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SAN FRANCISCO — More than a decade after Prada first began making plans to open a flagship in the City by the Bay, the Italian luxury fashion house is finally getting its wish.
This story first appeared in the July 22, 2008 issue of WWD. Subscribe Today.
An early 20th-century building at 201 Post Street, with a main entrance on Grant Avenue, will be home to a 5,650-square-foot Prada unit when it opens to the public on Wednesday. The 10 tall display windows on the first floor are framed in black and capped by Prada’s signature chain logo, evoking the original Prada flagship in Milan, which opened in 1913 in Galleria Vittorio Emanuele. Also a nod to Prada’s history are oversize steamer trunks showcasing products, such as the $15,000 to $20,000 collection of pergamena crocodile hatboxes and suitcases. The store’s walls are covered in signature pale green Prada linen.
The store carries the brand’s full line of women’s and men’s wear, footwear, accessories and luggage.
With 10 large display windows on the ground floor and 13 on the second floor — Prada is not using the second floor, but will devote the basement to offices and storage — the flagship makes a big impression in a neighborhood filled with international luxury brands and upscale fashion tenants.
“San Francisco is important in the U.S. market as much as it is at the world level,” said Patrizio Bertelli, Prada’s chief executive officer. “We therefore wanted to be present in San Francisco with a prominent flagship. We believe that this new store will significantly boost our business, both in this city and in the U.S.”
The store is the 11th Prada unit in the U.S., and the first to open in America since the Los Angeles Epicenter bowed in 2004.
Bertelli is clearly eager to expand more in the U.S. “We think the U.S. market continues to have growth potential,” he said. “Our strategy [includes] a new phase of retail expansion with the opening of several new stores within the next two years.” He declined to be more specific.
San Francisco has been on the mind of Prada executives for more than 12 years. In 1996, the company bought the building across the street from the new flagship. It planned to raze it and construct an Epicenter that would have put San Francisco on par with Los Angeles, New York and Tokyo as cities with Epicenters — those monuments to fashion and architecture conceived by high-profile and cutting-edge architects. Rem Koolhaas, who was chosen to design the San Francisco Epicenter, planned a 10-story tower sheathed in stainless steel dotted with small portholes for windows.
While the other Epicenters were eventually built, the San Francisco unit was put on hold after the Bay Area economy suffered a double blow, first the consumer fallout from the 9/11 terrorist attacks and then the dot-com bust the following year.
Further delaying Prada’s San Francisco Epicenter was the company’s reorganization, which included selling underperforming brands such as Helmut Lang and Jil Sander in 2006 and Azzedine Alaïa last year.
At one time, Prada considered opening stores for Sander and/or Lang in the former Brooks Brothers store across the street, which it began renting about six years ago. The store remained dark until recently, when it was transformed to the new flagship. Prada continues to rent the space. Local real estate sources said rents in the neighborhood start at about $400 a square foot.
“The Epicenter strategy was reevaluated,” a Prada spokesman said of the decision that led the retailer to sell the San Francisco building and stop building Epicenters altogether.
“The store will be able to capture foot traffic on three prime shopping streets,” the spokesman said, referring to Grant Avenue, Post Street and Maiden Lane. “We have more display windows than any of our stores in the United States, which really allows us to showcase the brand in a unique way.”
Each street entrance opens into a different department. The Grant Street door leads to a handbag area with a black-and-white marble floor. The entrance on Maiden Lane opens into the women’s wear and footwear departments, which have lilac velvet-upholstered curved seating. Post Street brings visitors to the men’s wear and footwear sections.
Exclusive merchandise highlights the importance of the San Francisco store for Prada. The entire 2009 resort handbag collection will be available in San Francisco until November, when it will make its debut in other U.S. stores. Items include a $1,000 paillette-sequined envelope clutch. Only two $12,000 long, sleeveless evening gowns with tiered ruffled organza couture silk skirts were produced for the U.S., and both are at the new San Francisco flagship. The store also has a one-month exclusive for a long-sleeve light blue Swiss couture lace cocktail dress, $4,600, first worn on the Prada runway by Linda Evangelista.
The city’s Union Square area also continues to be a hot spot of interest for international fashion labels to open stores, provided they can secure a large enough space in a neighborhood of small storefronts. A 3,100-square-foot Prada boutique that had been operating as a temporary outpost on Geary Street since 2000 recently closed in anticipation of the new flagship. Prada collections also are sold at Neiman Marcus, Saks Fifth Avenue and Barneys New York units nearby.
“When you look in America, there aren’t many cities where luxury tenants can go to street locations, and San Francisco is at the top of the list, along with New York,” said Jeffrey Paisner, a retail broker at Ripco Real Estate in New York. He called the San Francisco Prada building “a very rare [find] and a great piece of real estate.”
With such a prime location, Paisner expressed surprise that Prada didn’t sublet the space and earn valuable rent during the six years the company held the building before opening a store. The Prada spokesman said the company simply didn’t want to tie up the building. “We wanted to have the flexibility to open when we wanted,” he said.
As a whole, the Bay Area, with about eight million people, has felt less of the national economic downturn, largely because of the presence of thriving high-tech companies involved in bio research, software, computers, the Internet and green technologies. San Francisco’s unemployment rate in June was 5 percent, compared with 6.9 percent statewide and 5.5 percent nationally.
Tourism is also booming in the city, particularly among foreign visitors, according to industry officials.
However, middle- to upper-income households are under increasing financial pressure from rising costs of living, said Chris Thornberg, a principal with Beacon Economics. “This is affecting the marginal buyer of luxury goods, who has been enjoying a home equity line of credit to shop and can’t do that anymore,” he said.
Alf Nucifora, chairman of the San Francisco Luxury Marketing Council, said local consumers of luxury goods and services who are under age 40 with well-paying jobs but limited savings are pulling back on spending in the Bay Area. The next strata of luxury consumers tracked by the council, households with homes valued at between $3 million and $5 million and a liquid portfolio of $1 million, “can still afford to spend pretty much at will, but they are watching what they spend.”
At the top strata are people with net worths of $20 million or more. If you belong there, “you pretty much have immunity from what’s going on right now in the economy,” Nucifora said.
Such wealth ranks San Francisco second in the nation in per-capita income, after the Stamford, Conn., metro area. On Monday, as the store was being readied, Prada sales associates were busy helping invitation-only shoppers, who were nibbling on tea sandwiches and sipping cold drinks. A launch party will be held in the store tonight.
“The store will be good for the brand presence in the city,” the Prada spokesman said. “We expect this location to be performing among our top stores in the United States,” putting San Francisco on the same level as New York and Los Angeles.