After nine years of owning and running the Prada store in Beverly Hills, entrepreneur Judy Leaf is hanging up her handbag.
Among the last of the independent owners of designer boutiques in Beverly Hills, Leaf has cut short her 11-year franchise agreement and is selling the Brighton Way shop back to Prada owner I.P.I. in Milan. The deal comes on the stiletto heels of two other boutique sales in Beverly Hills: Gianni Versace and Polo Ralph Lauren shops were snatched back by their parents in April and June, respectively.
Leaf said she decided to sell because of pressure by I.P.I. chief Patrizio Bertelli, husband of designer Miuccia Prada (who is the granddaughter of Prada founder Mario Prada).
"Prada wanted to have complete control of the stores. (Bertelli) started buying them back several years ago because he said he was a control freak," she said. "He kept asking me to sell and I wasn't about to. He finally made me an offer I couldn't refuse."
The 85-year-old I.P.I., whose minimalist Prada sportswear comes with maximum pricing from $450 cashmere sweaters to $1,140 bamboo-handled purses is trying to bolster its U.S. image. The company opened a 5,000-square-foot men's store on Rodeo Drive three months ago, and plans to expand it to a 15,000-square-foot emporium next year that will include footwear, women's ready-to-wear and a juniors' collection called Miu Miu.
Leaf, whose maverick 1,500-square-foot boutique was the only Prada franchise in the United States, believes I.P.I. will close her store after the expansion. Prada officials could not be reached for comment.
She bitterly opposes the change of location.
"Rodeo Drive is so unhip, so bland, with no personality. It's very sad to see Beverly Hills go corporate, but people don't agree with me," said Leaf, who will retain a role as a special event consultant for the company.
But the change in the city's retail landscape was inevitable, say analysts, who point out that designers around the country are increasingly taking charge of their formerly franchised boutiques.
"The trend is occurring worldwide primarily because of capital smaller boutiques don't have the resources to maintain the current market, and their parent companies have eyes of growing bigger," said Brian Ring, an analyst with Ernst & Young LLP in Century City.
That trend is exacerbated in Beverly Hills because of the high rents, particularly in posh corridors like Rodeo Drive.
"There are only four or five privately owned, individual entrepreneurs left on Rodeo Drive, compared to 25 years ago when the only major tenants were Van Cleef & Arpels and Gucci. They're getting phased out because of the rents, and are moving to the side streets," said Gilmore Dembo, broker and president of real estate brokerage Dembo & Associates in Beverly Hills.
Monthly rents on Rodeo Drive are $15 to $18 per square foot, compared to nearby Canon Drive at $3.50 and Beverly Drive at $4, Dembo said.
The holdouts include David Orgell, Theodore and Lucy Zahran.
"Managers ... have an interest in the business, but it's not their business. They rely on corporations to tell them what to do," said Ali Soltani, whose family bought gift-shop David Orgell on Rodeo Drive in 1989 from the Orgell family.
But those who have already made the transition to corporate ownership say the change makes little difference to consumers. In fact, the only thing they notice is that inventories and choices tend to get bigger, said Ron Michaels, president of the Rodeo Drive Committee, an 85-member merchant organization.
"The boutique is still there the only difference is behind the scenes, and the changes are minimal," said Michaels, who operates luggage purveyor Louis Vuitton. "The idea is that you want to control the point of sale and want customer service that's offered consistently throughout the company stores."
Michaels and his family, who owned a luggage store on Beverly Drive 15 years ago, entered a partnership with Vuitton in 1982 and sold back their interest about nine years ago. Next September, the nearly 4,000-square-foot store will relocate a quarter-block away to the 12,000-square-foot space that was once home to the Fred Hayman boutique.
Meanwhile, Gucci will open its 14,000-square-foot Rodeo Drive flagship on Dec. 15. Versace opened its 9,500-square-foot store in May. Hermes increased its shop ten-fold by expanding into an 18,000-square-foot monolith one year ago. Tommy Hilfiger made its fashionable entrance with a 23,000-square-foot store last year.
Max Marra, which sells Italian designs for women, opened last month on Rodeo with 3,500 square feet. And Italian shoe designer Sergio Rossi will appear with a 1,500-square-foot store next September.
Calvin Klein, Donna Karan and St. John's are eyeballing space on Rodeo Drive as well.
The deeper pockets of these corporate owners increase the strength of the local business community, Michaels said.
"The Polo store was not a part of the Rodeo Drive Committee as a franchisee. But when it was purchased, they came on board," Michaels said. "We welcome and need them."
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