Hopes that a vibrant high-fashion district would sprout along a stretch of Melrose Avenue near the popular Fred Segal store are starting to fade.

Some of the few upscale boutiques that had moved into the L.A. neighborhood, dubbed Melrose Heights, already have left. And improvements that merchants say are crucial to make the area more pedestrian friendly are nowhere in sight.

"It's brutal over there," said one businessperson familiar with Melrose Heights, which begins a few blocks west of the avenue's popular retail district.

"No one is doing as well as they want to," said Mark Goldstein, who owns Emma Gold, a high-fashion store in Melrose Heights that carries exclusive European labels.

In the 1980s, it was the hipster stretch of Melrose extending from Fairfax to La Brea avenues that emerged as a prime shopping district and barometer of cutting-edge fashion.

But in recent years, that stretch has taken on a wilder, grungier flavor appealing to tourists and high school students.

So a few years ago, the high-fashion boutiques started taking refuge west of Fairfax, camping out around the exclusive Fred Segal store, where a skirt can cost more than $800 and a pair of pants can sell for $450. Nearby merchants had hoped that Segal's customers would wander up or down the street and check out their merchandise.

But it hasn't happened. Fred Segal has remained a retail island, with its own parking lot, in-store restaurant and entrance. Shoppers get out of their cars, enter the store and return to their vehicles without pausing in between.

"I thought there was a lot of opportunity for this street to become a new shopping district and a strong one," Goldstein said. "It hasn't been as good as we expected. We thought L.A. would embrace something new."

Retailers remain discouraged by Melrose Heights' narrow sidewalks, metered street parking, and a large telephone company building that looks like a fortress.

"I think what we need are some cafes and some major crosswalks," noted Jennifer Mendoza, assistant manager of the Betsey Johnson flagship store, which moved to Melrose Heights a little more than two years ago. "Our business has been up and down. There are some days when it is really slow and there are some days when it's really good. Some Saturdays we'll sell $400 in clothes and then another Saturday we'll sell $3,000."

A few that offer more unusual lines are faring better. Agent Provacateur, a London-based store that sells high-end lingerie, came on the scene nine months ago and is doing well. "Our product is not available anywhere else in the country," said store manager Natasha Aiello. "We're more a destination shop rather than a store that gets traffic from browsers. We get a lot of stylists and the celebrity crowd."

Other stores haven't been as lucky. Daryl K, run by designer Daryl Kerrigan, famous for her low-rise pants and sports skirts and jackets, closed early this year. Liza Bruce, whose swimwear store sported bright paint-strip walls, has left.

The Melrose Heights Merchants Association wants the city to help out by adding streetscaping, easing the permit process for sidewalk cafes and restaurants, and resolving the parking problems.

"Right now there is a lot of red tape for restaurants and various parking requirements," said Gordon Morikawa, who helped found the merchants' association and is co-owner of Xin, a hip clothing boutique. "This could be a tremendous area with a little help.

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