Rodeo Retailers: Life, Death in the Flash Lane

For many retailers, Rodeo Drive is the street of fortune--a shopping mecca that cashes in on glamour, prestige and an international fashion image.

But others find it’s not so easy to make it on the street of gilded dreams.

An early sign of flux came 18 months ago when Lanvin, a Paris-based fashion boutique, left Rodeo. Last December, Rome-based Fendi moved out. Along the way, several other businesses have vanished from the street.

Mathews, a women’s apparel store, closed its doors in June after 17 years on the street--weary, owners say, of Rodeo “glitter” and “astronomical” rents.

Furrier Lowell & Edwards moved off Rodeo Drive last April to less pricey digs nearby, as did the Williams-Sonoma gourmet cookware store (in June) and Hunter’s bookstore (in August).

And Celine, the European women’s boutique, left Rodeo in December, the result of too many tourists and not enough spenders. Next month, the store plans to reopen elsewhere on Rodeo in half its former space.

‘A Little Disillusioned’

“I think some people are a little disillusioned with Rodeo,” notes James Sheekey, senior sales consultant with Coldwell Banker in Beverly Hills. “They thought just because they were there, they were going to be fantastic merchandisers. They found out the street does not make the tenant.”

Yet, it’s still the Gold Coast. Some longtime retailers say they would never leave Rodeo. Others are expanding. And still others, new to the street, say their sales are beyond their greatest expectations.

Fred Hayman, president of Rodeo cornerstone Giorgio, Beverly Hills, calls Rodeo “the best street in the world,” for those who understand its sophisticated clientele. “There is a lot of good traffic on Rodeo, if you know how to handle it.”

But real estate agent Gilbert Dembo says competition from Melrose and Montana avenues, Beverly Center, Westside Pavilion and Century City malls has cut into the sales of some Rodeo retailers, who pay among the highest rents in the city.

“The small merchants are having a very difficult time, not getting the traffic that is required to sustain them,” says Dembo, president of Gilbert Dembo & Associates, a Beverly Hills-based commercial real estate firm. “Rent is a factor. Some landlords are more reasonable than others.”

In a Jan. 10 editorial, March Schwartz, publisher for 20 years of the weekly Beverly Hills Courier, urged Rodeo retailers to treat customers more courteously and to “hunker down and get on the ball.”

Schwartz reported counting 74 store vacancies in the Business Triangle of Beverly Hills, of which Rodeo Drive is the kingpin address. This “golden triangle” is bordered by Santa Monica Boulevard, Wilshire Boulevard and Crescent Drive and includes parts of Rodeo, Beverly, Camden, Bedford and Roxbury drives, Brighton Way and Dayton Way.

“This is as high as I’ve ever seen it (the vacancy rate),” Schwartz says in an interview, blaming the problem, in part, on absentee store ownership and retailer inexperience.

Although real estate agents won’t confirm his count, Coldwell Banker salesman Stanley L. McElroy Jr. says: “The vacancy factor has been getting larger and larger.”

“Whenever rents keep getting higher, there’s always going to be more turnover,” McElroy says. “You have to be that much better a retailer to compete.”

Many are competing. Beverly Hills Revenue Manager John Brewer says taxable apparel sales in the Business Triangle were up an estimated 8.9% in 1985 over 1984, compared to an estimated 7.5% growth in statewide general sales.

“Beverly Hills business did not grow as fast as retailers anticipated, but it’s slightly better than the average for the state,” Brewer says.

Rodeo Drive commands the highest rents in the Triangle, with monthly boutique rentals running $10 or more a square foot, McElroy says. That translates to $10,000 a month for a 1,000-square-foot store. Rents on other streets in the Triangle run one third that amount, according to McElroy.

Ruth Mathews says she and her husband, Arnold Albert, closed their 35-year-old retail business in June rather than face a costly new lease.

“We would have had to go off of Rodeo, after all those years,” says Mathews, co-founder and clothing designer for the store. “The rents went absolutely astronomical.

“When the property went up, up, up, we decided we weren’t going to work for the landlords any more.” Mathews, who also co-founded Mathews shops in New York, Chicago, Palm Springs and Newport Beach, came to Rodeo in the late 1960s, a time when the street had “a California signature” and catered to the neighborhood, she says.

But when the Rodeo Drive Committee formed in 1977 to promote the street internationally, Mathews says the street was hyped as “rich, rich, rich. That kind of thing, to me, was obscene. I think the only thing the (committee) did is bring a lot of shoplifters and tourists, and they made landlords very rich.”

Developer Don Tronstein, chairman of the Rodeo Drive Committee, declined to address Mathews’ statement.

“It’s a shame she did not take the opportunity to join the association,” he says, noting improvements on Rodeo, such as valet parking and beautification by merchants.

Tronstein sees the movement to and from Rodeo as only improving the mix. “Quality begets quality,” he says. “Every time one leaves, we get a higher and better (retailer).”

Tronstein points to the arrival of a Chanel boutique, as well as to the replacement of Hunter’s books by Claude Montana, Modasport and the expansion of the Lina Lee boutique.

“They gobbled that space up in no time and paid top rent,” Tronstein says. “These are all mer- chants who were already on the street, opening additional stores. To me, that’s very bullish.”

Tronstein also is bullish: He is developing 35,000 square feet of Rodeo retail space and a 10,000-square-foot penthouse office, which he says will open in October.

“Rodeo Drive is the only place to be if you’re involved with high-quality merchandising,” he says.

But for Mathews, the street’s growing image of extreme wealth meant an influx of international names whose merchandise one could buy as easily in New York or Paris as in Beverly Hills.

“Why would you want to go in and get what you can buy any place else in the city or the world?” Mathews says. “It would have been nicer if Rodeo had attracted the young California designer who was doing California kinds of things.”

Herbert Fink, president of Theodore men’s and women’s boutiques as well as new Sonia Rykiel and Claude Montana shops--all on Rodeo--calls the Beverly Hills Business Triangle “a difficult area,” despite his own staying power there for 17 years.

“I think due to the press hype of Beverly Hills, the rents and the expectations are a little higher than what foot traffic warrants at this time,” Fink says. “Originally, when we opened, Beverly Hills wasn’t an international city. It basically dealt with the local consumer. Therefore the rents were much cheaper.”

“Many of the new stores that have come are owned by outsiders and lend themselves to the international trade and people who come from other cities,” he says.

Some of those international retailers also have found struggle on Rodeo.

Spokesman Eric Turmel says the Lanvin boutique closed in late 1984 because the company’s Singapore business partner “did not understand what American people in Beverly Hills wear.”

Although the Fendi family could not be reached in Rome, former Fendi publicist Brando Crespi explains that Fendi left Rodeo in October because the boutique’s franchise owner, Japanese businessman Masatake Fukuda, did not understand “the realities of the Beverly Hills marketplace.”

“A number of times on Rodeo Drive, you’ll have a perfect product, a good location on the street and think success is assured,” says Crespi, who has an L.A. marketing firm and who consulted for the Fendis on their move to Rodeo. “But one of the things we all found out is that that formula doesn’t work. It’s not that clear-cut. It takes a specific combination of management skills and diplomatic skills to have a successful retail operation.”

Rick Allen, chief executive officer of the Rodeo Collection (where Fendi was located), says his 50-space retail complex has become “more choosy” in seeking tenants who understand the Beverly Hills and Westside customer.

“What we have determined over the last three years is that your chances with success are much greater with people who have the local business, the local clout,” Allen says.

With three empty spaces in the Collection, he says: “We’re unbelievably tough when screening people.”

For Paris-based Celine, the move to smaller quarters on Rodeo was planned because the earlier location attracted too many tourists, says Kohji Hiraga, vice president/general manager of Celine in the United States. (Celine also has franchises in San Francisco, New York and suburban Washington.)

“Our customers need an exclusive atmosphere for the clothes. They hate tourists,” Hiraga says. “They don’t like to be disturbed by tours. It was like a department store. Our new store will be more exclusive.”

Hiraga says it was “important” to keep a Rodeo image for the new Celine. “If we do national advertisements, its good to see Fifth Avenue (New York), Michigan Avenue (Chicago), Rodeo Drive--and maybe Post Street in San Francisco,” he says.

Coldwell’s Sheekey says out-of-state and foreign retailers often have a Rodeo Drive “myopia”--they don’t want to do business anywhere else.

“People will come here from Paris or London and say they only want to be on one street,” he says.

But experiencing high rents on Rodeo can prompt a move to other streets in the Triangle, Sheekey says. “They’ll find that they have the name and don’t have to be on Rodeo,” he says.

Lowell & Edwards furriers found that leaving Rodeo can be a boon to business.

“Strange as it may seem, it’s not only more affordable, it’s been advantageous to us,” says founder and president Merrill Lowell, who moved his 46-year-old fur company to nearby Camden Drive last April. “Businesswise, we found our customers rather being intimidated by Rodeo Drive hype.”

The fur company had been on Rodeo for 17 years when its lease expired. (Their old space is now occupied by Torie Steele Boutiques.) Lowell says he tried to find another Rodeo building, “but to get anything we wanted--like the old Mathews store--was so horrendously expensive--about $45,000 a month”.

“As a result of the move over here (on Camden), we have retrieved about 300 to 400 people who didn’t pay us a visit for many years on Rodeo,” he says. “We lost a lot of people when shopping became a little more difficult with the traffic and the international trade coming in.

“Those that did come in were mostly lookers. We had to spend time with people who were not interested (in buying), but who wanted to see what was going on on Rodeo.”

But one merchant’s blight can be another’s fortune.

Other retailers--such as the Bernini menswear boutique and the soon-to-open Kenneth Jay Lane jewelry boutique--are arriving with high hopes for Rodeo.

“It’s a marvelous street, how could one resist?” says Lane, who has a shop in New York’s Trump Tower and who will open in April at Fendi’s former site in the Rodeo Collection.

“If you have a clientele and you buy with those clients in mind, then you can be on Rodeo,” says Tom Bruno a buyer for Torie Steele, who has six Rodeo boutiques. “You can’t wait for 30 people to walk in every day. You have to be on the phone calling your customer.”

Chanel, which opened a boutique on Rodeo last Valentine’s Day, has “exceeded our expectations--it’s been very successful,” says Jack Matthess, executive director of the Chanel boutique, which is decorated with crystal shelves, suede walls and a skylight that looks like the top of a Chanel No. 5 bottle.

“Our rent is very high, and the business we’re doing certainly warrants it. People who are crying about their leases are people who have had a free ride for many, many years,” Matthess says.

So as the flux continues on Rodeo, “new players will fill the holes every year,” Sheekey says.

Some of those players may agree with what Giorgio’s Hayman sees as the truth about the street:

“Rodeo Drive is a double-edged sword,” he says. “If you know what you’re doing, it’s the best street in the world. If you don’t, you shouldn’t be on Rodeo.”