By  on September 6, 2007

There's still plenty of growth left in contemporary.

The market that has been fashion's engine for the last five years — accounting for about $16 billion of the $105 billion women's apparel industry — continues to skyrocket even as more designers flock to the increasingly competitive sector and prices jump.

It seems as though everyone wants in — Vera Wang launched her Lavender line last year, Imitation of Christ soon will introduce a contemporary collection called Imitation, Daryl Kerrigan will enter the arena for fall, Hollywould took its high-end brand off the market to create a contemporary line and Mint's Jodi Arnold loves contemporary so much that she is launching a second line, called Jodi Arnold, for spring. These designers, and many others, clearly are rushing to tap into a market that has helped put brands such as Theory, Diane von Furstenberg, Marc by Marc Jacobs and Phillip Lim on the fashion map.

Even as designers add collections, more stores are lining up to buy them. Neiman Marcus is tapping into the market, both in its main stores and its new Cusp format, while Barneys New York does the same with its flagships and Co-ops, which new owner Istithmar is eager to roll out. Saks Fifth Avenue, Bloomingdale's and Macy's also are capitalizing on the growth of the sector.

These stores are seeing no slowdown in business, despite the prices in the market spiralling upward. The rising prices in contemporary, they said, are still considered accessible in comparison with the young designer collections carried at high-end stores.

"Our girl is looking to the Co-op for stylish, casual, high-quality clothing, and there's a demand for that," said Julie Gilhart, fashion director for Barneys. "There's so much energy on the floor and a lot of excitement coming from this market. I love designer clothes, but personally, when I shop, I shop the Co-op."

Gilhart noted that Phillip Lim, Helmut Lang, Vena Cava, Diane von Furstenberg, Marc by Marc Jacobs and Band of Outsiders are just a few of the brands that continue to draw customers into the contemporary area of the store.

"While prices have gotten higher, it really doesn't matter for our customer. She's looking for style and fashion, and contemporary is where she can find that," she said.Saks Fifth Avenue's contemporary area also is growing, as it has over the past several years. The store continues to do well with such brands as Alice + Olivia, J Brand, Theory and Diane von Furstenberg. According to Joseph Boitano, senior vice president and general merchandising manager for the women's and children's areas, the contemporary area has generated double-digit growth for the first half of this year.

"We still consider this an important and emerging growth area for the company for the foreseeable future," he said. "In order to maintain customer interest and excitement, we continue to introduce new young designers and develop exclusive product from our existing collections. The key for designers is to evolve and continue to introduce novel and differentiated product."

Bergdorf Goodman also relies heavily on offering new product from new designers as well as exclusives. Shira Lauter, vice president and divisional merchandise manager of the store's 5F floor, where the contemporary assortment sits, said that for fall, she has several new reasons why customers will want to shop. As long as that continues, she can't see why contemporary would become a bore.

"The excitement in the contemporary market is only getting stronger with so many talented designers interested in selling their product at an accessible price point," she said. "The combination of emerging brands and monthly deliveries keeps 5F fresh. Our customers know that they will find something new on the floor with each visit. For example, this fall, 5F will launch Twenty8Twelve [the line from Savannah and Sienna Miller] and carry the brand exclusively in New York. Next spring, we will add 3.1 Phillip Lim, which has limited distribution in New York."

Ann Watson, vice president and fashion director at Henri Bendel, said that, when it comes to carrying contemporary collections, the key is to have a mix of styles and price points.

"It's no longer about the price in this market. These contemporary designers have evolved and continue to evolve, so price really isn't the issue — it's more about the mix," she said. "When we think about how to merchandise the floor at Bendel's, we try to think about the customer's closet and what she has in it as well as what she needs."Watson said it isn't out of the ordinary to see a customer come in and purchase a pair of J Brand jeans as well as a Missoni blouse. She said the contemporary market is always about mixing it up and that it's important to carry plenty of options from several different brands. For example, sportswear brand Abaeté has dresses for $600 as well as at the $400 price point, so the customer is given an option on how much she wants to spend.

"The best thing that a designer can do is to give the customer what she needs and give her what she didn't know she needs," she said. "She may know she needs to buy a great pair of black pants, but she didn't know she needed the high-waisted black pants with the pretty sequin belt."

Robert Burke of Robert Burke Associates, a fashion consultancy based in New York, said the contemporary area will continue to increase in popularity, as long as designers realize that their competition is coming from all markets.

"When we used to look at the customer, we used to think of her in terms of what floor she shops," he said. "Does she shop on the bridge floor? On designer or in contemporary? What we've realized is that she cross shops across the board, she mixes designer with contemporary and mass. The American contemporary customer has become somewhat European in her approach to shopping."

Burke said that traditionally, contemporary brands lagged behind designer, most of the time coming out with the trends a season after the designer market. Today, he said, contemporary designers can set the trends just as much as higher-end designers.

"What's happened in contemporary is that we've seen a true evolution," he said. "We have seen contemporary designers start opening their own stores and become retailers, which is the best thing for a designer to do."

Burke said designers in the contemporary market should realize they have to keep changing and not rely on one part of the business. He cited Vera Wang as the best example of that, since she went from designer to contemporary to mass. Her Simply Vera Vera Wang line will make its debut at Kohl's on Sunday."Vera Wang is a great example of where the market is going," he said. "From designer to the most affordable price point, I see a big increasing demand for the designer name at a low price point."

Erin Crandall, head buyer for contemporary online boutique Shopbop.com, said while she doesn't see the contemporary market declining any time soon, she does find it more of a challenge each season to fill the site with new designers offering something different from the rest.

"It's so important that designers realize that quality is important and they can't skimp on their fabrics," Crandall said. "The designers that stand out have amazing quality and construction in their product."

Crandall said that, if a customer is looking for a cheap and trendy item, she has many options at stores such as H&M and Forever 21, but when it comes to contemporary, she is willing to spend her money on quality, stylish product.

"Our customers are really into fashion and they are truly interested in it," she said. "So designers need to remember to keep creative and keep challenging themselves to offer something different."

Crandall also said that, based on the strong sales of her lower-priced lines such as Ella Moss, Splendid and C&C California, it is clear there is a demand for more lower-priced collections.

"If there is ever a niche in contemporary, it is for those lower-priced lines," she said. "There really aren't that many brands that offer products on the lower end of the price scale."

Olive & Bette's owner Stacey Pecor said even with the warm weather, jackets and coats have been selling well at all four of her Manhattan-based boutiques.

"They are structured, have interesting sleeves and just look fresh and new in the store," Pecor said. "That's what this contemporary customer always wants, something she doesn't already have in her closet."

As far as the price points go, Pecor said Free People is one of her best-selling and lowest-priced brands. She said sales of Free People are up not only because of its low price points, but also because of its originality."They offer a great product and really have things that you don't see from other designers," she said. "That's why they do so well."

Abbey Samet, contemporary market analyst for The Doneger Group, a merchandising and fashion consulting organization based in New York, agreed that the lower-priced lines are few and far between.

"I see a strong void in the young contemporary market for labels on the lower end of the price scale," Samet said. "Lines like Free People, Level 99 and Paul Frank do very well in young contemporary, but there should be more of a selection of brands in that area."

Samet said that, especially in this market, where parents tend to buy a large portion of their children's wardrobes, there is a need for more young contemporary lines.

"The prices in contemporary have reached a real high," she said. "How many $170 pair of jeans will parents buy for their kids?"

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