Dollar Slide

The US dollar's recent slide in value is causing a general anxiety across all domestic industries. In high-end retail, many buyers who once invested in European designers are now considering other options. Nevena Borissova, who owns Curve boutiques in New York and Los Angeles, invested 80% of her budget in European designers for their "quality and design" and reasonable prices (their luxury goods were priced similarly to "medium-bridge American designers"). Curve's stylistically discerning customers "felt that they were getting more from the European designers for the price, and it was a great business move, at least for me, for the past five years," Borissova explains. But with the Euro now at roughly 1.5 against the dollar (and many believe it is still climbing), European collections are nearly out of reach. "I dropped a few major lines and cut my European buy by 30%," says Borissova. Stacia Valle, the owner of Dernier Cri, a store in Manhattan's Meatpacking District, is "crying and weeping." "It's forced me to be more selective with inventory, and I need to turn away merchandise that is fantastic," Valle says. So who is filling the gap left by all those European brands? Americans, of course. This is the perfect opportunity for domestic designers to grow their retail presence at home, and to buck the international bias against the relative quality of their goods. Borissova says: "By the end of next year [the Euro] might reach two [against the dollar], and the reversal process might take a good five years. I think that we are entering a decade in which the American designers are just going to excel at lightning speed. People are going to need to fill the gap with domestic goods. In a way, it's great for the American economy of fashion; but in another way, buyers can no longer buy based on talent alone." The difficult economic climate doesn't just benefit American designers: "It makes us look at other designers from regions with attractive currency rates who are just as talented as the Europeans," says Valle. In effect, the market is diversifying its offerings, which will drive competition. However, European vendors are already responding. Many are keeping prices in line by sacrificing higher margins or by offering discounts, in order to maintain their market share in the US — knowing that it's still the most important market in the world, along with Japan. Valle views this as quid pro quo: "We've supported them in the past, so it's time for them to support us." -Robert Cordero