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A Fashionable Strategy for Tough Times

Small boutiques and specialty retailers use up-and-coming designers and the latest trends to cut costs and attract customers

As New York City heads into Fashion Week, Khajak Keledjian, chief executive of Intermix, a privately held chain of boutiques, isn't worried about the current economic crunch. In fact, despite reports of consumers tightening their designer belts, he projects his clothing and accessory sales will climb to about $100 million for 2008. He also is adding four stores to the 20 he already operates in cities such as New York, Miami, and Los Angeles. Recently he expanded his flagship store on Madison Avenue and 77th Street in Manhattan by about 1,500 square feet.

At a time when well-known designers such as Tommy Hilfiger have delayed taking their companies public (BusinessWeek.com, 1/25/08) because of economic concerns and sales are down at retailers such as Saks (SKS), Coach (COH), and Nordstrom (JWN), Keledjian's confidence is even more noteworthy. Unlike these larger players, Intermix's operations remain both relatively small and highly localized. His stores are situated in hip neighborhoods, and his price tags aren't too outrageous: While it is possible to find a dress that costs $1,200 at an Intermix store, there also are plenty of $175 jeans and $58 T-shirts. And, unlike bigger stores, he doesn't sell big-name designers, preferring smaller, hipper labels—such as Yigal Azrouel, Imitation of Christ, Catherine Malandrino, and Theory—many of which got their first real exposure through Intermix.