

What’s more, given a choice between buying the “best of the best” or “better and occasional best,” the richest consumers preferred the latter option in her most recent research.

Based on a survey of some 1,200 affluent consumers in the U.S., conducted last month, Danziger is predicting “cautious behavior” even among elite consumers whose “pent-up demand” for luxury goods led to a spree early in the year that is unlikely to continue.

Lanciaux also foresees a tougher second half, noting European luxury brands were buoyed in the first two quarters by a “huge restocking,” plus a rise in the value of the U.S. dollar against the euro that has since eased.

To be sure, luxury has come roaring back compared with the doldrums of 2009, with most European firms posting strong double-digit sales gains in the first two quarters of 2010 (albeit against low comparisons the year before).

While there are detractors, many executives, consultants and analysts agree the change in fortunes is largely thanks to elite consumers — and emerging markets — rather than a broader buying public.

In a recent report, Bernstein Research analyst Luca Solca said “overseas markets will represent the future driver of luxury growth in the medium and long term. Although the two largest luxury markets — the United States and Japan — make up the majority of current overseas luxury demand, we expect the growing importance of emerging markets to become increasingly pronounced as these markets mature.

“This should bring overseas luxury markets to 66 percent of total demand by destination (versus Europe at 34 percent) in 2020, with emerging markets representing nearly one half of the total overseas portion,” Solca wrote.

Coach’s 34.1 percent bump in fourth-quarter income, reported Tuesday, was also deemed encouraging, suggesting the “ ‘affordable luxury segment’ is also well oriented,” according to a research note by HSBC analyst Antoine Belge.

“We are not saying that everything is rosy for luxury in the U.S., but brands which engage the luxury (or affordable luxury) consumer with products offering clear ‘perceived value’ should continue to do well in our view, even in a jobless recovery phase,” he wrote.

Guy Salter, deputy chairman of Walpole, the association that represents British luxury goods firms, argued the recent rebound in sales in luxury is “not only due to the very wealthy shopper but to other consumers as well. The luxury goods houses have come out with more accessibly priced lines, and the brands that have positioned themselves in the ‘affordable luxury’ space have done well. Links of London, for example, has had very strong results, and all sorts of brands are doing well in that space. I think affordable luxury as a category is maturing.”

Salter noted the crisis forced consumers to change the way they shop. “I think they will continue to buy classic products from high-end brands because they feel they are getting value for money in the long term,” he said. “What they have dropped is the irrational shopping — having to have a certain number of shoes each season or a certain bag because it’s so ‘in.’ The frothiness has been stripped away. To that point, the affordable luxury brands — like Coach — have played the value card by offering classic, well-made products at affordable prices.”

Fendi’s Burke pointed out that fortunes in luxury goods are closely correlated to the stock market, suggesting the core customers are those with financial assets. “We all do very well with that core, elite segment,” he explained, noting the Roman firm’s business remained buoyant through the recession in Europe and Japan, and that furs in the 50,000-to-100,000-euro, or $66,000-to-$132,000, range continue to sell strongly. Meanwhile, the brand’s most expensive leather goods, the Peekaboo range, continue to garner the longest waiting lists. “In luxury, we shouldn’t be in the instant-gratification business,” he said.

Burke noted that Italy remains the one market in the world where the aspirational business has not diminished, thanks to wealthy parents who continue to indulge their adult children with high-end leather goods and fashions, even through the 2009 downturn. “We’re taking market share in Italy,” he noted.

Robert Polet, president and ceo of Gucci Group, said “impulse buying” of luxury goods, seen during the boom years, has decreased. Meanwhile, appreciation for higher-quality, timeless and discreet products has risen, giving a competitive advantage to “reference” luxury brands, he said.

In disclosing first-half results last week, PPR chairman and ceo François-Henri Pinault echoed the sentiment, saying Gucci Group would move away from logos, “adjusting to this new perception of luxury, which is more subtle, more sophisticated.”

“The whole trend we are seeing — from fashion through to beauty — is antimass, antifaux, antibling,” said Marigay McKee, fashion and beauty director at Harrods. “What customers are looking for is heritage, provenance — and embellishment.”

The landmark London department store said recent bestsellers include 10,000 pound, or $15,825, embellished Balmain jackets and 1,400 pound, or $2,215, Balmain jeans. She said fragrance and beauty sales are tracking in a similar way, with Tom Ford, Creed and Bond No. 9 fragrances — all with price points of 150 to 200 pounds, or $237 to $315 — driving fragrance sales. She said customers on the whole are looking for outright luxury and/or unusual ingredients that make a product unique — signals for a healthy trend of trading up.

“The trigger point is always desirability,” said Gucci Group’s Polet. “People aspire to belong to the world of a brand.”

But how many today can afford the admission price?

“There were more aspirational customers prerecession than there are now,” said Robert Burke, head of the New York-based Robert Burke & Associates consulting firm. In his view, sharply priced handbags, shoes and clothes were beneficiaries of the downturn — particularly from contemporary and designer second lines — and will continue to be so.

However, aspirational customers will still save up to buy iconic luxury products, especially from blue-chip brands such as Chanel, Hermès and Louis Vuitton. “I see heritage brands only getting stronger and more desirable to the aspirational customer,” the consultant Burke said. “Consumers are more discerning and more selective in what they buy. I don’t see the market switching right back to where it was.”

During the economic crisis, even well-heeled customers accustomed to designer labels experimented with mixing price points. “I think there’s more opportunity launching contemporary and below price points than launching designer right now,” said Burke. In that vein, he noted the success of American labels such as 3.1 Phillip Lim and Alexander Wang, priced under traditional designer brands.

Lucian James, founder of strategic consultancy Agenda Inc., based in New York and Paris, said luxury was not only impacted by the economic crisis, but a “crisis of meaning” as well.

“Consumers spent some time away from luxury products, and the spell was — to some extent — broken,” he explained. “The recession was a time when consumers really connected to discount and fast-fashion brands and found them surprisingly good.”

To win shoppers back in the postcrisis period, luxury brands “need to create more powerful messages, not just evoke aspirational lifestyles and expect consumers to be seduced….They need to explore ways that they can connect the brand to emerging consumer lifestyles and emerging consumer moods,” James said.

He noted the clientele for luxury today is less tied to income levels than to which brands consumers choose to adorn themselves with, counterfeit or otherwise. “People don’t reach up en masse to luxury brands. They go to the ones that are meaningful for them,” he said.

According to Danziger, the postrecession period creates opportunities for premium brands, and will compel luxury players to put “luxe back into luxury,” the theme and title of her next book.

Luxury players “need to recognize that people are being cautious and figure out ways of bringing additional values to premium brands,” she said. “If we look at the luxury department stores, they have asked their vendors to offer lower opening price points.”

Even affluent men now brag about bargains they scored in Danziger’s focus groups, a first. “That’s the next level of shopping: Being the smarter shopper, finding the better deal and bragging about it,” she said.

In Lanciaux’s view, luxury players will have to adapt to changing spending patterns in mature markets like Europe and Japan, where travel, technological products, art and entertaining are attracting more discretionary dollars. “Luxury brands need to cautiously but surely enter these new territories more tied into cultural lifestyle if they want to continue to grow,” she said. “In addition, they may eliminate licenses that dilute their brands.”

The consultant James suggested Europe’s luxury players lessen their dependence on the “old grammar” of luxury and look beyond heritage. In Japan, meanwhile, brands should look for ways to “connect to a nervous economic culture where security is more important than status.”

Meanwhile, emerging markets like China offer chances for masstige or aspirational brands, positioned at the opening price points for luxury, to write a new luxury grammar. James noted that Coach, for example, recently opened a store in Shanghai and invited young artists to customize bags, leveraging Chinese culture to tap into new generations of high-end consumers. The vodka brand Absolut also successfully introduced a premium product that taps into the Chinese mentality.

Brands such as Nike and Puma, which are perceived as premium but “not weighed down by outdated codes of luxury” also have an advantage in the fast-growing region, James noted.

WWD: Reason No. 1: Luxe Lust

WWD | FN STAFF

During the height of the recession, retail pundits declared that the days of the $800 shoe were over. How wrong they were.

Led by Christian Louboutin, who posted double-digit increases last year, many of the luxury shoe stars have continued to shine, from the red carpet to the oval office.

“I don’t think shoes have ever been as dramatic or as extreme as they are now,” said Robert Burke, former fashion director at Bergdorf Goodman and founder of the consulting firm bearing his name.

And even as more ready-to-wear designers dive in to the footwear game, shoppers continue to gravitate to the footwear specialists. In a recent survey conducted by the Luxury Institute, Christian Louboutin and Manolo Blahnik were ranked No. 1 and No. 2 for designer shoes, while Jimmy Choo came in fifth on an extensive brand list spanning Giorgio Armani to Versace.

“It’s like consuming candy when you were a little kid,” said Milton Pedraza, the Luxury Institute’s CEO. “These are beautiful, attention-getting shoes that make you feel really special and great.”

WWD: As Luxe Would Have It: The High-End Market Rebound

WWD | JEAN E. PALMIERI

For a long time, luxury labels were above it all. Brands aimed at the most affluent sliver of the market were simply immune to recession, they had long maintained. So it caused a minor stir this spring when Kiton, the renowned Neapolitan tailored-clothing company, introduced a lower-priced line called CIPA 1960 at Bergdorf Goodman Men.

Everything remains relative. Although CIPA is pronounced “cheap-a,” the new collection is anything but. It includes beautifully tailored suits for $5,500, stitched entirely by hand, but made with fine archival wool or linen fabrics instead of Kiton’s usual cashmere blend. This helps shave about 30 percent off the typical $8,000 price of a classic Kiton suit—a meaningful saving for the upscale shopper still skittish after the Wall Street meltdown of fall 2008. And if the economic crisis has taught luxury marketers and retailers one lesson, it’s this: The old notion that they are recession proof is a myth.

Leaders in the luxury field are quickly adapting to a seismic shift in the market, one that affects not just pricing, but also consumer attitudes, shopping patterns and the very definition of luxury. As Gregory Furman, founder and chairman of the Luxury Marketing Council, puts it, “The luxury shopper has changed and will continue to be changed as never before.”

Ron Frasch, vice chairman and chief merchant of Saks Fifth Avenue, sees opportunity for those who respond to this rapidly evolving consumer. The Great Recession, he says, was a “wake-up call that significantly changed what we do. And perhaps it was long overdue.”

The shake-up stems in part from a significant decline in the size of the core luxury market. According to the 2009 World Wealth Report by Merrill Lynch Global Wealth Management and Capgemini, the world’s population of high-net-worth individuals—defined as those with investable assets of more than $1 million—shrank 14.9 percent to 8.6 million people in 2008, as their combined wealth fell 19.5 percent to $32.8 trillion. The ultrahigh-net-worth population—individuals with assets of $30 million or more—saw an even steeper decline of 24.6 percent.

And the market didn’t improve in 2009. According to the global consulting firm Bain & Co., last year was the worst ever for the global luxury goods business, with sales falling 8 percent—albeit from a very lofty perch.

Lately, there have been hints of a rebound. Sales began to regain some strength by holiday 2009, and Bain forecasts a 4 percent increase for 2010. “We’re seeing now that consumers are going back into stores,” says Claudia D’Arpizio, lead author of the Bain study.

Cara David, senior vice president of corporate marketing and integrated media for American Express Publishing Corp., also reports a “modest resurgence” in the luxury sector. “We’re seeing a little slack in the guilt and angst over purchasing luxury products,” David says. According to Amex Publishing, 45 percent of affluent consumers now say they feel guilty buying luxury goods, down from 54 percent last year, and David says this attitude adjustment will have an estimated $28 billion net impact on the luxury market, or a gain of 6 to 8 percent.

But even if luxury has begun to bounce back, the profound shift in the consumer mind-set is expected to endure. Jim Brennan, a principal at McKinsey & Co., predicts an ongoing emphasis on value and values that could last five to 10 years. Consumers will buy fewer pieces at lower prices, he says, and they will favor products they consider iconic or authentic. Brennan notes that luxury shoppers have returned to buying jewelry, watches and other “statement pieces that can be handed down to their kids.” Apparel has not rebounded as quickly.

But America’s luxury retailers have already set out to change that.

Saks is “resetting our ways,” says Frasch, “particularly in tailored clothing, dress shirts and shoes.” While offering more goods at opening price points, the store is creating exclusive products and brands to distinguish itself from the competition. “We’ve enhanced our good, better, best model,” Frasch explains. “In the past, our assortment of ‘good’ was OK; our ‘better’ offering, brands like Corneliani and Canali, was respectable, and we had a fine ‘best’ offering, with Zegna, Brioni, Armani and Kiton. But our ‘good’ model has really grown.”

The core suit price is now around $1,500, down from $1,700 in 2008, as Saks lures new customers with younger silhouettes and lower prices from brands such as Michael Kors, Hugo Boss, Z Zegna, Versace, Calvin Klein and Burberry. The retailer has also scored with its new Saks Fifth Avenue Men’s Collection, a comprehensive assortment of modern classic men’s wear with sharp prices. Suit separates, for example, retail at $695 for jackets and $195 for pants.

As Frasch tells it, the men’s luxury shopper is “looking for a quality product at a fair value, not low price.” He cites the “tremendous resurgence of made-to-measure” as evidence the customer is willing to pay a premium for products with clear intrinsic value. Frasch sees potential in luxury sportswear, as well. “As bad as last year was, we had a good year with Brunello Cucinelli, which can never be called volume pricing,” he says.

Russ Patrick, senior vice president and general merchandise manager of men’s wear at Neiman Marcus, acknowledges the luxury retailer “took a hit” during the recession. “So we worked to get our inventories in line,” he says. “With less open-to-buy, there was less room for error, so we had to be spot on. It required us to be better editors.”

“We worked closely with our important vendors to adjust costs on specific ranges of fabrics so we could retail a portion of their suit offering under the $2,000 price point,” said Patrick. “In addition, we introduced two lines, Z Zegna and Caruso, this year, which offer a full collection of suits under $1,500.”

The strategy is paying off: Sales have improved across all categories as shoppers respond to fresh offerings. Still, the Neiman’s customer will continue to be “more mindful about shopping,” Patrick says. “So we have to remain focused on product, challenge our vendors for newness and give him things so he can continue to update his wardrobe.”

One of the ongoing challenges in the luxury field is the aspirational consumer, who has pulled back, according to Pam Danziger, president and founder of Unity Marketing. Danziger defines this segment as households with income of $100,000 to $249,900—23 million households in the U.S., compared with only 2.5 million with incomes of more than $250,000. “The buoyancy in the luxury market prior to the recession was due to aspirational shoppers trading up,” she says. “But now, they’re simply not participating.”

As Danziger sees it, future luxury-market growth will depend upon attracting “ultra-affluent consumers” who “will demand higher quality and more value in luxury purchases.

They also demand more information. Although the affluent consumer remains willing to pay a premium for quality, he now insists on knowing why a product costs what it costs—a phenomenon that Furman, of the Luxury Marketing Council, calls “connoisseurship.” According to Furman, 90 percent of luxury shoppers started out in the middle class. Luxury brands, he says, must “not assume they understand the underlying value of a product.”

That gives an edge to brands that convey “craft and heritage,” says Robert Burke of Robert Burke Associates, citing classic clothing labels such as Kiton, Brioni and Zegna. “The consumer is happy to invest in long-term pieces, but they’re not spending frivolously,” he says. Nor are they spending at the same rate as they did in the past. “It doesn’t feel or sound right today to buy 14 custom suits,” Burke says. “They’re buying luxury in a quieter way.”

Bergdorf Goodman has responded by bringing in key classifications at a “more gentle price point,” says Margaret Spaniolo, senior vice president and general merchandise manager of men’s. “There were men who took a couple of seasons off, but we felt our customer still wanted the brands that we carry in our store,” she says. That desire for luxe brands minus the sticker shock prompted Bergdorf to bring in Kiton’s CIPA 1960 suit collection and other accessible offerings.

“It worked,” Spaniolo says. “We saw the customer come back in shopping.” But not in the same way he did in the past. “The consumer psyche has changed,” she explains. “All of us used to just buy what we liked without thinking about it. Now we think about what we’re spending. If this didn’t wake us all up, I don’t know what it’ll take.”

Tom Kalenderian, executive vice president and general merchandise manager of men’s at Barneys New York, says shoppers have acquired a “more measured” perspective—and more price consciousness. “We’ve consistently dropped tailored clothing prices 5, 10, 15 percent,” Kalenderian says. “We’re selling more value, and that isn’t going away. The customer is supersmart, and our clients know which manufacturers failed to rise to the challenge.”

What the new luxury consumer really wants is “a variety of price points,” according to Bob Mitchell, co-president of the Mitchells Family of Stores, headquartered in Westport, Conn. “He still wants luxury, but he wants to mix in some other pieces, primarily in sportswear.” The Mitchells have paid increased attention to what they call “approachable” pieces, such as cashmere sweaters for $300 to $400, or denim-friendly sport coats and shirts. At the same time, luxury brands that have “repositioned their suit prices are getting traction,” says Mitchell. That includes Brioni, which came in under $5,000, and Zegna, with some basic models for $1,995 or less. Canali offered $1,495 suits, down from $1,900. “That kind of choice had vacated the market before,” Mitchell says.

Robert Ackerman, president and chief executive officer of Ermenegildo Zegna’s North American business, says, “Broadening the assortment of suits helped the business.” The brand also has seen an uptick in its sportswear sales, along with shirts and ties—smaller-ticket items that can “freshen a wardrobe,” Ackerman says.

Mitchell, meanwhile, sees the spreading of price points as an opportunity for additional sales. “There’s potential for us to get more closet share,” he says. “They’re buying Cucinelli, but they’re also picking up a $195 sweater they can play golf in.

“We drank our own Kool-Aid,” Mitchell adds. “Even in the [luxury] heyday, they bought other stuff, they just bought it elsewhere. We’re better merchants today, having that breadth.”

WWD: Stores Lure Back Luxury Male Shopper

WWD | EMILIE MARSH & JEAN SCHEIDNES

Welcome back, department stores.

Luxury retailers say they have experienced a strong start to 2010 and expect continued improvement in the second half of the year, buoyed in part by men returning to stores, as well as inventory control and focus on gross margin. Men’s buyers are heading to Pitti Uomo in Florence next week, followed by the Milan and Paris men’s ready-to-wear shows, in search of enticing product at fair prices.

“We feel that confidence has returned and that men are back in the store at full force,” said Kevin Harter, Bloomingdale’s vice president of men’s fashion direction. “The biggest surprise is how strong the tailored business is. Men are definitely dressing up, and they are coming to Bloomingdale’s to update their suits and accessories that go with them, such as ties, shirts, etc.”

In the U.K., Selfridges’ business has been “consistently strong” this year with contemporary fashion and edgy designer labels such as Alexander McQueen and Balenciaga leading the way, according to David Walker-Smith, director of men’s wear and beauty. “We expect the second half of the year to also be robust,” he said, adding that good management of inventories has been key to the store’s ongoing success.

Although their recovery has trailed that of brands’ own stores, department stores across the globe have reported increased sales for the year to date.

At Liberty of London, “sales have been on fire this year” with total first-quarter sales up 30 percent and men’s wear performing “even stronger” than overall sales, according to buying director Ed Burstell. “As we have been able to increase market share this past year, we are aggressively looking to grow men’s wear this fall, with the budget increased by 15 to 20 percent.” The size of the men’s wear department will also increase by 20 percent.

Chastened by the recession, department stores have made top-to-bottom adjustments to stimulate sales and improve margins: tighter-edited collections, careful assortments of brands, balanced price ranges, more employee training, locally targeted marketing, in-store events, revamped men’s spaces, enhanced loyalty programs, exclusive product (especially private label collections) and perhaps, above all, inventory discipline.

Harvey Nichols “experienced strong double-digit growth” in men’s wear sales for the first half on significantly reduced inventory levels, said Richard Johnson, men’s wear buying manager. “Our more contemporary designer collections and casual sportswear collections have seen the most rapid growth. This has allowed us to keep sale periods short and focus customer attention on full-price product. It is of the utmost importance that we retain the integrity of the products we offer and premium position of brands whom we partner with,” said Johnson.

At the same time, luxury brands have grown increasingly dependent on their own stores, eroding the dominance of the wholesale business. In the latest quarter for Polo Ralph Lauren Corp., for example, retail sales jumped 31.4 percent, while wholesale declined 2.6 percent. The trend will likely continue, as the company has deep cash reserves to spend and has identified international retail and e-commerce initiatives as top priorities for investment.

As a brand grows more international, the balance of distribution shifts even more toward freestanding stores. China, for example, simply does not have department store networks for wholesale distribution that the U.S. has, so brands looking to expand rapidly there must open stores.

Calvin Klein Inc., which operated 67 CK Calvin Klein stores worldwide at the end of 2009, plans to ramp up to 151 by the end of 2012, and about 60 of those will be in China alone.

“The freestanding stores are really important because they present the lifestyle and they’re a branding platform,” said Tom Murry, chief executive officer of Calvin Klein.

Luxury consumers sometimes want to see the largest possible assortment from a brand, said Robert Burke of the fashion consultancy Robert Burke Associates.

“Also, because of all the inventory reductions and economic instability, sometimes department stores had played it very safe. And what we’ve found is safe product is not motivating the customer to spend….People who had a strong store presence realized during the last two years that they could control their own stores, but they couldn’t control the department stores.”

Indeed, brands have not quite forgiven retailers for the great discounting panic of 2008.“We will be more selective in the future, proceed with more caution and control and put limitations where necessary,” said Pier Luigi Loro Piana, ceo and deputy chairman of Loro Piana. “That said, we don’t want to lose the sense of competition department stores offer. They play a key role in determining how your merchandise fares compared to others.” With wholesale comprising 20 percent of sales, Loro Piana eked out a 1 percent sales increase in 2009.

For their part, department stores say they don’t discourage vendors from opening stores, which add credibility to the brand, ultimately benefiting everyone who carries it.

Besides, if brands are out to reduce their dependence on retailers, the feeling is mutual, since department stores are aggressively ramping up their private label businesses that afford them maximum control over the margins, the flow of goods and the floor space. As they head to Pitti Uomo next week, one of their top priorities will be to find manufacturing partners for their private labels.

“Our men’s collection has pretty quickly become our largest brand,” said Ron Frasch, Saks Fifth Avenue president and chief merchandising officer. “We have very, very aggressive plans for it, and we’re investing aggressively in it from all angles — store staff, brand management, product development, real estate, visual, marketing, every aspect. And we think it has a big number attached to it, with a very high margin.”

Private label has also gained a foothold in Europe, with department stores looking to invest in their own brand names, which more often than not predate that of the labels they carry.

“Historically, private label’s share of the market has increased over time, especially during recession, and almost a quarter of all consumer goods sales in the U.S. are private label,” said Umberto Angeloni, citing Harvard Business School professor John Quelch. Angeloni co-owns Caruso, which manufactures tailored clothing for such brands as Dior Homme, Lanvin, and Ralph Lauren, as well as a handful of private label brands. “I view the exercise as that of building a retail brand…a brand that they can totally control and thus will never betray them or compete unfairly. Stores realize that sometimes their most valuable asset is their own name.”

To wit, Harvey Nichols said it would launch private label product in selected core categories later this year.

And Paris-based Printemps is gearing up to introduce a cashmere collection for both men and women, priced between 95 and 120 euros, or $114 to $144 at current exchange, under its own banner in September.

“We are positioning the collection at a very affordable price point while maintaining a premium quality and style quotient,” said Tancrède de Lalun, general merchandising manager for men’s and women’s apparel.

Liberty is taking the strategy a step further, with plans to wholesale a contemporary men’s line it created with licensee Slowear Group, banking on the cachet of the retailer’s own heritage. The 200-piece line, which marks Liberty’s first licensing pact, will bow in Milan for next spring, and sales in six years should reach 30 million euros, or $38.6 million, Liberty said.

“It’s a clear margin-building strategy where we can control the product so it does not conflict with anything else we carry,” Burstell said, adding the store’s 135-year history and heritage provided the ideal background.

Brands with perceived heritage continue to enjoy a competitive advantage, and playing up history — in the form of origin myths, legacy stories, reverence for forefathers, founding dates and artifacts — is now front and center of many marketing strategies. Retailers are embracing the trend as well.

From a merchandising standpoint, “I see stores being much more edited and selective. That’s a fine line, because you want to take a specific point of view but you also want to have a breadth of product and especially unique and high-positioned product,” said Burke.

Despite tensions with brands that also have retail strategies, Burke added, “It’s important to be able to grow the department store business, because there’s a customer who doesn’t want to shop in a specialty store, particularly a men’s customer who wants a one-stop-shopping situation.”

Brands and retailers still have plenty of common ground. All parties want to provide distinctive product that will inspire consumers to buy. While no one wants to relive the nightmarish overstocks of the recession, vendors say it’s time for stores to loosen the purse strings a little.

“We’re not seeing this recovery as much in Europe as in Asia and the U.S., but what I’d like to see [in the healthier regions] is more aggressive purchasing. They were so cautious and gun-shy during the downturn. Now I’d like to see more confidence in the recovery,” said Calvin Klein’s Murry.

Indeed, buyers said they had to “chase inventory” for most of the spring. But that doesn’t mean they’re about to abandon their newfound discipline.

“The budgets are up, and we’re feeling confident but cautious,” said Frasch of Saks. “I don’t want the inventory to outpace the sales growth. We learned we could improve our margins significantly with targeted investments and very disciplined inventory management. We’re not going to walk away from that.”

Alluring product offerings go hand in hand with alluring environments and, to that end, many stores have revamped their men’s spaces to lure shoppers in.

Barneys New York, which has identified men’s contemporary sportswear as a category with significant growth potential, last month revamped the fourth floor of its flagship to seize the opportunity. Le Bon Marché is making room for Balthazar, its men’s department, to devote more space to high-end tailored brands and shoes. The LVMH Moët Hennessy Louis Vuitton-owned department store on Paris’ Left Bank will unveil a revamped 44,000-square-foot men’s wear space in September.

“Men’s wear is a growth sector for the store,” said Le Bon Marché deputy ceo Bruno Villeneuve. “We intend to go higher end.”

Meanwhile, Andrew Keith, president of Joyce, said men’s wear will find a new home in the brand’s Canton Road store in Hong Kong in August.

“We are seeing an increased level of confidence from our male customers. They are responding to new brands and key trend items well,” said Keith.

By managing inventory levels and chasing early deliveries, inventory is down 35 percent from last year, and it has delayed season-end discounting by nearly a month. Exceptional levels of service, such as home-shopping visits, tailoring services and personal orders for top clients, have also helped to entice shoppers.

“We have been caught short a little by the strength of customer reaction to certain key items [that] in certain cases we have had to do multiple reorders on. We now have male customers putting down deposits on fall 2010 runway,” said Keith.

Vendors complain that when buyers scramble for inventory too late in the season, everyone loses.

Polo Ralph Lauren told analysts that with production mostly offshore involving requisite lead times, it might be difficult for suppliers to react as quickly as some stores would like. Roger Farah, Polo’s president and chief operating officer, said, “Retailers will need to learn what is realistic and what is not.”

FINANCIAL TIMES: A sartorial strategy for growth

FINANCIAL TIMES | VANESSA FRIEDMAN

There is no question that football can sell fashion – Louis Vuitton’s current heritage campaign, featuring legends Zinedine Zidane, Pelé and Diego Maradona playing table football in a Madrid bar, was chosen, according to the company, specifically because of the “universality” of the sport’s appeal. But can fashion sell football?

For the first time, Fifa, the sport’s governing body, is betting yes. This year it has licensed its imagery, including mascots and logos, to be transformed into a clothing brand, courtesy of Singapore-based Global Brands Group. In turn, the company, which also owns the rights to create and distribute products from the PGA golf tour, has licensed its products to 19 territories round the world – including the US, football’s most fan-challenged region. The theory is: if the sartorial strategy works there, it will work everywhere.

Janon Costley, chief executive of Total Apparel Group (Tag), the company charged with making this happen in the US, believes that consumerism could be the answer. “During the period around every World Cup, Fifa has huge sales – during the last one they did $2bn in merchandise globally – which then dwindles to basically zero over the next three years,” he says. “It became clear to Fifa that they needed to come up with a new form of outreach to consumers. When Global Brands approached them with the idea of creating a clothing brand, they decided it could be the answer.”

So, while Nike (sponsor of nine teams, including the US and Brazil) and Adidas (sponsor of 12 teams) project huge sales during South Africa’s event, Fifa is hoping that by entering the lifestyle market, it will not only keep interest alive between tournaments but may actually increase its audience in the US.

This is especially important in the US, where, Don Jones, Tag’s chairman, points out, there is the most room for expansion.

“The potential market is huge,” agrees Mike Principe, managing director of Blue Entertainment Sports Television (Best), an equity investor in Tag. He says there are now 18m registered football players in the US, a number that includes children playing in soccer leagues as well as adult weekend teams and official teams. Yet somehow all those players have never cohered into an identifiable and dedicated consumer fan base.

Of course, there have been previous efforts to turn football into a mainstream sport in the world’s biggest market. The US hosted the World Cup in 1994 and, five years later, when the US football team beat China in the finals of the women’s World Cup, pundits predicted that this would provide the breakthrough.

Even more famously, in 2007, David Beckham moved to Los Angeles to play for LA Galaxy and opened a football academy, saying “soccer is huge all around the world except in America, and that’s where I want to make a difference”. But earlier this year sponsor AEG closed Beckham’s California soccer academy.

Why do the backers of the Fifa clothing brand think they can succeed where others have failed?

Don Jones, Tag’s chairman, says the problem in the past was that the sport failed to cement its place in mainstream US culture. “Now, sport and fashion and entertainment are interchangeable, and you have to strategise with that in mind. Clothes put the sport squarely in front of people who might not see it any other way,” he says.

Mr Costley adds that “if you buy the product, you participate in the sport in some way, so the garment itself becomes an educational platform”.

The hypothesis works like this: a customer in search of a cool T-shirt sees one with, say, a cartoonish player on the front, or a faded, “aged” looking logo; he buys it and by wearing it, becomes both a walking advertisement for the sport and, perhaps, someone who starts kicking a ball around; he might then join a league, or at least turn on ESPN soccer, and football will then, like baseball or American football, become part of their identity.

But despite Tag’s bullishness, not everyone is convinced. According to Robert Burke, founder of Robert Burke Associates, a strategic brand consultancy, a clothing brand is unlikely to achieve what a World Cup, celebrities and sport stars have not. “As with any licensing deal, the success is gauged by the size of the audience,” he says.

“The Fifa brand could be interesting, with cool designs, but it would be very small compared to the American sports of football, basketball and [ice] hockey. With regards to the product helping influence the America interest in soccer, it is a long shot. The problem is that America. . . has not embraced soccer. I don’t think a fashion product will do the trick.”

Andrew Sacks, head of Agency Sacks, a luxury branding firm, agrees. “It’s hard to believe that audiences – American or in football-loving nations – will respond to merchandise from a league,” he says. “Passions are aligned with teams, not with corporations and bureaucracies. The only exception that I can think of may be Nascar, which is a movement in itself and is made up of individuals. In team sports, the team sells.”

Tag’s products have been specially selected to appeal to the US market – both men and women – with the company’s executives working with GBG’s design team in the Netherlands. Simon Hawkins, general manager of the Fifa Football Business Unit for GBG, says: “The collections have been engineered to garner an emotional connection with the consumer through the power and history of the Fifa brand.”

To wit: for the first time, former World Cup mascots have been used on current products, with many chosen to appeal to the US demographic. For example, “Juanito” from the 1970 World Cup in Mexico, is featured to appeal to the large number of Mexican-Americans.

There is also a separate “heritage” line that focuses on Fifa’s founding in 1904 on the Rue St Honoré in Paris, with the address embossed on the shirts not unlike the way Loewe, the Spanish luxury brand, has embossed its address on wallets, and Yves Saint Laurent has on clutches. “Before, football was seen as a European sport,” says Mr Costley. “And it was presented that way. We are trying to transform that perception.”

Still, the history of such forays into the garment world is that they have not been enormously successful. As Jeff Bliss, a former marketer at New Balance, the running shoe brand, and co-founder of consultancy Brand Ideology, pointed out in Sports Business Journal: “Fan passion follows teams and players – they do not get excited about a governing body.”

Yet Tag says that to worry about the meaning of Fifa is to miss the point, which is that whatever a consumer’s relationship with the governing body, the designs stand on their own. “Soccer isn’t just a game,” says Mr Principe. “It’s a fashion statement.” That’s the goal anyway.

WWD: Young Designers Build Overseas Sales

WWD | MARC KARIMZADEH

NEW YORK — “If I can make it there, I’ll make it anywhere.”

Where once designers used to live by the iconic Liza Minnelli lyric and come to Seventh Avenue to build their businesses in New York and the U.S. before tackling opportunities abroad, the city’s young designers are now thinking globally almost from the moment they launch their labels.

And these days, they see the biggest potential in the East — from China to South Korea, India to the Middle East, including the Emirates and Lebanon. Many said Europe and Russia remain challenging, given their economic turmoil, while markets such as Brazil are still relatively untapped even though major luxury brands are flocking there.

To build their overseas presences, designers have either partnered with sales showrooms in other fashion capitals or started to go to Paris during the city’s fashion weeks to show and sell their collections to buyers who don’t make the trip to New York.

Jason Wu, for instance, plans to travel to Paris in July during the couture season to present his resort collection to European and Asian stores in town at the time. Currently, 30 percent of his sales are overseas and, of those, London, where he sells to Browns, Selfridges, Harrods and Net-a-porter, and Japan, with stores like Estination and Designworks, are the largest, accounting for 10 percent each. And Wu takes these markets as seriously as his American business. For instance, the designer just created a limited edition T-shirt collection for Tokyo’s Designworks with prints from his fall 2010 collection.

Asked about his fastest-growing market, Wu, who had wholesale sales of $10 million last year and projects $14 million for this year, pointed to China, “especially Beijing. It’s an emerging market in terms of demand for luxury goods. In designer clothes, it has always been the big players like Chanel and Louis Vuitton. Young designers are a new thing for China, whereas they are not as new for Japan or Korea.”

Alexa Adams, who designs the Ohne Titel line with Flora Gill, concurred. “China has a whole new group of people with money that can afford to buy designer clothing, and they are open to new designer labels,” she said.

Robert Burke, head of the Robert Burke & Associates consulting firm, works on projects in China, the Middle East, Brazil, Kazakhstan and Korea, and said there has been interest from all those countries in emerging American talent. “They see the talent coming out of the U.S. as a potentially very strong business, and the young designers see opportunities there,” Burke said. Within them, “Korea and China are the two that seem to be the most focused in the sense of interest in buying from young designers.”

And these designers are eager to sell to overseas stores — partly because they have little choice if they want to survive. The worldwide recession hit the U.S. retail sector particularly hard, prompting stores from Saks Fifth Avenue to Neiman Marcus to cut their number of vendors or the amount they buy from individual designers. In addition, a slew of specialty stores, long a launchpad for young talent, went out of business.

So, left with little choice, they got on a plane.

“American designers, for a long time, had difficulty breaking into international markets,” said Elana Posner, Peter Som’s business partner. “I think this generation of designers learned from that.”

Wen Zhou, chief executive officer and president for 3.1 Phillip Lim, said, “Especially with the crisis in the economy, you have to be in as many countries as soon as possible in order to have a viable business. It’s no longer this idea that a designer comes out with a collection and makes it in the U.S., and then in the rest of the world. The world is much smaller now, and you have to almost build a global brand instead of a U.S. brand from Day One.”

When 3.1 Phillip Lim launched in fall 2005, the line was sold in 27 countries. Today, it is sold in 49 countries, and the designer projects wholesale sales of $50 million for this year. International accounts for 45 percent of the designer’s total business, of which Japan and the U.K. represent 10 percent each. Lim also has a significant business in the Middle East, selling to stores such as Plum in Beirut, Beymen and Harvey Nichols in Istanbul and Boutique One in Dubai.

“The Middle East is the fastest growing for us,” Zhou said. “In Europe, Italy is our other fastest-growing market. Italy has many small towns, and in every single town, there is that beautiful boutique that people go to locally and they embrace fashion. While Italy is not huge, the amount of boutiques available for us is interesting.”

With its Singapore partner, Club 21, 3.1 Phillip Lim is planning to open a freestanding store in August. Zhou added China is expected to grow into one of the most important markets for Lim in the future, and to that end, the designer is planning to stage a fashion show in Beijing in October to present the spring 2011 collection.

Posner at Peter Som agreed that Asia is among the fastest-growing markets. “Japan and Korea have always been strong, and Taiwan and Singapore are starting to be strong,” she said, adding that, in China, “main brands have opened their stores, and now specialty stores are starting to open and they will want European and American brands.”

Maria Tomei Borromeo, Thakoon’s ceo, said that, since launching the collection in 2004, the business has been roughly evenly split between domestic and international. Overseas accounts for 45 percent, while the U.S. represents 55 percent. By region or country, Asia accounts for 14 percent, which includes “a significant business” in Japan, Hong Kong, the Philippines and Korea. Russia and the Middle East are about 10 percent of Thakoon’s business and Europe is 21 percent. “A lot of focus and attention are being paid to what is going on in New York, and our brand is coming up at a time when a lot of interesting things are happening in New York,” Tomei Borromeo said of international demand for the brand.

Many designers also cited developments on the Web as another instigator for global growth. It not only allows potential overseas customers to familiarize themselves with emerging U.S. talent through the click of the mouse, but also makes it easier for designers to communicate with their international stores through e-mail, Skype, BBM and other tools of online communication.

“Because of technology, five years ago, if you were a young designer, wherever you were based, it was very much about growing there slowly, and eventually international people caught up,” designer Prabal Gurung said. “But because of such things as Facebook, Twitter, the way the shows are going viral, information is instant. When you do a runway show, or a celebrity wears your clothes, it can be picked up by everyone around the world.”

Brian Reyes said, “I think the world is so focused on fashion now, through the Internet or entertainment at large, that the idea of American style has penetrated more markets.”

Stephanie Cozzi, president of Brian Reyes, agreed that technology played a key role in changing the perception. “It wasn’t as easy five years ago, when no one had a BlackBerry,” Cozzi said. “Until very recently, it was really the specialty stores that drove overseas business and it was all about relationships. Now you can BBM your buyer in London as easily as your best friend around the block. Technology has really taken down the barriers.”

That said, there are still benefits and hurdles for American designers looking to build their businesses abroad.

Joseph Altuzarra, who designs in New York and Paris, said he benefits from doing business in Europe.

“We produce in Italy and all of our fabric mills and all of our suppliers are in Italy, as well as some in France,” he said. “On a practical level, we pay everything out in euros, so building a euro business outside of the U.S. is a priority for us because it helps us balance what we take in versus what we pay out.”

Doo-Ri Chung said, “[With] the amount they mark up with the duties [in Europe], you can’t be as competitive. You don’t really have that problem in the Middle East, and so we are able to open up more freely. For us, the emerging market had been Russia, but we felt that, with the recession, a lot of accounts have gone out of business, or had their budgets slashed. The Middle East market has remained stable for us.”

For Iranian Behnaz Sarafpour, her native Middle East represents the largest overseas region, and she sells to countries such as Dubai, Saudi Arabia and Kuwait, followed by Russia. She also has seen growth in Turkey and Korea. “There is interest in American fashion from other countries, regardless of the issues there are with exporting American goods,” said the designer.

Sometimes, however, styles need to be adjusted for local preferences and religious considerations, particularly in Saudi Arabia, where many designers have to lower the hems of their dresses to adhere to local dress codes. But if it gets them more business, so be it.

“It’s a huge playing field, with countries like India and China and a lot of other Asian countries and the Middle East,” Gurung said. “It’s not just domestic. You can’t just focus on domestic and think you can be successful.”

WWD: David Yurman's Madison Avenue Leap

WWD | SOPHIA CHABBOTT

NEW YORK — David Yurman is making a statement on Madison Avenue.

The fine jewelry firm is marking three decades in business with the opening today of a multimillion-dollar flagship in a converted town house on Madison Avenue at 63rd Street here that represents the brand’s biggest single retail investment.

The five-floor flagship, which Yurman calls the Townhouse, punctuates a two-year global expansion that included the company’s entry into Europe with a 400-square-foot in-store boutique at Printemps in Paris, which launched in March, and another shop-in-shop at the Moscow luxury retailer Tsum. There are also plans for a London location.

In Asia, Yurman has opened four boutiques and is eyeing a second store in Macau. The firm has also bolstered its presence at U.S. stores such as Saks Fifth Avenue and Bloomingdale’s, where the new looks of the in-store shops gave a taste of the new flagship, which will be the inspiration for the brand’s 15 domestic stand-alone boutiques. These units could be retrofitted in the Townhouse’s design.

“We built this home together,” said company chairman and designer David Yurman, referring to his wife, Sybil, president and chief marketing officer, and their son, Evan, design director of men’s, timepieces, bridal and Couture Jewelry. “It’s an evolution. Design is in my bones.”

Yurman’s chief executive officer, Paul Blum, said the flagship will be a prime platform for generating brand awareness.

“Every one of our stores is a very important example of each market we’re in,” he said. “Retail is the ultimate in local marketing…our retail really sets the standard [for] someone that really wants to get the pure form of the brand.”

Blum said beyond diversifying product assortment — with prices starting at $250 — the current economic environment requires wowing the consumer with impressive product, displays and an educated sales staff.

“People have a lot of options of shopping today: online, jewelry stores,” he said, adding that he expects “a healthy increase” in sales versus Yurman’s former Madison Avenue store. “If you’re going to bring something to the retail landscape…it’s got to be transcendent; transcend the assortment, transcend the training, transcend the shopping experience. It’s a higher level of service.”

Industry sources estimate the brand’s sales range from $500 million to $700 million, but the privately held firm declined to provide figures.

The flagship has 2,000 square feet of selling space over three floors — the fourth and fifth are back office space — compared with just 800 square feet at Yurman’s previous Madison Avenue locale, one block north.

The store, which was under construction until the 11th hour and was designed by Gabellini Shepherd Associates, echoes the Yurman aesthetic with clean lines, unexpected textures and light. The narrow building has been given an enhanced sense of depth with double- and triple-height ceilings and an atrium. The focal point is the store’s nave, where a steel rod sculpture — evoking Yurman’s iconic cable bracelet — is suspended from the triple-height ceiling and wrapped by a curving staircase.

The facade has hand-etched glass onto which a projector within the building displays the brand name and other images. Gray canvas walls recall Sybil Yurman’s background in painting and the door handles have been hand-sculpted by David Yurman. Smooth planks of American walnut unfold across the ceiling and reflect the couple’s reverence for midcentury American design and furniture.

The first floor, which houses women’s jewelry, features striated Nublado marble floors, mirrors and steel and wood trim. Collections will be merchandised together, such as the Silver Ice, or the edgy new Midnight Mélange collection, a line of pavé diamonds set into oxidized silver that debuted at Yurman’s Printemps boutique.

The second floor displays men’s jewelry and timepieces. The denlike atmosphere includes a bar, club chairs and a flat-screen television.

The third floor represents newness. The bridal jewelry collection is on display along with the new Couture jewelry line. The Couture collection reflects the fine jeweler’s push into a high jewelry-like category in which the one-of-a-kind pieces escalate from $18,000 into the millions.

Yurman previously had a line called Couture that was comprised of limited edition pieces. That line has been renamed David Yurman Limited Edition. The Couture project was championed by Evan Yurman, a fan of the work of jewelers in the highest, most rarefied echelons of the market, such as Joel A. Rosenthal of JAR.

The jewelry pieces are focused on color with large, unique stones such as a 12-carat Kashmir sapphire perched atop a white gold ring with signature Yurman cable detail and pavé diamond accents, an 80-carat peridot set in a necklace of color change medallion spinels or a 25-carat red spinel cocktail ring. The line represents some of Yurman’s highest-ticket items.

“Part of David and Sybil Yurman’s success has been in anticipating consumer needs,” said Robert Burke, head of the Robert Burke & Associates consulting firm. “They’ve always been ahead of the curve. Making a statement like this [store] and pushing the brand up in price point and design in a lifestyle environment will only set it apart.”

David Yurman has not be averse to taking some risks. When injecting diamonds into sterling silver for his revolutionary Silver Ice collection, Yurman shifted the paradigm in fine jewelry — something that was frowned upon by old guard jewelry houses that view silver as an unworthy metal to combine with precious diamonds, but was ultimately accepted by consumers who appreciated the lower price and everyday wearability of the pieces.

The chairman and designer has long been fascinated by geometric shapes and sculpture forms. Yurman’s cable bracelet was one of his first designs and is still a top seller that his most devoted clients collect year after year.

The growing involvement of Evan Yurman, who pushes his parents to do edgier styles, is indicative of how the Yurmans view their business — as a family matter. The husband-wife team is closely involved with day-to-day operations at the firm’s headquarters on Vestry Street in lower Manhattan, and within their store network. There is a familial sense among employees, several of whom have been with the Yurmans for decades.

The couple said they will never sell the company, and that Evan Yurman will eventually take command.

“We are a family and we like to design,” Sybil Yurman said. “We don’t live to work. Design is part of our romance and our life.”

Ultimately, the company’s expansion and creative energy — including a fragrance and eyewear through licenses with Clarins and B. Robinson, respectively — are generated by the Yurmans themselves.

“I made my first cuff links when I was 11 years old,” said Evan Yurman, now 28. “Six years later I wanted to buy a surfboard and [my parents] promised me the [royalties of sales from the cuff links]…we sold thousands of pairs so I bought a surfboard and went to Europe for a month.”

He has developed a particular affinity to rare gems because of the craftsmanship involved in the pieces and the relationship that blossoms between jeweler and customer.

“It’s an intimate process between myself and the client,” Evan Yurman said of working on the Couture collection. “It’s a dialogue and it’s an heirloom.”

WSJ: Appeals-Court Ruling Favors eBay in Tiffany Case

WALL STREET JOURNAL | CHAD BRAY

NEW YORK—In a potential setback for luxury brands trying to combat sales of knock-offs on the Web, a federal appeals court on Thursday sided with eBay Inc.EBAY -3.55% in a lawsuit against the online auctioneer by jeweler Tiffany TIF -1.37% & Co.

The U.S. Second Circuit Court of Appeals here upheld a district judge's 2008 ruling that eBay couldn't be held liable for trademark infringement for counterfeit jewelry sales on its site, unless it had specific knowledge an item might be counterfeit.

Ebay has fought back a number of challenges by luxury-goods makers in recent years. Last year it won victories in British and French courts over the sale of fake L'Oreal SAOR.FR -1.40% products on its site.

The Tiffany lawsuit, which was filed in 2004, has been closely watched because the U.S. market accounts for the bulk of eBay's business, providing $3.88 billion, or nearly half, of the company's 2009 revenue.

At trial in 2007, Tiffany argued that eBay knew it had a problem with counterfeit luxury goods on its Web site and should be forced to take a more aggressive approach to policing it.

The appeals court on Thursday said eBay has a "strong incentive" to reduce the number of counterfeit goods sold on its Web sites and has taken a number of steps to do so, including removing suspect auctions when notified by a trademark holder.

"The risk of alienating users gives eBay a reason to identify and remove counterfeit listings," U.S. Circuit Judge Robert D. Sack said in Thursday's ruling.

Michael R. Jacobson, eBay's general counsel, said the decision was a "critically important victory" for consumers and said eBay supports cooperation with brands, rather than litigation, to combat counterfeit goods.

Tiffany said the decision was a loss for consumers, and said it is considering whether to appeal to the Supreme Court. "As an e-commerce leader, eBay has a responsibility to protect consumers and promote trust in its marketplace," said Michael J. Kowalski, Tiffany's chairman and chief executive.

One bright spot for Tiffany was that the appeals court reinstated its false-advertising claims against eBay and referred them back to the lower court for more proceedings. The false-advertising claims related to ads on its Web site for Tiffany products and sponsored links on search engines.

Tiffany "can try to prove up its claim that this was false advertising," said Brian E. Banner, an adjunct law professor at George Mason University. "That's good news for brand owners."

"Nothing is more important to a luxury brand than image and authenticity," said Robert Burke, president of Robert Burke Associates, a New York-based luxury-goods consulting firm.

WWD: New Online Sites Aim to Connect Industry

WWD | SHARON EDELSON

First consumers, then business people in general and now there are a slew of new fashion industry-specific Web sites springing up that combine marketplaces with social media.

Consumers, designers and retailers have embraced e-commerce, Facebook and Twitter, yet most in the industry are still using outdated tools to perform their jobs. For example, buyers still generally rely on pencil and paper to write orders.

BrandOrders.com, created by retail and fashion executives, is a wholesale online community for brands and stores to increase buying efficiencies, with a social media component as well. The site is targeting high-end labels and retailers, with Barneys New York and Showroom Seven participating in the test phase.

BrandOrders will go live in the spring, with 75 brands from Prêt à Porter, a trade show in Paris, and its New York show, The Train/The Box. Lilla P, Pure Amici, Real Truth, Lauren Balgiore and Tiia Vanhatapio are among the site’s apparel vendors, while Lockhart, Jennifer Elizabeth, Abas, Pono and Lexi Lu represent accessories and jewelry resources, said Lincoln Brown, BrandOrders’ chairman.

Brown, a venture capitalist whose Next Generation Ventures invests in fledgling firms, is funding BrandOrders.com.

BrandOrders founder and chief executive officer Chris Guerra got the idea for the site after accompanying his mother to trade shows and buying trips for Bamboo Clothiers, the stores he and his parents own in South Florida. “When we got home, I watched mom piece together orders with carbon paper all over the place,” said Guerra. “She wrote orders and faxed them in. This [site] eases some of the pain of the wholesale buying process.”

“We saw an opportunity to create a platform for brands and retailers to interact and communicate,” said Robert Burke, a former senior vice president of fashion and public relations at Bergdorf Goodman, who now owns a retail and consumer products consulting firm and is working on the project. “I’m an old war horse retailer who writes orders by hand. The goal now is to have as lean an inventory as possible, but not so lean that you can’t maintain proper stock levels. BrandOrders allows retailers to communicate more quickly.”

Brands can post new items on the site and retailers can search for products by showroom, trade show or product category. “This is a cross between Facebook and Amazon for the wholesale industry,” Guerra said.

Communications between parties is private, but the format offers opportunities for networking. Brands can view a retailer’s inventory, see what’s selling and what’s not selling, and suggest ways in which their products might best be sold. BrandOrders is charging wholesalers about $200 a month for the service, and it will be free to retailers. A cell phone app is coming in the fall.

As a buyer at Mimi Maternity and Ann Taylor, much of Mona BiJoor’s time was spent rushing to showroom appointments, poring over line sheets and scouting emerging talent. She conceived of Joor, an online contemporary fashion network, “to eliminate multiple pain points such as line sheets and phone calls,” she said. “This is a tool I wanted when I was a buyer.” Boutiques can use Joor to search for new designers, view collections and manage transactions. Designers can search for new boutiques and display their collections. Like an online dating service, brands and buyers must request a match before mutual access is granted. The site has 75 designers who pay an annual fee, which Joor declined to disclose, and 500 boutiques.

Another similar site is Afingo.com, which launched last month at MAGIC and “connects the dots for people,” said Liza Deyrmenjian, ceo and co-founder. “It’s a Web-based roundtable where all four building blocks of the fashion world — designers, retailers, professionals in the industry and consumers — meet.”

Parts of Afingo.com are free to consumers, but access to special events, sample sales and special designer-retailer offers requires a subscription for $49 a year. Designers, retailers and suppliers pay $299 a year.

WSJ: LVMH Wipes Céline Slate Clean, Opening Way for 'Phoebe Effect'

WALL STREET JOURNAL | RACHEL DODES & CHRISTINA PASSARIELLO

PARIS—French fashion house Céline is quickly shedding its reputation as one of LVMH Moët Hennessy Louis Vuitton SA's most troubled brands.

After struggling for years to forge an identity and a following, the label is finding influential retailers including Barneys New York, Saks Fifth Avenue and Bergdorf Goodman are clamoring to carry its collection, even as they cut back their portfolios to focus on best sellers.

Credit for the resurgence of the brand—which LVMH bought in 1996 for €412 million ($562 million at current rates)—goes to British designer Phoebe Philo and a decision to make a sharp break with the past.

Céline recruited Ms. Philo 18 months ago. To start fresh, the company destroyed all of the inventory left in the stores prior to her first collection, a move that contributed to the €98 million in restructuring charges LVMH took last year.

Céline also closed all but one store in the U.S., cut ties to less exclusive retailers, stopped producing bags in China and restored the accent to its name, all part of a move to tightly control and elevate the brand.

Despite prices that seem to forget the Great Recession—like $790 platform sandals—Ms. Philo's utilitarian overcoats, pants and blouses have tight-fisted store buyers ready to spend.

Prices are up under Ms. Philo, and less exclusive retailers like Bloomingdale's and e-commerce site Net-a-Porter are out. Céline's plan is to cement a high-end image before ultimately broadening out to include more affordable offerings.

"I felt it was necessary to establish quality to the brand," Ms. Philo said in an interview. "Now that we are establishing that and the top of the pyramid is in place, we can open it out."

Her designs "did not fail to inspire us, which is hard to do—particularly in this environment, where nobody was looking to add anything," said Ron Frasch, president of Saks Inc., which has picked up the line for its Boston and suburban Philadelphia stores.

Ms. Philo's minimalist reinterpretation of the label has struck a chord with retailers, and it was on display Sunday, when the 36-year-old showed her second runway collection for Céline during Paris Fashion Week.

LVMH pursued Ms. Philo intensely. She had spent five years as head designer of French label Chloé, where she created the hit Paddington bag and more than doubled the brand's sales, before taking off two years off to focus on her family.

Pierre-Yves Roussel, chief executive of LVMH's fashion division, traveled to London every other week for nearly a year to persuade Ms. Philo to sign on. The company agreed to build her a design studio in London, where she lives.

LVMH, which also owns Moët & Chandon champagne, Dior perfume and Tag Heuer watches, doesn't disclose sales by individual fashion house. It hasn't set a timetable for the label to make a profit, according to people close to the company. The line is still a tiny part of LVMH, which is dominated by Louis Vuitton.

It's apparent, though, that while retailers have been calling many of the shots with fashion houses, Céline is setting its own rules. The brand managed to get Bergdorf and Barneys to share the rights to Ms. Philo's debut Spring 2010 collection in the New York market, even though department stores normally get exclusives on new brands. Barneys put a $1,050 cotton taffeta top with matching $1,200 canvas pants by Céline on the cover of its new spring catalog—a coup for the niche French brand.

Times weren't always this good. Founded in 1945 as a purveyor of children's shoes that later expanded into women's clothing, Céline had floundered since a brief moment of profitability under the auspices of the American designer Michael Kors, who left in 2004.

The look of the brand "seemed to waffle after he left," says Robert Burke, a luxury goods consultant. "It felt a bit Prada-esque one moment, a little something else the next."

Mr. Kors declined to comment.

Once on board, Ms. Philo and Céline's new chief executive, Marco Gobbetti, who previously revived LVMH's Givenchy house, decided to whittle down the brand's distribution. They closed some 20 out of more than 100 stores around the world, including the flagship in New York, situated inconveniently across from Barneys.

"There were too many stores," Ms. Philo said, dressed head to toe in Céline except forNike NKE -0.54% sneakers.

"I really felt that in coming back into the workplace, and in life generally, if you start small and reduce everything to a point that's understandable, it gives you a foundation to grow," Ms. Philo said. "It's all about Céline being brought back to a focused situation."

Ms. Philo unveiled her first interpretation of Céline last June, with a pared down aesthetic. The current "utility chic" look, featuring "clean, interesting, almost military tailoring," is a direct consequence of Ms. Philo's first runway show in October, said Bergdorf Goodman fashion director Linda Fargo. She has linked the constellation of spring trends including wider-leg trousers, leather-as-clothing, and the palette of olive, camel and nude back to Céline, calling it "the Phoebe Effect."

WSJ: A Coming-Out Party for a Pedigreed Designer

WALL STREET JOURNAL | CHRISTIAN BINKLEY

There's one dress that designer Sophie Theallet makes each season that will never see the runway: the one she plans to wear at her show. Each season, superstition overcomes her, and instead she puts on the same pair of black jeans and tunic that she has worn at previous shows. Her show in New York this week was no exception.

Ms. Theallet, who is 46, is an unusual recent entrant to Big Fashion—a designer who is getting her big chance 20 years later than most. Her clothes are worn by Michelle Obama and sold in some top boutiques around the world. Her apparel is so well-crafted, requiring extensive hours of labor and miles of fabric, that a cotton dress might cost upward of $2,000.

"Ruching of chiffon or appliquéing of shearling are not things that are done easily or cheaply," says Robert Burke, founder of Robert Burke Associates fashion consultant. Mr. Burke calls her designs "investment" clothing. "The thing is educating the consumer to understand that," he says.

Ms. Theallet toiled for years for Jean Paul Gaultier and Azzedine Alaia—two famous designers known for the quality of their work—before striking out on her own. Last year, she won the prestigious Council of Fashion Designers of America/Vogue Fashion Fund award, which offers a $200,000 cash prize as well as a lot of publicity. About 160 designers apply for the prize each year, most of them young and looking for overnight success. Other winners and finalists include some hot designers: Proenza Schouler, Derek Lam, Thom Browne and Isabel Toledo.

"I like that she put in the time working with other designers," says Vogue Editor in Chief Anna Wintour, who attended Ms. Theallet's show this week with a phalanx of Vogue editors. Ms. Wintour notes many young designers lack their own clear vision, or the bottom-line design skills to make well-cut clothes. "She can really make a dress," Ms. Wintour says, "unlike a lot of [designers] who can't."

And then there's Ms. Theallet's strict adherence to her vision, regardless of what the rest of the world is looking for. "I don't do trend," she says.

Another hot, new fashion label, Rodarte—whose designers Laura and Kate Mulleavy never studied fashion—commands premium prices for tiny collections. But this is largely because their clothes are often more art than craft—worthy of being exhibited in a gallery. Ms. Theallet's creations are exacting, exquisite from the inside out, and expensive because of the labor involved.

Moments after Ms. Theallet's last look walked down the runway on Tuesday evening, Mr. Burke leaned over in his front-row seat and said to me, "You probably just saw the most sophisticated collection of the week."

The collection drew a room full of fashion heavy-hitters, but didn't touch on a single trend of the week. It was breathtaking for its secretive details, as well as its fine line between the formal and the casual. A green velvet dress shimmered, with a silk-lined hoodie that spread like a shawl collar over the shoulders. The clothes included pencil skirts that looked straight from the front, then revealed tiny pleats at the back, turning a power skirt into something more feminine and slightly flirty.

Short on money, Ms. Theallet doesn't always use the most sumptuous fabrics in her collections. She often works in fine cotton, though she has been able to add knitwear and some Loro Piana wool-cashmere blend fabric this season, using some of her prize money. "I don't have to line the garment because the wool is soft on the skin. It's a beautiful feeling to have that wool-cashmere on the skin," she says.

The seams are flawlessly taped, creating an inside that's as lovely as the outside. The mind boggles at the quantities of fabric she used for a Fall 2010 chiffon dress that was so finely pleated that it looked ruched or gathered.

Some retailers are now fighting for access to the small collections Ms. Theallet makes in a small factory in New York, where the seamstresses create flawless seams, tucks and pleats. Her line is carried in exclusive boutiques, including Ikram in Chicago (where Mrs. Obama shops) and DNA in Riyadh, Saudi Arabia. "I carried her from the beginning," says DNA's owner, Princess Deena Abdulaziz, establishing bragging rights for recognizing a talent before the herd.

The daughter of a doctor and raised in the south of France, Ms. Theallet works from the living room of the Brooklyn apartment she shares with her husband and business partner, Steve Francoeur. With one assistant, Ms. Theallet creates only two collections a year, compared with six or eight for many designers. She will start on her next collection in a few weeks, and it will take until September to complete it. Her husband helps with deliveries as well as serving as the company's business head. The couple reinvest their earnings in the company, which is also backed by friends, including the actor Rupert Everett.

She finished this week's fall collection just three days before her show, then went to work cutting fabric samples and pasting together the sales books for retailers herself.

She's says she knows her recent rise has been a long shot. "Normally it's young designers that get that benefit," she says. "I'm not a young designer. I am a woman and I know what I'm doing."

WSJ: Art Couture: Theyskens' Next Act

WALL STREET JOURNAL | CHRISTINA BINKLEY

Often heralded as one of the greatest designers of his generation, Olivier Theyskens has seen his wispily layered clothes enshrined at the Metropolitan Museum of Art and worn to the Oscars by Madonna. It's hard to fly higher than that in fashion. And he's only 33.

Yet Mr. Theyskens (pronounced TAY-skenz) has had a hard time keeping jobs. At French brands Rochas and Nina Ricci, Mr. Theyskens' collections won rave reviews but failed to sell well enough to satisfy retailers or investors. He became fashion's version of "My So-Called Life"—the TV show that was simultaneously applauded and canceled.

Unemployed for the past year, Mr. Theyskens has collaborated on a book with an old friend, portrait photographer Julien Claessens. Due to be published Feb. 11—the kickoff of New York fashion week—by Assouline, the $120 book has an enticing title: "The Other Side of the Picture."

But this is no tell-all rant, airing the Belgian designer's side of the art vs. commerce controversy. It's a photography book covering his short but highflying career. All art, with just a touch of commerce.

Mr. Claessens, the photographer, studied art, not journalism, but there is reportage in the way he captures moments backstage at a fashion show. If anything, I wish he and Mr. Theyskens had included more shots of the Mr. Theyskens and his assistants at work, and fewer of models' eerily made-up faces and hairdos. The book's magic is in moments such as the tangle of arms as a dress is being donned, or perhaps doffed. Without comment, there are the emaciated bodies of models and muses, such as the corseted boniness of Hana Soukupova backstage at Rochas. There's also the mundane act of sewing, the designer needle in hand.

The book isn't an attempt to bask in the past, he says. "I'm not at all nostalgic," Mr. Theyskens said recently from Paris. He sounded remarkably grounded for someone who once posed for a portrait in "lingerie borrowed from the photographer's girlfriend," according to the introduction by Vogue news editor Sally Singer.

Since departing Nina Ricci last March, Mr. Theyskens says, he hasn't kept up with fashion magazines or parties—even during Paris fashion week last October. "Actually, I was thinking, oh, you should see on the Net what was going on," he says. "But I didn't. It makes me think that normal people—99% of the people—don't run to the Net to see what's happening [on the runways]."

Mr. Theyskens is a boyish wisp of a man who wears his dark hair very long. He famously dropped out of art school at the age of 20. He was hired a few years later as designer of Rochas, where he dressed Nicole Kidman and Kirsten Dunst and won the International Award from the Council of Fashion Designers of America for his haunting, feminine designs. Mr. Theyskens insisted on designing his own fabrics: Some silk prints were reminiscent of watercolor paintings. He often used materials in new ways, for instance, attaching floaty strands of ostrich feathers to silk dresses.

Dresses 'Like Sculptures'

Mr. Claessens says he sees the designer as a pure artist. "Olivier Theyskens' work goes beyond creating clothes and a collection. Prints are like paintings, dresses are like sculptures," Mr. Claessens says. "I see it at the same level as the work of some conceptual artists or grand movie makers."

Yet some retailers criticized the Rochas collection for being high-priced. Critics gushed, then gasped, as owner Procter & Gamble PG -0.58% shuttered Rochas's fashion line in 2006, saying fashion wasn't "a core competency" of the company. The line was revived in 2008 with new investment partners and a new designer, Marco Zanini.

A year later, Mr. Theyskens landed at Nina Ricci. Again, reviewers gushed and retailers griped. Some ethereal silk blouses cost more than $2,000. His muses were rail-thin.

'I Can't Give It Away'

"He cut for somebody that was tall and very thin. It didn't fit women who could afford clothes of that caliber," says Karen Daskas, owner of the Tender Birmingham boutique near Detroit. There, the designer's final collection for Nina Ricci has been marked down to 60% off. "I can't give it away," she says. "And we try it on everybody."

Mr. Theyskens was shown the door after showing his fall 2009 collection in Paris—and Nina Ricci hired a new designer.

Mr. Theyskens says the criticism that his clothes sold poorly because they cost too much is "legend" but untrue. He also says the production department controlled fit issues using "strict measurement scales supposedly corresponding to the sector."

Is it fair to blame an artist for a brand's lack of commercial success when there are so many factors at play? Perhaps Mr. Theyskens should have paid more attention to the fit of his clothes. But fashion investment consultant Robert Burke believes that what Mr. Theyskens needs is a business partner who can help add wearable, more affordable clothes to his runway demi-couture. That model is working for Alexander McQueen, whose wild runway shows do for his brand image what his wearable precollections do for his sales.

"In the stable of fashion designers who are available [to be hired] now, Olivier Theyskens would be at the top of the list," says Mr. Burke.

Mr. Theyskens' experience with the two design houses says much about the fashion business today. It's reminiscent of the music industry, where record labels once gave artists like Bob Dylan or Pink Floyd years to build an audience. These days, pop artists are either overnight sensations or they're in search of a new label. In fashion, investors also often rotate through designers in search of a magic spark. Alessandra Facchinetti was given only one season at Valentino before a third set of designers in two years was brought in. There was a similar revolving door at Gianfranco Ferre.

As Mr. Theyskens searches for a new label, he says he has been creating imaginary collections in his notebooks. Three or four are completely ready to go—down to the chosen fabrics, plans, "everything."

When asked about the idea of creating his own label, he says, "Oh God. … That's for sure, I have always thought [about] it." Still, he notes, 2009 wasn't a bad year to be on the sidelines, with its economic tumult and dire straits.

When the subject is his artistic oeuvre, Mr. Theyskens seems unflappable. He says, "I know I can be proud of what I have been doing. So voilà. I don't know what I can say more."

WWD: Experts Weigh in on Juicy Designers' Departure

WWD | LISA LOCKWOOD

The fashion industry has had a mixed track record when its comes to companies surviving the departure of founders-designers.

WWD polled industry experts to see whether they believed Juicy Couture could survive without the creative leadership of its co-founders, Pamela Skaist-Levy and Gena Nash-Taylor, after their wildly successful run.

“It’s certainly possible to have designers go on to the next thing, as long as there are designers there to keep the DNA alive and keep it current,” said Andrew Jassin, managing director of Jassin Consulting. He pointed to brands such as Gucci, Lacoste and Hugo Boss, which have had successful futures without their original designers. “Some have suffered, such as Ungaro, but Dior has been fantastic and Chloé has had its ups and downs. Under Stella McCartney, it was great,” he said.

He also cited Claiborne’s Kate Spade brand. “The Kate Spade brand got stale with Kate, and it’s been reinvented with someone else. You need to have reinvention. Calvin Klein’s business without Calvin has been terrific and has grown geometrically year to year in categories that would have been difficult to do with Calvin,” Jassin said.

Hal Reiter, president and chief executive officer of Herbert Mines Associates, agreed companies do survive changes in creative leadership. “Founders-designers can be replaced and transitioned from the original. Look at Anne Klein, Calvin Klein; J.Crew is a perfect example of a whole new J. Crew. Many of these faces of the brand are no longer designing, but they edit and veto. These eponymous companies can go on with a new designer provided they stay loyal to the brand,” he said.

Marshal Cohen, chief industry analyst at The NPD Group, explained that if a company is able to keep the personality of the brand, but find the balance with someone who’s got professional experience, it will allow the company to grow to the next level. He said when a designer partners with a company like Claiborne, the expectation is to grow, not stay stable. He believes Juicy will survive if certain things are done right. “Sometimes it’s even better,” he said, pointing to firms like Perry Ellis, which survived a long time after the death of its designer, whereas Williwear went downhill after Willi Smith died.

Cohen believes Claiborne is doing the right things to succeed. He said it’s not about how many stores a brand opens or how many skirts it sells. “It’s, ‘How profitable can you become?’” he said, adding he believes leaner, more focused, more differentiated brands are the future.

Robert Burke, president and ceo of Robert Burke Consultants, said, “I think that Juicy Couture has certainly been an enormous success since its creation. They have created a very distinctive image, and diversified with men’s, women’s and children’s and freestanding shops. It’s well on its way as an established brand. I can foresee it moving forward.

“It’s not in that crucial phase of still defining the brand. Any time there’s a loss of a designer, there’s concern, especially at the collection level because they’re doing such a good job. It will probably live on. They’ve been very much the face of Juicy. It worked for the brand’s benefit, but the brand is so well established,” said Burke.

“I would never say it’s a recipe for disaster. The creative director-founders’ leaving can very often have an impact on the brand, especially when they’re strong product people,” added Kim Vernon, ceo of Vernon Co. She pointed to Calypso founder Christiane Celle, who sold Calypso and later had irreconcilable differences with the new owners, which had a dramatic impact on the brand and the business “because she was an extremely strong product person.”

As far as the Juicy designers, she said, “They were involved many years post-acquisition, and [their departure] might be very dramatic for the brand. They don’t have teams there anymore. There’s been so much turnover. Juicy Couture is hitting a bit of maturation in the market. Their involvement was petering out. Frankly I’m surprised they stayed in this so long.”

Marc Gobé, president of Emotional Branding, believes Juicy Couture has developed an enviable cult following.

“Juicy Couture is interesting. The brand is really cool, fresh and imaginative,” he said. “People who start the business and are the inspiration of the business, when they walk away, it signals trouble even if it’s for a good cause. Do they want to leave? Then it’s their prerogative, or are they leaving because they realize that being part of a bigger corporation does not give them the freedom they were accustomed to?”

But, he warned, “The hardest thing in fashion, or in any creative field, is to find a good creative director. Some companies do well. Look at Gucci, they were able to continue with a new designer, but generally it’s very challenging because it’s the business of fashion and inspiration and feelings, and understanding what the market wants by emotionally connecting. That won’t show up in any report.”

“It [Juicy Couture] still has a tremendous amount of potential, and what it has is the ability to grow globally,” said Gilbert Harrison, chairman of Financo Inc. “Bill [McComb] understands the business. He inherited, to a great extent, a perfect storm. He’ll survive it. I have confidence in him, and the board has confidence in him.”

NEW YORK TIMES: 'Affordable Luxury' Bucks the Crisis

NEW YORK TIMES | KATIE WEISMAN NEW YORK — Tommy Hilfiger just opened a 22,000-square-foot store on Fifth Avenue in Manhattan, a move that, in this economy, some might call insane.

But the Hilfiger line, like many midrange designer brands, is growing, while other labels, notably at the high end, are struggling to hang on to market share.

“We are positioned very well with accessible, affordable luxury and this is something we have been doing for 25 years,” the designer said last month during New York Fashion Week.

Very well indeed. Sales of the Tommy Hilfiger Group, a unit of Apax Partners, a private equity investment group, rose 21 percent, to $1.6 billion, for the financial year that ended March 31, according to Fred Ghering, Hilfiger’s chief executive officer. Hilfiger sales for this financial year are expected to rise in the single digits, much less than in previous years, but they will still grow in a stagnant market. For the record, a Hilfiger cocktail dress sells for $450 and a camel hair coat goes for about $750.

Brands like Tommy Hilfiger, D&G from Dolce & Gabbana, or Tory Burch, all selling below the luxury designer category, are growing now because they expanded or reorganized, repositioned collections or introduced new lucrative lines before the first signs of the recession.

“There is this white space between major designer collections and contemporary lines,” said Robert Burke of Robert Burke Associates, the New York luxury consulting company. “Designers like Tory Burch, Phillip Lim and Alexander Wang are filling that gap. These collections provide their own great creativity at a great value.”

This “white space” has, until now, been filled with what the American apparel industry calls “bridge collections,” where retail prices for a skirt range from about $250 to $400, and pants cost $175 to $250, Mr. Burke said. Brands have been moving in and out of this category as well as the “contemporary designer” range priced slightly higher, by either changing their price points or going out of business. This dynamic has created opportunities for creative international labels to move in and grab market share.

D&G, the younger Dolce & Gabbana collection, is a great example of this market’s momentum, according to Karen Katz, president and chief executive of Neiman Marcus department stores, adding that it “has the creative DNA of Dolce & Gabbana” and good pricing.

In 2006, the Dolce & Gabbana group brought the collection’s production inhouse, ending a license arrangement with Ittierre group of Italy. Since then, the collection has had average sales growth of more than 8 percent a year, reflecting its more sophisticated styling and fabrications. For the financial year that ended March 31, D&G sales were €706 million, or $1.04 billion, roughly 44 percent of the group’s revenue.

As Mr. Burke noted, the Tory Burch line, founded by the New York socialite in 2004, also is succeeding because it has found its niche.

“When I was researching my business plan, I came up with the idea of what was missing from the market. I wanted beautifully made but accessibly priced clothing,” Ms. Burch said. “Since I had worked in the business, I knew what kind of margins and markups were being made. I new that price was going to be a challenge.”

One of her first steps was to hire Fiona Kotur Marin, who had helped start Old Navy and is an expert on producing in China. The Tory Burch collection is now produced through a group of factories, most of which are in China, a top factor in the collection’s prices. The average retail price of dresses from her fall 2009 collection is about $365, excluding two more elaborate evening gowns that were $1,250 and $1,695, respectively.

The privately owned company will not disclose its revenue, but sales are expected to rise modestly this year to $200 million, thanks in part to increased wholesaling outside the United States.

There also are companies that do not appear to be doing anything special, like Isabel Marant of France, and yet are growing at a healthy rate — more than 20 percent a year, according to Isabel Marant’s chief executive officer, Sophie Duruflé. Wholesale revenue for Isabel Marant and its secondary collection, Etoile, rose 29 percent last year, to €25 million, and they are expected to increase 35 percent this year, said Ms. Duruflé. Isabel Marant plans to open a store in New York’s SoHo area next year. The company owns three stores in Paris and two in Hong Kong with a local partner.

Isabel Marant’s two collections are successful because they espouse Isabel Marant’s signature Parisian chic, are priced well and exude value, said Christine Chapellu, the women’s buying director for Le Bon Marché in Paris. The average retail price for an Isabel Marant dress is €390, and €200 at Etoile.

Buyers are particularly vocal in their praise for such midrange lines.

At Harvey Nichols in London, U.S. labels like Milly, Rebecca Taylor and Tory Burch have “performed really well” this fall, said Suzanne Pendlebury, the womenswear buyer. She noted that separates from brands like Vanessa Bruno from France, Diane Von Furstenberg, 3.1 Phillip Lim, Anglomania and the Danish labels Bruuns Bazaar and Malene Birger are seeing strong growth because “with these labels, rather than buying one expensive designer piece, you can afford to buy a few items that work together and produce different looks.”

At Bon Marché, Ms. Chapellu said that contemporary labels like the Marant collections, Vanessa Bruno, Marni, Marni’s Summer and Winter Edition and Marc by Marc Jacobs have all sold well this fall.

However, Ms. Chapellu stressed, price is not the sole driver for success. “You need the whole equation,” she said.

Printemps, another iconic department store in Paris, is planning to shift more of its spending from luxury designer lines to these contemporary and bridge collections for the spring season, said Tancrède de Lalun, the general merchandise manager for womenswear and menswear. He did not disclose which brands would be favored.

WWD: Jewelers Craft a New Path to Luxury

WWD | SOPHIA CHABBOTT

Excess is out and prudence is in.

A year after the financial markets melted down and the days of freewheeling spending on luxury goods came to a grinding halt, top-tier jewelers have adapted to marketing their best pieces in this economy. In an era when conspicuous consumption appears on the wane, pitching diamond and gemstone jewelry that can sell for upward of $100,000 and go into the millions is definitely a challenge. Consumers’ new mind-set makes it even tougher, executives and retailers say, even as they stress consumers are getting more comfortable with spending again.

So fine jewelers are adopting two tactics. One is to market the pieces as an investment that can help diversify the customer’s financial portfolio. The other strategy plays on the limited nature of truly rare pieces: buy now or it may never be available again.

David Klein, executive director at Leviev, said clients come into the firm’s Madison Avenue boutique looking for value. “We have people that come in and say, ‘I want something special, something that’s going to keep the value,’” he said, noting that Leviev, which is known for its white and yellow diamonds, had several important sales in the past several months and that clients come in asking which pieces would be solid investments. “People are interested in seeing [what we have]. They want large, whites and yellows.”

One client is said to have come in with his wife a few months ago wanting to invest in diamonds and she got to choose the piece. Initially they spent $2 million, but after a few months of evaluating the purchase, he upped the ante with the purchase of a pair of $4 million diamond earrings.

Leviev is aggressively procuring new pieces made with ultrarare and pricy stones. Standout pieces include a collar of oval- and round-cut white diamonds interspersed with intense pink diamonds, and a 76-carat pink diamond that has been reset as a pendant surrounded by smaller colored diamonds in orange, green, yellow, pink and blue that retails for $18 million.

“We haven’t changed because times have changed and it’s serving us well,” added Klein.

Graff America president and chief executive officer Henri Barguirdjian said the London-based firm would never dream of selling its rarefied jewels from an investment aspect, saying, “It’s never a consideration.” But with diamonds and gems escalating in price year upon year, the investment aspect is not to be discounted.

Barguirdjian claims Graff’s business in America is good, although the nature of sales is different.

“My business has changed completely,” he said. “Most of the bread-and-butter [opening price point] business has disappeared, and we are selling only important pieces.”

The average price point at Graff is $200,000.

“It’s logical to a certain extent,” said Barguirdjian. “Clients realize that fine diamonds and fine colored stones keep their value.…When you think about it, each piece of jewelry [costs] more than a house.”

Barguirdjian noted a client to whom Graff sold a 5-carat fancy pink diamond four years ago doubled his investment when selling the stone through Christie’s in Hong Kong in December.

“They are buying, and in the back of their mind is an investment,” he added.

While diamonds are universally graded by carat, clarity, cut and color, their prices aren’t monitored like gold is on the commodities index. The international industry standard for a wholesale price gauge for diamonds is through a company called Rapaport. The “Rap Sheet” periodically lists diamond prices, offering a barometer for industry members. The October 2009 Rap Sheet printed wholesale prices of $23,100 for a 1- to 1.49-carat D-color, flawless stone and $121,500 for an E-color 10- to 10.99-carat round diamond, VVS1, meaning it has an inclusion invisible to the naked eye.

Even as fine jewelers target consumers with products that are either an investment or a not-to-be-missed one-off, there is no doubt the sector, like all luxury goods, continues to see tough times. In March, Bulgari SpA cut jobs, reducing the number of products and closing unprofitable stores after the company’s earnings fell 45.1 percent in 2008. In July, the Roman jewelry firm reported a net loss of $53.8 million in the first half ending June 30, citing a slowdown in demand for fine watches and jewelry in the U.S. Chopard, a privately held firm, cut staff and expenses in the spring and summer.

In August, Tiffany & Co. beat earnings estimates by cutting costs and expenses, but profits fell by 29.7 percent. In September, Harry Winston Diamond Corp., which supplies rough diamonds to the global market from its 40 percent ownership interest in Diavik Diamond Mine, reported an operating loss of $5.6 million for the three months ended July 31, versus an operating profit of $5.9 million a year earlier amid significant layoffs. In the U.S. alone, revenue decreased 48 percent to $15 million.

However, Winston, which controls the Harry Winston retail network, said it would resume production for winter at Diavik Diamond mine in Canada’s Northwest Territories, after planning to shut down for the season. Summer production was halted, affecting some 600 employees, in response to market conditions.

Diamond mining giant De Beers SA also cut production by 73 percent compared with the same period last year, to 6.6 million carats, and reduced the global workforce by 23 percent. In July, the company reported a 99 percent decline in first-half net profit citing “historically difficult trading conditions,” and, in the six months to June 30, net profit fell to $3 million from $316 million in the same period last year, while total sales fell 54.2 percent to $1.71 billion from $3.74 billion during the same period last year.

But Gareth Penny, managing director of De Beers Group, said American buyers are for the first time viewing diamonds as assets across the board.

“People want to invest in diamonds,” said Penny. “A year ago, no one asked if they were a good store of value.…People are conscious of lasting value.”

Industry consultant Robert Burke of Robert Burke & Associates, agreed. “Pitching [high-end jewelry] as an investment is going to make more sense in this economy and state of mind,” he said. “Passion purchasing or anything that is emotionally motivated or whimsical doesn’t feel correct right now.”

De Beers has launched a major marketing campaign called Everlon. The diamond-mining giant has partnered with several Sightholders and designers across many price levels to play on the motif of a round diamond being hugged by a rope of pavé diamonds inspired by the Hercules knot, an ancient symbol of strength. According to Penny, the styles symbolize hope, support and faith of a loved one in these uncertain times. Prices start as low as $249.59 for a pendant with diamonds totaling 0.2 carats at J.C. Penney to the high thousands for a one-of-a-kind pair of large diamond pendant earrings designed by venerable jewelry designer Martin Katz.

For Stephen Russell, the Madison Avenue jeweler specializing in top-quality, signed vintage pieces as well as new designs, the main selling is buy now, because pieces are one of a kind and won’t necessarily come back on the market in the near future.

Zelenetz told the story of a client who hemmed and hawed over buying a piece a year ago and ultimately didn’t. That same client came into the boutique recently and said he regretted he didn’t buy the piece, as the money he was bound to spend on it foundered in the stock market.

“[Jewelry] is not necessarily an investment instrument — it’s a passive investment,” said Zelenetz, who added he has seen clients pop up and move capital from the stock market into jewelry. “People are comfortable with spending money again, but it has to be the best. When you deal in unique things, it’s a double-edged sword: Pieces are hard to find, and when they become available, you have to buy them. If it’s something that’s manufactured by the hundreds, there’s no sense of urgency. They’ll always be available.”

Marc Hruschka, Chopard’s U.S. president and ceo, said discerning clients make all the difference. “We went from a nation of spenders to a nation of savers in a short period of time,” said Hruschka. “People will feel more comfortable acquiring things again, whether it’s cars, jewelry, watches or homes. You have to be a sophisticated and savvy diamond buyer, however beautiful, unique or special [an important] diamond is. They are still one in a million or one in 10 million.”

Then there are those firms, like Chanel, whose fine jewelry category is focused on distinctive design more than large stones.

“A stone is more a commodity. We are selling the creativity of the product,” said Benjamin Comar, international jewelry director at Chanel.

Comar shared an anecdote that there were two clients in July who wanted to buy the same one-of-a-kind high jewelry piece, adding: “It was difficult to arbitrate which customer would get the pieces.”

Ultimately, Chanel sold the piece to its longer-standing client and offered the newer one another exclusive piece to purchase. Comar said the high-end business is doing better in the U.S. than other segments.

“Clients are looking very carefully in the design component on the high end. It’s first and foremost jewelry,” said Thomas J. O’Neill, ceo of Harry Winston. “If customers are interested in buying jewelry for other reasons…we aren’t marketing our designs in that way.”

For Winston, pieces above the $1 million mark are what are selling well.

“The U.S. customer tends to be more sensitive than other parts of the world,” said O’Neill, noting business is stronger in Asia and Europe. “It’s the U.S. where the customer continues to think carefully about what they purchase and when they purchase. Are they going to get the piece they have their heart set on, or are they going to moderate the price?”

While business may show some bright spots for jewelers, it’s an uphill battle to begin to match sales figures from two years ago. Brands focusing on value overall and pedigree are seeing results. The fact that jewelry of such ilk is collectable, not trendy, bodes well for sellers. Verdura, for one, has sold out of the recently reissued limited edition run of the famous Maltese cross cuffs made originally for Coco Chanel, according to a company executive. The cuffs sell for $65,000 each.

Emmanuel Perrin, president and ceo of Van Cleef & Arpels North America, focuses on the value and design factors when selling any piece.

“In the heyday, you’d buy things without thinking,” he said. “The pattern of purchases is for fewer things, but better things. You’re going to look for maximum value for your purchase.…Life goes on; real estate is an investment. Jewelry always links back to an emotion or a celebration — birthdays, anniversaries, engagements. You can’t postpone the celebration, but you can always postpone an investment.”

WWD: Big and Little Retailers Join Forces

WWD | MILES SOCHA & ELENA BERTON

PARIS — After designer collaborations and celebrity tie-ups, it’s now time for stores to pair up — even Davids with Goliaths.

As fashion retailers continue to feel the pinch from the worst recession since World War II, they’re becoming increasingly creative to offer more exclusive products and experiences that can persuade regular shoppers to open their wallets and hopefully attract new customers as well.

Over the weekend, Gap and edgy Parisian boutique Merci wrapped up a monthlong project in which each hosted a selection of the other’s products in their New York and Paris stores. Also over the weekend, Parisian department store Printemps christened the opening of a Maria Luisa location within its recently revamped Boulevard Haussmann flagship here.

Uniqlo recently set up shop in hip Paris concept store Colette as a teaser for the arrival of its Paris flagship, which opened last week.

And Target is mulling a one-off collaboration with Britain’s Liberty to launch clothing and accessories bearing the store’s trademark flower prints.

“In an effort to lure back the consumer, retailers are increasingly having to be more creative by devising events and promotions that promote the concept of uniqueness, exclusivity and scarcity. The partnership with an exclusive brand is just one example,” said Patricia Pao, founder of New York-based fashion consultancy The Pao Principle. “I think we are going to increasingly see more of the big brand-little brand pairings.”

Through these kinds of partnerships, large retailers acquire a degree of exclusivity and scarcity, as well as the prestige of carrying the smaller but highly desirable brand. The smaller retailers gain brand awareness and a degree of exposure they couldn’t afford to buy on their own, as well as trialing their products on new consumer segments.

“I do think it’s the next thing,” said Robert Burke, president of Robert Burke Associates, a New York-based consulting firm. “The designer collaborations have been played out quite a bit. This is a new angle. It’s one of those win-wins.”

He noted that for giant stores, “there’s a great deal of cachet with these small retailers, particularly French retailers.” Whether big or small, all retailers jockey to carry exclusive designer brands and products. Now big retailers are competing to gain access to buzzy specialty store banners, Burke said.

Indeed, according to market sources, Galeries Lafayette recently made overtures to Dover Street Market, the quirky multibrand emporium in London masterminded by Rei Kawakubo of Comme des Garçons, which has everything from vintage Cutler & Gross sunglasses and Christopher Kane dresses to Rose Bakery pound cakes under one roof.

“It allows us to bring in new talents, which can’t really stand commercially on their own feet in a big space, but which we think have potential for our customers,” said Maurizio Borletti, chairman of Printemps Holdings, which controls France’s Printemps and La Rinascente in Italy.

Industry experts pointed out there has to be synergy between each brand’s customers, because both brands still need to produce and sell merchandise to their core customer.

“These arrangements need to be more than merely puff and noise. It requires consistency in terms of brand identities so the hype around the event and cobranding does not dilute any of the brands,” said Florian Gonzalez, a London-based brand consultant. “Hopefully, by sharing their customers, products or retail spaces, brands experience cross-fertilization, rather than cannibalization or confusion.”

Borletti noted there are considerable challenges in meshing the “industrial mentality of a big retailer” with the more instinct-driven one of an independent fashion boutique. “That business in retail is what haute couture is in fashion,” he noted. “The chemistry to make it work is not easy.”

The business model is also vastly different, with the independent boutique dealing more with the vagaries of fashion and therefore operating at a higher risk to margins.

“We think as a department store we should have that competency. And I think we can do it more profitably because we have a lot of traffic,” Borletti said, noting Printemps’ personal shopping service will bring even more attention to the brands Maria Luisa plans to showcase.

Borletti said European department stores are no strangers to collaborations with other retailers. Printemps, for example, long had departments for Zara and Mango. “But back then, Zara was a totally new thing,” he said, whereas today, they wouldn’t “contribute to the exclusiveness of our offer.”

Inspired by the chic Merci boutique in Paris, Gap opened a “Merci Gap” pop-up store in New York. Meant to stay open only a month, the store occupied a 500-square-foot space next to Gap’s flagship on Fifth Avenue, re-creating the look and feel of the original Parisian shop, with proceeds going to various children’s charities. Across the Atlantic, Merci hosted a selection of one-off Gap designs. The original Merci is the brainchild of Marie-France and Bernard Cohen, the founders of Bonpoint, a children’s wear brand they sold in 2003.

Merci is a concept store stocked with unusual house wares, fashions, perfumes, fresh flowers and an ice cream stall. All the proceeds from the shop benefit Accueil des Sans-abri, a nonprofit organization that helps Madagascar’s homeless.

Jean-Luc Colonna, co-founder of Merci, said he was surprised by the reception the Merci shop-in-shop received from Gap customers.

“Many New Yorkers now have placed Merci on their radar screen,” he said.

Specialty fashion store Opening Ceremony is considered a pioneer in hookups with giant retailers, being the first American store to carry Topshop at its first outpost on Howard Street in Manhattan. Five years later, Topshop operates a flagship on nearby Broadway, and Opening Ceremony counts branches in Los Angeles and Tokyo, too.

“We’ve never felt that these giant retailers would detract from our merchandise,” said Opening Ceremony’s co-owner Humberto Leon. “We have a great customer that can see the inherent value of fun, well-curated fast-fashion and then turn around and buy a Rodarte knit or Proenza Schouler bag.

Opening Ceremony also bills itself as the first retailer to partner with Target on its 2004 collaboration with Proenza as part of its Go International initiative featuring limited edition, low-cost collections from established designers. Opening Ceremony also did a collaboration with Uniqlo earlier this year, introducing the brand to the Los Angeles market.

“I think it set a tone that having these goods in your store is cool and modern,” Leon said. “We think this is something fun for the customer. It also helps to highlight the designer collaboration and take it out of context. This reiterates the importance of design within these collaborations.

“It’s exciting to introduce a curated segment of the giant retailers to cities or countries that they do not have a presence in,” he added.

According to Leon, “the possibilities are endless. If other retailers offered us great products, we would look at it.”

In that vein, Opening Ceremony plans to carry special Rodarte products the Mulleavy sisters created in tandem with their one-month residency at Paris boutique Colette. “For us, it’s a way of sharing the marketplace and sharing ideas,” Leon said.

NEW YORK TIMES: When a Bottom Line Isn't Just About Profit

NEW YORK TIMES | ELISE ANNISS

As the fashion industry struggles with a global economic downturn and a rapidly changing consumer landscape, qualities that are at the heart of family and owner/founder businesses, like a consistent vision and a long-term approach, seem to be helping those companies ride out the storm.

Among the mid-range businesses that match this description is FJ Benjamin, a franchise specialist in Singapore. And there are the founders who hope they are nurturing family businesses in the making, like David Reiss, head of the British chain Reiss.

“The advantage of these family-owned businesses is that they are nimble, close to their business and the end consumer, and are able to move quickly compared with some larger companies,” said Robert Burke, president and chief executive of the consultancy Robert Burke Associates in New York, whose clients range from international fashion and retail brands to luxury resorts. “Also, they are not as tempted to over leverage themselves, which has been one of the downsides for some larger businesses in this present crisis.”

His opinion is echoed in the report “In Safe Hands,” which was published in March by Barclays Wealth and the Economist Intelligence Unit. It concludes that family businesses have certain characteristics — they are risk averse, less burdened by debt, and agile because ownership and management are closely aligned — that can stand them in good stead during difficult times.

“I think having the owners being involved is comforting because we own a stake in the business so we will do whatever we can to make it perform as well as possible in the long term,” said Douglas Benjamin, chief executive of FJ Benjamin Singapore.

His father, Frank Benjamin, founded the company in 1959 and still acts as its chairman. His uncle is chief executive of the parent company, FJ Holdings, which is listed on the Singapore stock exchange. With his brothers and other family members, he retains a 28 percent stake in the company, which notched up sales of $200 million for the year ended June 30. “We also take a long-term approach to risk, which is a different way of looking at something compared with someone who is incentivized to act in a short-term way,” Mr. Benjamin said.

The company initially ran the local operations of such major fashion brands as Gucci, Lanvin and Fendi, until those companies got excited about emerging markets and took back control. But retail franchising is still an important component of the business — it operates Celine’s business in Indonesia, Malaysia, Singapore and Thailand, and for three years it has been responsible for GAP and Banana Republic’s 30 stores in Singapore, Malaysia and Indonesian.

Focusing on the long term, Douglas Benjamin said he was going international with the company’s brand, Raoul. The label, which began as a men’s shirt line in 2002, now sells men’s and women’s clothing through a network of Raoul stores in South East Asia and Dubai.

And he is being cautious — the brand will go wholesale first, rather than retail, a route that Mr. Benjamin is more familiar with but is the riskier path.

Raoul opened a New York showroom in July and made its European debut as part of the Vendôme Luxury Trade Show that was showing at Le Meurice through Tuesday as part of Paris Fashion Week.

David Reiss still heads the privately owned chain that bears his name, which is valued at £90 million, or about $143 million. Reiss. Started in 1971, it has grown to 90 stores on both sides of the Atlantic as well as in China and the Middle East.

“When the whole world was crashing in 2008, I decided that 2009 would become a year of consolidation,” Mr. Reiss said. “I took stock of exactly where we sit in the market and re-sowed the seeds for brand evolution.”

Mr. Reiss has hired from the luxury sector — the new brand director is Andy Rogers, who joined Reiss from Stella McCartney, where he was store planning and visual director — and introduced the edgier men’s and women’s 1971 collection for autumn (celebrated at the start of London Fashion Week last month). But Mr. Reiss said that, at its core, company values have not changed.

“1971 is an extension of the Reiss brand and we’ve been careful not to alienate the core customer with it,” he said, explaining that he wanted to complement the existing, dressy collections with a casual sub-brand that also might appeal to a new, younger customer. The collection includes items like a short leather jacket at £195 and jeans with different fits and finishes, ranging from £79 to £89.

“I think that from the perspective of third parties, like employees and suppliers, companies such as these provide secure relationships that are longstanding,” said George Wallace, chief executive of MHE Retail, a strategy firm.

“With these people there’s a sense of ownership that you just can’t recreate with someone on a salary and a bonus,” he said. “They have a drive and commitment that goes beyond doing the job. After all, they won’t jump ship when the going gets tough.”