TIME: Almanac 1995

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<text id=91TT2515> <title> Nov. 11, 1991: Fashion:Why Chic is Now Cheaper </title> <history> TIME--The Weekly Newsmagazine--1991 Nov. 11, 1991 Somebody's Watching </history> <article> <source>Time Magazine</source> <hdr> BUSINESS, Page 68 FASHION Why Chic Is Now Cheaper </hdr><body> Big-name clothing designers are moving down-market to court price-conscious customers. But not everyone wins. By Barbara Rudolph--With reporting by June Hager/Rome and Farah Nayeri/Paris Giorgio Armani. The name defines chic. Luxurious fabrics, exquisite craftsmanship, elegant design--that's the Armani that customers love and competitors fear. So what is this upscale Italian designer doing peddling cotton T-shirts and blue jeans? Quite simply, he is trying to make money like everybody else--by reaching the millions of American men who cannot afford his $1,875 suits and the women who can only admire his $1,800 dresses on department-store racks. In December the designer will market a line of casual clothes bearing an Armani Jeans label--chambray shirts, denim jackets, linen blouses. Nothing fancy. More than three-quarters of the items will cost less than $100. Armani is only the latest designer to enter a clothing market that is rapidly coming to realize that nobody wants to spend real money on clothes these days. U.S. retail sales are depressed, and Christmas sales will probably be flat--at best. The picture looks no prettier in Europe. In fashion-conscious Italy, for example, apparel sales are expected to decline 12% in 1991. The one striking exception seems to prove the rule: in the U.S., sales at the Gap, purveyor of $19 cotton turtlenecks and $28.50 sweat pants, are running 30% above last year's. "Everyone is thinking about less expensive clothes," says Calvin Klein. "We're all doing it." While the designer- collection business is ailing, if not dying, moderately priced second collections, known in the trade as bridge lines and costing about half as much as top-of-line labels, still sell. Armani is betting that a whole chain of boutiques--to be called A/X Armani Exchange--can capture $60 million in sales next year from this miniboom in cheap chic. A/X units will open in department and specialty stores across the U.S. in March. It was the surprise success of Donna Karan's DKNY that inspired the industry. Selling such staples as $90 cotton poplin blouses and $365 navy wool blazers, DKNY last year hit $100 million in sales and should reach $140 million this year. Launched less than three years ago, the company is proving to be the salvation of Seventh Avenue. Clothing designers, like businessmen everywhere, tend to fall all over a winning formula, and store racks are groaning with DKNY wannabes. "I call our rivals the Pac-Men," says DKNY's president, Denise Seegal. "They're all coming after us." This fall saw the launch of Company, a division of Ellen Tracy, whose best sellers include $145 velour tunics and $255 stirrup pants, and of Anne Klein's A Line, which sold a passel of Lycra-blend stretch pants ($215) and double-breasted blazers ($365). Other recent entries in the category include KORS from Michael Kors, which markets $185 sarong skirts and $105 chambray shirts. Kors anticipates that sales this year will reach $15 million. Ungaro's Emanuel line includes a $360 houndstooth dress and a $195 gabardine skirt. Declares Ungaro: "A woman doesn't need a lot of money to be elegant. She can be chic with clothes bought from a supermarket chain." In the men's market, where the move toward lower-priced lines is less pronounced, second collections include Versace's V2 and Armani's Mani. The bridge market in womens wear alone totals about $1 billion at retail, more than twice what it was just three years ago. Predictably, department stores are devoting more space to second collections. At the new Manhattan outpost of Galeries Lafayette, the French department-store chain, the shelves are stocked with French designers' second collections as well as more moderately priced labels such as Chantal Thomass and Lolita Lempicka. Bloomingdale's senior vice president Kal Ruttenstein reports that sales of the store's bridge lines are running 28% ahead of last year. Debt-laden retailers keenly appreciate that markdowns on bridge clothes typically run around 30%, according to retailing consultant Howard Davidowitz, while designer markdowns often hit 70%. "In the late 1980s, women were into designer labels. That's not where it's at now, and we may never get back there," says Frank Mori, president of Takiyho, which owns Anne Klein and has a 50% stake in Donna Karan. "The days of selling clothes on the basis of brand name alone are over," says Ralph Toledano, president of Karl Lagerfeld. Though the bridge market existed on a small scale during the 1970s, it really took root in the early 1980s with the launch of the Anne Klein II line, designed by a young Donna Karan and Louis Dell'Olio. Anne Klein II, which found its niche selling career clothes just as professional women were entering the work force in large numbers, shared the spotlight with Ellen Tracy, an established line that was spruced up by designer Linda Allard. The market hummed along at moderate speed until early 1989, when Donna Karan rewrote the rules by tapping into a powerful consumer demand that others had somehow failed to satisfy. DKNY offered stylish, sporty clothes at decent (though hardly bargain-basement) prices. It is now running neck and neck with Ellen Tracy, though DKNY is sold in 450 stores in the U.S., compared with 1,000 for Tracy. And DKNY has probably cut into the market share of Anne Klein II, whose sales have slipped from $130 million in 1989 to an estimated $110 million this year. By all rights, Calvin Klein, one of the patron saints of American sportswear, should be cleaning up in this market. He was one of the first to launch a lower-priced collection: Classifications, first sold in 1983, was discontinued in 1988. These days, though, his lower-priced Calvin Klein Sport division, which last year accounted for nearly 80% of all business at Calvin Klein, Inc., has been floundering. Company sales in 1990 fell to $197 million, down from $225 million in 1989. Even worse, the firm lost more than $4 million and carries long-term debt of close to $68 million. The problem, competitors say, is that Calvin Klein Sport is known for jeans but little else. Klein hopes to change that. "What I'm doing now," he says, "is refocusing the line to sell in the bridge market." Says DKNY's Seegal: "It's the repositioning of the repositioning of the reposi tioning." Adds a competitor: "Calvin Klein is not a happy camper." After Klein's launching a $10 million ad campaign featuring model-actress Carre Otis, half-naked men and women, and lots of leather, business is picking up. At Bloomingdale's, for instance, Calvin Klein Sport sales are running 30% ahead of last year's. Whether Klein can keep up the momentum remains to be seen. Bridge lines are clearly the right response to the recession, but more than economic factors explain their success. The second collections, speculates Vogue editor in chief Anna Wintour, are in synch with the "breaking up of fashion," in her words. "Women are looking for things that are more their own," she says, "and less of a designer statement." In other words, fewer women feel the need to wear Armani or Karan or any label head to toe. They'll happily pair a Chanel jacket, say, with a DKNY skirt and not worry about getting reported to the fashion police. In the apparel business, though, no trend lasts forever. "The bridge market has already got crowded," says Peter Brown, a vice president at Kurt Salmon Associates, a New York consulting firm. A shakeout is probably coming, and soon. Though many industry observers pronounce the high-priced- designer business dead and buried, others hold out hope that when the economy finally improves, the sector may get a new lease on life. "There will always be designer customers," says DKNY's Seegal, who has been wearing designer labels since she first splurged on Betsey Johnson as a high school student. "They're basically snobs. The feeling is, `If I can afford a $3,000 Chanel suit, it makes me stand out.' Are we going to do away with status? No." For now, however, those status seekers are playing it very close to the vest. </body></article> </text>