Forging a licensing relationship with Macy’s after expanding his American Rag Cie retail concept gave Mark Werts, the founder and chief executive officer of American Rag and Industrie Denim, a fresh idea.

This story first appeared in the May 2, 2012 issue of WWD. Subscribe Today.

Macy’s carries American Rag Cie in more than 700 doors and, through negotiating markdowns, switch-outs and other terms of the traditional wholesaler-retailer relationship, Werts finally realized the nature of the business.

“It’s a consignment game,” he told the audience in his keynote address. “Why don’t denim manufacturers do that with specialty stores?”

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Werts answered his own question after broaching the topic with Robert Haas, Levi Strauss & Co.’s chairman emeritus and former ceo, at a cocktail party. The result was the opening last October of the first Industrie Denim store. While the original concept was a store that sold Levi’s and the 25 best global brands, the number has now mushroomed to over 80 brands, including Double RL, J Brand, Prps, Nudie, AG, Earnest Sewn, Joe’s Jeans, Current/Elliott and Paige.

Sensing skepticism about the business model among attendees, Werts acknowledged that some people in the retail and fashion industry still regard consignment as “the devil.” To prove them wrong, he said many of his suppliers are pleased not only with their sales on consignment but also with the ability to control the way their product is being presented by Werts.

“I see this as an opportunity,” he said. “It’s not new to electronics. It’s not new in Japan. It’s not new in Europe. It’s not new all over but it’s new to us.”

Twenty-seven years after Werts opened his first American Rag store in San Francisco, the first Industrie Denim locations opened in Scottsdale, Ariz., and San Francisco late last year. A third lease has been signed for Dallas and a letter of intent written for a spot in New York’s Chelsea Market. Each outpost is designed to highlight architectural salvaging and recycling, as well as local flavor, Werts said. For instance, the Scottsdale location pays homage to the desert, whereas fixtures from the Golden Gate Bridge are used in the San Francisco store and the Dallas shop will have a cowboy motif.

“It’s the age of diversity,” Werts said. “Retail is entertainment. We all want entertainment.”

Werts provided much amusement as he shared with the audience pictures and details of his life. He was born 67 years ago in Hollywood, where he often played on director Cecil B. DeMille’s lawn, and attended colleges in California, France and Spain before being introduced to the denim business as a 26-year-old consultant working for Price Waterhouse and later opening Salty Dog, an Amsterdam-based specialty store that grew to 10 units, and maintaining a denim design business. Among the unusual challenges he faced were heroin addicts who’d steal his scissors and sewing patterns and then sell them back to him.

His creations ranged from patchwork denim, made with raw denim imported from New York at 10 cents a pound, to bell-bottoms. The photographs he shared of patchwork maxiskirts and wide-leg jeans worn with platform shoes wouldn’t be wildly out of place in today’s fashion. Moreover, when he first started selling denim in the early Seventies, 80 percent of his merchandise consisted of nondenim fabrics, including velvet, wide-wale corduroy and prints. “I see a great parallel with what’s going on today, certainly at American Rag and Industrie Denim,” he said.

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