Published: Friday, 11 Sep 2009 | 1:25 PM ET

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The fabric in the hands of Thakoon Panichgul, one of Michelle Obama’s favorite designers, is exquisite. An Italian jacquard, woven from yarns of eight different colors, it costs $100 a yard. A dress that Mr. Panichgul plans to make from the cloth for his runway show next week will cost $2,000.

He lets it fall away. It troubles Mr. Panichgul that as much as people love beautiful clothes, they do not understand why they cost so much. “It’s becoming a losing battle,” he said.

Source: victoriasecret.com Adriana Lima

Designer fashion — the creative wellspring of the American apparel industry, the engine of style magazines, the stuff of plain old dreams — is experiencing a serious case of the blues. As another show season rolls out across the city, against the chilliest retail climate in years, many believe this is not merely a difficult moment for high-end fashion but a defining one as well.

Here is the reality: More and more people shop at H & M and other purveyors of cheap chic. Factories offering fine craftsmanship in Italy and New York are closing as business moves to China. Consumers do not see longevity in the clothes they buy. “I think the true designer business is in trouble, no question about it,” said a senior buying executive at Macy’s

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With shoppers afraid to spend, department stores cut orders for fall goods by 30 percent. For next spring — the collections being shown during New York Fashion Week through Sept. 17 — little improvement is seen. “In my 40 years in fashion, I’ve never seen women scared to shop — at all price levels,” said Vera Wang, who sells $1,000 dresses at stores like Bergdorf Goodman and also has a low-priced line at Kohl’s

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Retailers have pressured designers like Ms. Wang to lower their prices. Anyone walking through an empty store in recent months could see why this was necessary. On Tuesday, Neiman Marcus reported a $668 million loss for the year. The luxury chain said the latest quarterly sales at stores open at least a year fell 23 percent from the period a year ago. Saks posted a 16 percent drop. On Thursday, the industry tried to excite people with after-hours shopping at stores around the city, called Fashion’s Night Out.

Makers of high-end fashion wonder how far they can drop prices without diminishing their prestige, or cutting corners that might compromise their creativity.

Ms. Wang said she cut prices for her resort collection this year by 40 percent, but was told by some stores that those $600 to $800 dresses were maybe too low for a designer brand. “I don’t know what’s going to happen,” Ms. Wang said, referring to the future of prestigious labels. “It’s going to be a world of crepe de Chine.”

Although designer fashion accounts for only a small portion of the $191 billion apparel industry in the United States, and many consumers would not mourn the disappearance of $2,000 dresses from the racks, the creativity of runway collections inspires looks in the mass market and sets trends that entice shoppers back into stores season after season, fueling a vast segment of the economy.

In the 40 years since modern ready-to-wear came into existence in Europe and America, and made household names of Ralph, Calvin and Donna, designers have enjoyed enormous respect and prosperity. However, in the past few years, they have lost some face with consumers. Their clothes became exotically pricey as they courted celebrities and did quick-and-dirty deals with makers of fast fashion.

This week the situation reached a nadir of sorts when the Paris house Emanuel Ungaro — once the pride and joy of the Upper East Side — announced that it had hired Lindsay Lohan as its artistic adviser.

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Another impact of recession-driven designing is a retreat to more predictable styles, a repetition of the safe looks that sold well in previous seasons. The designer Elie Tahari, whose labels generate about $500 million in sales, is focusing on dresses, animal prints and leggings and slim pants worn with tunics. “Fashion has to be new and wearable and there has to be a need to it,” he said. Mr. Tahari has cut prices by 30 percent and closed a handbag factory he had in Italy to move that production to China.

Even Oscar de la Renta, the very emblem of high-end New York design, known for $4,000 and $5,000 dresses and suits, plans to offer a $1,500 dress in his spring line to meet retailers’ demands. And although he recently bought a local garment factory that had planned to close, to help maintain his label’s craft standards, he has also sought out less expensive suppliers in Asia and Eastern Europe.

In his Seventh Avenue studio, Mr. de la Renta pointed to a sleeveless black dress with two knitted, frilly panels. The panels, done in Romania and combined with an Italian wool, will help keep the price of the dress down to $2,500. And Mr. de la Renta likes a silk faille that he gets from a mill in South Korea. Aside from the price — it costs a third of what Italian faille does — he likes the look. “Listen, Prada has been using it for years,” he said.

European houses, with their savoir-faire and deep pockets — thanks to leather goods and perfume sales — may hold a creative edge over American counterparts that will matter in the marketplace. Stores insist that women, while choosier now and prone to mixing styles, can’t part with quality altogether. “There are still customers who want that workmanship,” Ann Stordahl, the general merchandise manager at Neiman’s, said. “There are just fewer of them than there were.”

But there’s a paradox in all this, a slight slub in the fabric. Ultimately, what distinguishes high-end fashion is an appreciation for the small differences: in the fit, the fabric. This is a designer’s creative toolbox. Remove a tool, and he has less with which to do his job.

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Joseph Altuzarra, a young designer in New York, specializes in ruched georgette dresses, priced around $2,000, which are made in France. Recently, he asked his factory there if it might simplify the ruching process to lower costs. The factory refused. “They said they would be ashamed to produce a garment that way,” Mr. Altuzarra recalled.

Then he took a sample to a New York City factory to see if it might produce garments for him. “They looked at the sample and passed it around the factory and 15 minutes later said, ‘We can’t do it,’ ” Mr. Altuzarra said. “It was technically impossible for them to do it.”

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