Fashion: Why Chic Is Now Cheaper

Giorgio Armani. The name defines chic. Luxurious fabrics, exquisite craftsmanship, elegant design -- that's the Armani that customers love and competitors fear. So what is this upscale Italian designer doing peddling cotton T shirts and blue jeans? Quite simply, he is trying to make money like everybody else -- by reaching the millions of American men who cannot afford his $1,875 suits and the women who can only admire his $1,800 dresses on department-store racks. In December the designer will market a line of casual clothes bearing an Armani Jeans label -- chambray shirts, denim jackets, linen blouses. Nothing fancy. More than three-quarters of the items will cost less than $100.

Armani is only the latest designer to enter a clothing market that is rapidly coming to realize that nobody wants to spend real money on clothes these days. U.S. retail sales are depressed, and Christmas sales will probably be flat -- at best. The picture looks no prettier in Europe. In fashion- conscious Italy, for example, apparel sales are expected to decline 12% in 1991. The one striking exception seems to prove the rule: in the U.S., sales at the Gap, purveyor of $19 cotton turtlenecks and $28.50 sweat pants, are running 30% above last year's.

"Everyone is thinking about less expensive clothes," says Calvin Klein. "We're all doing it." While the designer-collection business is ailing, if not dying, moderately priced second collections, known in the trade as bridge lines and costing about half as much as top-of-line labels, still sell. Armani is betting that a whole chain of boutiques -- to be called A/X Armani Exchange -- can capture $60 million in sales next year from this miniboom in cheap chic. A/X units will open in department and specialty stores across the U.S. in March.

It was the surprise success of Donna Karan's DKNY that inspired the industry. Selling such staples as $90 cotton poplin blouses and $365 navy wool blazers, DKNY last year hit $100 million in sales and should reach $140 million this year. Launched less than three years ago, the company is proving to be the salvation of Seventh Avenue. Clothing designers, like businessmen everywhere, tend to fall all over a winning formula, and store racks are groaning with DKNY wannabes. "I call our rivals the Pac-Men," says DKNY's president, Denise Seegal. "They're all coming after us." This fall saw the launch of Company, a division of Ellen Tracy, whose best sellers include $145 velour tunics and $255 stirrup pants, and of Anne Klein's A Line, which sold a passel of Lycra-blend stretch pants ($215) and double-breasted blazers ($365).

Other recent entries in the category include KORS from Michael Kors, which markets $185 sarong skirts and $105 chambray shirts. Kors anticipates that sales this year will reach $15 million. Ungaro's Emanuel line includes a $360 houndstooth dress and a $195 gabardine skirt. Declares Ungaro: "A woman doesn't need a lot of money to be elegant. She can be chic with clothes bought from a supermarket chain." In the men's market, where the move toward lower- priced lines is less pronounced, second collections include Versace's V2 and Armani's Mani.