Along Rodeo Drive: it's just not business as usual


BEVERLY HILLS -- Rodeo Drive seems every bit the exclusive playground of the rich and famous on a recent Saturday.

Ferraris are everywhere; a show of sport and racing models has temporarily blocked every other vehicle from the four-block drive, home to some of the most expensive boutiques in the world: Versace, Chanel, Giorgio Armani, Fred Hayman Beverly Hills, Van Cleef & Arpels, Cartier, Bijan, Ungaro.

Here on the drive, ogling the cars, are "Tonight Show" host Jay Leno, Olympian infomercial star Bruce Jenner, and actors Perry King and Michael Nouri, along with many who are obviously tourists, and many others done up in exquisite threads who carry themselves in the rarefied manner that says "I belong."

So it's hard to tell, at first glance, that Rodeo Drive has hit hard times.

But the ritzy street has been knocked on its elegant behind by worldwide recession, bankruptcies, plunging sales and a loss of prestige.

While some upscale boutiques scramble to survive, moderate-priced but highly profitable chain stores are muscling their way in. The once-haughty street now has stores found at your nearest mall.

"We are going through an evolution," said Fred Hayman, as he watched passing scene from the cappuccino bar in the shop he founded under the name Giorgio Beverly Hills. It was Mr. Hayman who about 18 years ago organized the Rodeo Drive Committee and persuaded the other merchants to market the street as a shopping destination of the wealthy -- a strategy that succeeded beyond expectations.

Rodeo Drive became a street of dreams, where money was no object, where one went for $95,000 gowns, $42,000 bedspreads and $500,000 diamond necklaces. Fashion houses and investors fought to pay exorbitant rent for retail space, and rich travelers, California socialites and celebrities shopped till they dropped.

During the late 1970s and the go-go, spend-spend '80s, Rodeo Drive came to rival such world-renowned shopping streets as Rome's Via Condotti and Paris' Rue du Faubourg St. Honore.

Mr. Hayman's boutique was a symbol of the street; it drew the "creme de la creme," and was immortalized in Judith Krantz's racy 1978 novel "Scruples." (Mr. Hayman sold the Giorgio name and perfume to Avon in 1989.)

But Rodeo Drive is no longer as exclusive as it used to be. Opened recently are mainstreamers such as Baby Guess? and Guess?; Imposters, a costume jewelry store, and one of the Limited's Express stores.

Around the corner are three Guess? boutiques, a Gap and a Banana Republic. Adrienne Vittadini operates a new, moderate-priced boutique here, and others in her price range may follow.

The neighborhood has gotten so bad that Yves St. Laurent last summer canceled a planned boutique.

A stroll down Rodeo Drive illuminates the story.

Stripped across the windows of the Ted Lapidus and Ungaro boutiques and a few others are giant red signs proclaiming "50 to 70 percent off." Unthinkable as little as two years ago.

The Lina Lee shop at 451 is crowded with shoppers. That's because Ms. Lee, such a presence on Rodeo Drive for 17 years she was called the Queen of Rodeo, is liquidating her stock and closing.

At other Rodeo boutiques -- Armani, Ferragamo, Bijan, Louis Vuitton, Versace -- there are more salespeople than customers. By contrast, the Guess? Ranch is packed with customers snapping up Guess? $18 T-shirts, $29 backbags and $60 jeans.

Manager Alex Martin says the 4-month-old store with its Western theme has drawn crowds daily.

Stores such as Guess? were able to get a toehold when high and mighty places like Amen Wardy went bankrupt and art galleries and premium businesses closed. Retail space increased with new developments, such as Two Rodeo Drive, a courtyard enclave that houses Versace and a few other boutiques.

"The city also built three parking garages and put retail space on the ground floors," said Bill Boyd, executive vice president of the Beverly Hills Chamber of Commerce.

But there are factors other than overbuilding that contributed to Rodeo's woes, including a difficult retail climate. While the U.S. recession may have eased, California is still economically depressed. Last year's riots also put a damper on tourism.

Then there is a new austerity, an anti-fashion chic that has caused even those with major bucks to balk at overdone and overpriced goods.

Last, and perhaps most significant, is the explosive growth of designer boutiques and the availability of designer goods.

Once their stores were clustered along a few streets in the world's fashion capitals. Now designers such as Gianfranco Ferre, Gianni Versace and Donna Karan manage or lease boutiques around the globe, including those in U.S. cities such as Philadelphia, Bal Harbour, Fla., Palm Beach, Washington and Las Vegas.

Also in the last decade or so, upscale department stores such as I. Magnin, Saks Fifth Avenue and Bergdorf Goodman began aggressively acquiring and promoting upper-end designer merchandise, even building special boutiques as temples to individual designers. These stores do drastic markdowns. Leftovers are shipped to outlet and off-price stores, which also buy direct.

Said Mr. Boyd: "Ten years ago, Rodeo Drive had a franchise. There just weren't that many places to find exclusive designer goods. Now there are. Obviously this has taken some of the business from Beverly Hills and it had to broaden its appeal."

Still, worries that Rodeo Drive will be nothing more than an outdoor mall are put to rest by Mr. Hayman.

Speaking of the proper 2 1/2 blocks that originally constituted the Rodeo merchants, he said: "These 2 1/2 blocks are solid. Don't let anyone tell you any different. It is the ultimate."

Or, Rodeo Drive may be down, but it's not out, in Beverly Hills.

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