The high fashion capital of cool

In the Eighties designer labels were for the rich, as Yuppies showed how much they were worth. But this decade's designer clothes are for the masses

As you walk down Bond Street in your Armani T-shirt, Versace jeans, DKNY sunglasses and swinging your Prada handbag, breathe a sigh of relief. It is time to love your labels again as London becomes the world's most popular place for designer stores.

Traditional fashion capitals like Paris and Milan have found themselves left behind as big names cash in on the feelgood factor, according to a new survey.

Fuelled by the success of London Fashion Week and London's christening as the capital of cool, there have been 35 designer store openings in London since 1990 and the capital now has more designer floorspace in the pipeline for 1997-98 than Paris, Milan or Los Angeles.

And London is not the only place to benefit - both Armani and Hermes will open stores on King Street, Manchester, this year, which has become known as "the Bond Street of the North". They join Hugo Boss and DKNY there. Paul Smith and Vivienne Westwood have also moved into Manchester, Red or Dead into Sheffield and Gianni Versace and Christian Lacroix into Glasgow.

More than half the openings in London and New York by the top nine names - like Armani, Versace, Tommy Hilfiger, Donna Karan and Gucci - have happened since 1995, according to the investment research company Hillier Parker. In London this has crystallised into three areas - Sloane Street for couture, Bond Street for diffusion ranges such as Versace Jeans Couture, DKNY and Emporio Armani, and Covent Garden for more specialist designers.

Worldwide sales of premium branded clothing have risen to pounds 20bn last year compared to pounds 16bn in 1992 - a rise of 8.7 per cent per annum. Projected sales put next year's sales as high as pounds 24bn.

This "phenomenal growth" can be attributed to several factors. The UK and the US emerged early from economic recessions compared to countries like France and Germany, while the rich, who buy designer clothes, have been getting richer. In both the UK and the US, people in the top 20 per cent income group have enjoyed large growth in their net disposable incomes - up to 60 per cent between 1979 and 1994 - which has filtered through to increased spending on clothes and footwear.

But while the 1980s created designer labels almost exclusively for the rich, this decade's designer clothes are for the masses. Only 6 per cent of the population could afford ready-to-wear, but more than 60 per cent can afford the so-called diffusion lines. So far, 35 per cent of the stores are diffusion line outlets, and for those in the pipeline the percentage is growing.

"There are few people who can afford pounds 700 a garment, let's face it. But take something like CK Jeans," said Alexander Lawrie, retail analyst and author of the report. "At pounds 45 they may be cheaper than a pair of Levi's and they have become a best seller. Kids like them because they are different - they are bored of wearing Levis and Wrangler and the kids also perceive that they are getting catwalk quality. It's a triumph of image over substance."

"It's buying into the catwalk lifestyle. And designers are becoming famous in the way football stars did. It's not just about their collections. There's a big obsession with the private life of say Calvin Klein, Armani. Ralph Lauren was profiled in Fortune magazine. It's become this whole big thing."

As the designers move in, the competition gets fiercer and fiercer. Ralph Lauren who is to open a new store in Bond Street in 1998 is paying an annual lease of pounds 2.5m - a new London record - whilst spending pounds 10m on refurbishing the site. Prada, due to open this year on Old Bond Street, is believed to have paid pounds 650,000 to Jil Sander to obtain the lease of this premium site. Moschino and Saks Fifth Avenue are looking for sites in the area. Rents in Old Bond Street are rising by more than a third every year. To finance such expansion three of the top nine designers have floated on the stock market and others look likely to relinquish their privately owned status.

"The major provincial cities are getting more designer stores," added Clive Vaughan of the leading retail analysts Verdict . "They are seeking further opportunities. There is a sea change away from retailer labels which is why the department store sector is growing so well. they are on the crest of the wave."

"We haven't reached the limits yet." said Peter York, style guru. "It is a simple way of telegraphing where you are and what you want which is pretty extensive ... If people feel more happy, more assured because they are prepared to pay pounds 20 to have a name on their jeans it's a fair price - no a relatively modest price - for therapy."

t Fashion Designer Store Expansion in Central London and New York; available from Hillier Parker, 0171 629 7666