By  on July 2, 2009

SAN FRANCISCO — Diesel is relocating its flagship in the city’s Union Square retail district.

The Italian denim and contemporary fashion brand opened its second U.S. store here in 1997, but felt a move was in order to keep up with the changing retail landscape.

While the new, 11,200-square-foot store at 800 Market Street is only five blocks from Diesel’s original flagship at 101 Post Street and still in Union Square, the two are worlds apart, according to Diesel U.S. chief executive officer Steve Birkhold.

“There’s more traffic” on Market, said Birkhold. “We believe there has been a shift where the consumer wants to go [in the neighborhood], and Market Street is what we’re betting on.”

Market Street is downtown San Francisco’s busiest thoroughfare and crossroad. Outside Diesel’s new front door in a Flatiron-shaped 1929-era building is a BART regional subway entrance. Across the street is the Westfield San Francisco Centre, where Bloomingdale’s and Nordstrom are anchors. Nearby on Market are San Francisco-based Gap and Old Navy flagships and a Ross discount apparel store.

Diesel’s relocation in San Francisco was planned before the recession, but even in a down economy the move should bring an increase in sales over Post Street, according to Birkhold.

“We are putting ourselves a little closer to the consumer from a mass-traffic perspective,” he said.

Diesel’s other San Francisco store, at Market and Castro Streets, is a similarly busy location three miles away in the Castro neighborhood’s commercial district.

Reaching a wider audience in San Francisco is part of the company’s overall recession merchandising strategy. The volume of merchandise retailing at entry-to-medium price points, or between $125 and $240, has doubled to 45 percent of the assortment, said Birkhold.

“We believe the most important thing in this time period is to offer the consumer a much better value” while keeping quality high and continuing to offer Diesel’s premium-priced goods ($250 and up).

The two-level corner location in Union Square is set to open July 10. The store features 17-foot windows and an .abstract copper staircase, a large Italian-made chandelier and refurbished Italian vintage furnishings.

While San Francisco is feeling the effects of the recession, the impact appears to be carrying less punch here compared with other parts of California. The city’s unemployment rate last month was 8.8 percent, while the statewide jobless rate was 11.5 percent. Current measures of affluence in the Bay Area aren’t available, but prior to the onset of the recession in 2007, the San Francisco region of 7.2 million people was home to the top six of 58 California counties with the highest average personal income, according to the U.S. Bureau of Economic Analysis.

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