Shakeout for Specialty Boutiques in Los Angeles

It's the survival of the fittest among specialty boutiques here as retailers navigate turbulent economic seas.

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LOS ANGELES — It’s the survival of the fittest among specialty boutiques here as retailers navigate turbulent economic seas.

This story first appeared in the November 30, 2007 issue of WWD.  Subscribe Today.

After a frenzy of openings last year in new retail hubs, stores such as Filly on Third Street and Iconology and Lily Savitch on La Brea Avenue have shuttered. Others are hunkering down even as more newcomers enter the market.

The local economy, mirroring national conditions, is enduring a housing slump, higher fuel prices, tighter credit and falling consumer confidence. Another ingredient in that mix for the last month or so — specific to Los Angeles and New York — has been the movie and television writers’ strike.

“The spenders are spending, but they are not spending as much….Everyone is down about 30 to 40 percent,” said Johnathon Vasquez, owner of three-year-old Terra on Third Street. “I am down about 28 percent.”

Without money in the bank, newcomers stand little chance. “They don’t have the background and the financial support that a store like mine has,” said Diane Merrick, who has operated her namesake store, now on Beverly Boulevard, for almost 40 years. “If you have business swings, you have to be ready to weather out those storms.”

Hillary Rush, who opened her eponymous Third Street store three years ago, said, “There were lots of people who moved in last year when they started hiking up the rents because they think it’s easy to open a store, but it’s not. You have to serve your time and do your due diligence.”

Economic dynamics don’t explain every closing. Although cash registers may not be humming compared with previous years, many stores haven’t broken stride and merchants are opening on popular shopping thoroughfares. In fact, success may have squeezed out some competitors.

“There used to be three boutiques on my street, and now there are 30,” said Deborah Wolsh, owner of seven-year-old Ethel on Third Street. “There has to be some kind of fallout.”

In the last several months, Eveline Morel, owner of two-year-old EM & Co. on Third Street, said four stores — Romp, Pixie Market, Magenta and Threads — have planted themselves on her block. She cautioned that owners without defined perspectives may get lost in the shuffle.

“If you are the same as the person down the street, you are going to get less of the shoppers’ dollars,” Morel said.

Differentiation is complicated by designer flagships. The stampede to the West Coast by Marc Jacobs, Diane von Furstenberg and Oscar de la Renta, among others, has drained some independent boutiques of exclusivity.

“We do very well with Rebecca Taylor, YaYa, Cynthia Vincent, but I don’t think they are rushing to open up stores,” Merrick said. “If they do, we have to look at that.”

Knowing the audience is essential. Surviving shop owners speculated that those who went out of business might have overreached with prices and items that don’t resonate with the community or the current trends.

“Some of the stores that have opened here are really the taste of the owner. I think that is more the problem,” Wolsh said.

Iconology, for example, offered a dressed-up look during a feminine, frilly fashion cycle, which has now been replaced with edgy fashion. Co-owner Michelle Dalton Tyree said designer prices were also a factor. “L.A. is still a contemporary town,” she asserted.

Magda Pietrobelli, who opened Pixie Market on Third Street more than a year ago after launching her lower Manhattan store, is providing a large selection of clothes under $150, while Rush said customers praise her varied price points, from $20 to $800.

Bargains are not a must at designer boutique Satine on Third Street, where customers, including many celebrities, are often “obsessed with luxury and make it their business to buy it every season,” said owner Jeannie Lee. “We have a certain almost bulletproof clientele who will shop no matter what.”

Those seeking Lanvin and Balenciaga in particular haven’t stopped shopping. “This is one of the richest towns in the world. People here may not be wearing gowns, and it is harder to sell a designer like Oscar de la Renta in Los Angeles than New York, but it’s not just jeans and flip-flops.”

Inexperienced boutique owners may also underestimate the time it takes to gain a following in Los Angeles. Pietrobelli said stores can get hot overnight in New York. In Los Angeles, Morel estimated it takes two to three years to become established because of the city’s geographic spread and isolating car culture, which slow word of mouth.

To gain notice, boutique owners contended that whipping up press attention is more important here than elsewhere, but it requires an investment they might not be able to afford. Even with press, Iconology floundered. “I was doing celebrity events constantly and making hundreds of calls, and it still wasn’t enough,” said Tyree, a former WWD staffer.

The car culture here makes parking critical. Streets with only parking meters may lose shoppers to malls and streets such as Robertson Boulevard with parking garages. However, in the case of Third Street, the lack of parking garages might protect boutiques from larger competitors that prefer higher-rent districts with ample parking.

Despite the challenges, the most determined merchants persevere.

“It just seems like every time a store goes out that a new one goes in, somebody who has a better mousetrap,” Merrick said.

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