By  on March 7, 2012

LONDON — In 1979, Sir Paul Smith opened his first London shop in Covent Garden, which was then a gritty, has-been of a neighborhood whose only attractions were the Royal Opera House and the Royal Ballet School. “I remember walking onto Floral Street and shouting — literally — ‘Is there anybody out there?’” said Smith with a smile during an interview at his head office here.

With no one there to watch — and no retail competition — Smith started having some real fun, projecting images onto the shop walls each night. “It was like the theater,” he said. That attitude extended into the mix as well, with the store stocking colorful, but decidedly unfashionable, items. He happily sold his friend James Dyson’s lilac and purple vacuum cleaners alongside the equally colorful clothing.

That Floral Street shop — now much bigger — is still trading in a neighborhood that has morphed over the past 15 years into a fashion retail playground featuring niche and mass brands such as Burberry Brit, agnès b., Betsey Johnson, Banana Republic and the Apple Store. Last summer, Tommy Hilfiger unveiled his Prep World pop-up shop in Covent Garden, while Ralph Lauren Corp. chose the neighborhood for its first Rugby store in Europe.

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Smith admits he has a knack for ferreting out an emerging neighborhood, and finding the right location for his first New York store, on Fifth Avenue and 16th Street, in 1987, was no exception. “I looked and looked, and for some reason I liked the area. It was filled with Chinese laundries, diners and bodegas. It had a nice atmosphere.”

On March 14, the Paul Smith shop — which is now surrounded by a bevy of nationally known retailers including H&M, Zara, J. Crew, Joe Fresh and Club Monaco — will mark its 25th anniversary with a party for the longtime neighborhood clientele and Smith’s friends.

Although the designer already had a thriving men’s wear business with Bergdorf Goodman, Saks Fifth Avenue and Barneys New York, he said he approached the Manhattan opening with humility. “So many British brands — Tie Rack, Marks & Spencer, The Body Shop — had tried to establish themselves in New York and hadn’t survived. There was always a worry whether it would work or not,” he said.

The store, Smith’s first retail unit outside the U.K., also became the brand’s U.S. headquarters in those years. Retail was on the ground floor, and a showroom, wholesale sales and a press office were in the basement. Today, the basement space houses a bookshop, shoe area and stockroom.

Over the years, Smith used his New York shop windows to mirror events taking place in the city — such as the closing of CBGB in 2006 — or his personal interests, such as John Lennon and George Harrison. He dedicated the windows to Gerhard Richter during the German artist’s 2002 retrospective at the Museum of Modern Art.

Fairly quickly after opening, Smith said, the shop established itself as a neighborhood hub with a clientele whom he describes as “massively loyal.” (He added that his second store in New York, at 142 Greene Street in SoHo, attracts more tourists.)

To wit, in the days following 9/11, Smith said, customers weren’t shy about coming into the Fifth Avenue store. “It was cozy, with mahogany interiors, and the staff had been there for years. It was almost as if the customers were going in for a cuddle.”

The early New York customers were mainly creative types, buying lots of tweeds, colors and suits with patterned linings. Smith said he did a brisk business in shirts with flower prints or with photographs printed onto a black background.

Smith is marking the store’s milestone with more than just a party, though. The company has created a number of limited edition products to celebrate the anniversary, including a black, long-sleeve shirt, vest and wallet printed with photos of green apples.

Smith has also created a 25th anniversary logo — Paul Smith/5th Avenue/25 Years/1987-2012 — that will appear on woven apparel labels, posters, cotton hankies and T-shirts. A Citizen watch, cuff links with a $1 bill folded inside and a green apple scented candle also make up the anniversary merchandise.

Although his early customers went for bright colors, Smith marvels at how much more brave the male shopper of today is, compared with his late-Eighties counterpart. “Now, men have magazines, bloggers like The Sartorialist, they travel, and fashion shows are streamed. Today, people can see how people look in other parts of the world.”

The 25th anniversary is one of many projects in the Paul Smith pipeline this year. The designer is opening a raft of new stores — a mix of directly operated and franchised units with interiors designed by his 11-strong in-house team.

Amsterdam, Melbourne, Singapore, Moscow and Shanghai are among the cities that will get new Paul Smith stores by the end of the year. In addition, Smith plans to enlarge his Albemarle Street furniture shop in London, having purchased the space next door. The new, expanded shop will open in September and stock men’s and women’s wear, shoes, accessories and furniture.

In China, Smith has a new distribution partner, Imaginex, that will run the designer’s retail in Hong Kong and Taiwan, and will open a 5,000-square-foot Shanghai unit in December. Four further shops are set to open in Mainland China in 2013, and a total of 20 are planned for the next four to five years.

“I was very unsure about China,” said Smith, who first entered the market in 2002 with then-distribution partner Bluebell. Five years later, Bluebell shuttered the small clutch of Paul Smith stores it had opened in China, due partly to the overwhelming competition from the big, branded luxury players. “I think about all the new money there, and I’m not what you’d call a heavy logo boy. And we don’t spend huge amounts of money on advertising and promotion. But we’re getting more confident in the region. This time around it seems more encouraging.”

In 2012, the overall Paul Smith business is set to post revenues of 200 million pounds, or $316 million at current exchange, while the Japanese licensed business will generate a further 200 million pounds — giving Smith’s global business sales of more than $600 million a year. Not bad for someone who to this day says modestly that his empire began because, “All I wanted to do was open a shop.”

Socks, shoes, men’s and women’s accessories and men’s suits are top performers, Smith said. He is also starting to do more red-carpet events: Livia Firth wore a Paul Smith tuxedo to the British Academy of Film and Television Arts Awards in London last month, and long-time client Gary Oldman donned a three-piece bespoke mohair wool suit.

The company is growing by a minimum of 5 percent annually, according to Smith, who has a 60 percent stake, with the balance held by his longtime Japanese licensee Itochu.

Probably one of Smith’s greatest professional feats has been weaving his favorite hobbies into his working day.

An avid photographer, Smith shoots all of his brand’s ad campaign images, and has a regular once-a-month gig with the Italian design title Grazia Casa, for which he shoots home interiors. He did a 10-page of fashion shoot entitled “If I Were a Boy” for the September 2011 issue of Tatler. Asked how he manages to fit the photography in, he replies: “I’m real quick.”

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