By  on May 24, 2007

LONDON — London's Carnaby Street has shrugged off its reputation as a purveyor of tired tourist shops peddling Union Jack paraphernalia and transformed itself into a destination for denim and streetwear.

Over the past several years, a who's who list of the denim industry's most recognized brands have opened stores on the quirky, pedestrian street that lies tucked behind West End thoroughfares Regent Street and Oxford Street. Wrangler, Lee, Pepe, Miss Sixty, Diesel and Fornarina all have stores in the area, and Hilfiger Denim will open its first Central London unit on the street in September.

While the retail spaces on the street aren't huge — most of the units range from 2,000 to 4,000 square feet — it's the village-like appeal of the street and its fashion-forward customers that attract major denim brands.

"We were one of the first denim brands to open on the street and felt that our cutting-edge, directional styling fit in with the type of consumer shopping in the area," said Naomi Humphrey, marketing controller for Lee in the U.K.

The area wasn't always a retail magnet. Simon Quayle, director of Shaftesbury, the company that owns, manages and develops the majority of the property on the street, said when Shaftesbury took over the area in 1997, the storied street had long outlived its heyday when record shops and Mod stores made it a byword for the swinging Sixties.

"We wanted to get rid of the older types of stores and build on the street's fashion heritage," said Quayle.

Nish Soneji, managing director of Pepe Jeans London, which has its store at the corner of Carnaby Street and Lowndes Court, said despite the presence of down-market stores when the company opened on the street in 2001, he could see Carnaby's potential.

"At the time, there were still a lot of tourist souvenir shops there, but Carnaby historically has been an iconic London fashion location, edgier and more intimate than Oxford Street," said Soneji. "It is with some degree of good fortune and a lot of effort on the part of [Shaftesbury Estates] that the area has developed a character of its own and [now] attracts a fabulous crowd of shoppers."Quayle said the key to attracting trend-setting consumers and, in turn, desirable denim brands is keeping a fine balance between the big-name, international brands; independent boutiques, and chic cafes and bars.

"We're very protective of who comes into Carnaby Street," said Quayle. "Alongside the flagship stores of key denim brands, there's a lot of individual retailers who we targeted to be on the street. We want shops that are going to draw people to the area, rather than just benefit from passing trade."

To that end, Shaftesbury actively seeks out new, independent retailers at trade shows such as Bread & Butter to take spaces on the street and in the surrounding areas. In Kingly Court, an airy, three-floor retail complex directly off Carnaby Street, the company offers smaller brands incentives such as competitive rents, stores with fitted units and lease agreements as short as six months.

The spaces in Kingly Court, which are between 250 and 600 square feet, and start in rent from 12,500 pounds, or about $25,000 a year, house independent T-shirt labels, vintage stores and a Triyoga yoga studio.

"For small, independent stores taking units in Kingly Court, there are no huge financial obligations," said Quayle. "It's like a nursery [for new retailers]."

For bigger denim brands hoping to build an affinity with fickle European consumers, the associated cool that independent retailers bring attracts a valuable audience.

"The smaller designers bring a very unique element to the area," said Soneji of Pepe. "They…attract a segment of customer [who] has that independent mind-set, people who make determined choices."

The trendy clientele, aided by the proximity of London's advertising, TV and media communities, also has prompted denim brands such as Levi's and Diesel to open novel retail concepts. On Newburgh Street, a quiet, shaded, cobbled street that runs parallel to Carnaby, Levi's has a small store called Cinch that carries hard-to-find vintage Levi's. The store isn't clearly branded as a Levi's store and it has a niche feel, in sharp contrast to its Original Levi's Store flagship on nearby Regent Street.

Next door to Cinch is No. 6, a similarly unbranded store from Adidas that sells rare sneakers, and Diesel has a store for 55DSL, its street-inspired line, on the street. Quayle said as the street redefined its offer, sports footwear and apparel retailer JD Sports decided to convert its unit to one of its Size stores that specialize in cult sneakers."Independent and concept stores are the sort of thing we want here," said Quayle. "We had a Boss Orange store open on the street [last year], but a Hugo Boss store wouldn't have worked."

Quayle said Shaftesbury was also in talks with brands including G-Star, Criminal and Original Penguin to open on the street.

George Wallace, chief executive officer of retail consultancy Management Horizons Europe, agreed that the area had been "sensitively redeveloped."

"It has reached critical mass," said Wallace, who added that the area was more attractive to denim retailers than streets such as Knightsbridge that has recently seen mass retailers such as Zara and H&M open flagships. "Knightsbridge has had a less focused redevelopment strategy than Carnaby Street. It relies more on international visitors and [retail traffic] suffers if tourism drops."

Along with comparatively smaller units, rent on Carnaby Street is also more competitive than London's major shopping streets, at an average of 300 pounds, or $590, a square foot, compared with West Oxford Street's average of 750 pounds, or $1,480, a square foot.

However, Wallace cautioned that, with a host of denim brands on the street, each brand would have to differentiate its offer from its competitors. "It's a challenge, to make sure that [they] stay ahead and maintain a point of difference," said Wallace.

Soneji said, "We like the fact that consumers can compare and evaluate various offers. We simply [have] to be true to our roots and our London breeding."

Quayle noted that Shaftesbury continually monitors the mix of stores on the street so it isn't saturated with denim brands.

"Out of 40 shops on the street, only nine are denim [including the new Hilfiger Denim store]," he said. "They are destinations, as the flagships of key denim brands, but if we felt there were too many, we would say, 'OK, no more denim.'"

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