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Black Gold Fuels Fashion Boomtowns

By
  • Robb Young

PERTH, Australia — It is shortly after noon in Western Australia's state capital and Tony Sage is feeling mighty chipper. A scrum of well-wishers has gathered around the multi-millionaire in a swish restaurant where he is holding court. In between vigorous handshakes and fragments of conversation, Sage orders champagne for everyone as he suddenly turns his attention back to the panoramic view outside the window.

"See that building over there?" he asks, gesturing beyond the botanical gardens to a cluster of skyscrapers hugging the Swan River. "I built that one back in the 90s. It used to be the tallest building in the city but Perth's skyline changed a lot in ten years. Most of them are from the mining and resources business, but take a look at that tall one over there. That one was built with money from oil and gas."

Like many of Perth's wealthier residents, Sage banked much of his fortune during the decades-long mining boom that made the city an engine for the Australian economy, while keeping the country recession-proof during the aftermath of the global financial crisis. Now he is chairman of the Perth-based company International Petroleum where he finances oilfield ventures in far-flung corners of the globe.

"That kind of money, mate, that is why you're going to see even more Prada and Gucci handbags sold here soon — and more local designer gear too," declared the tycoon whose unique swagger caused a ripple of flashbulbs wherever he went during this month's Telstra Perth Fashion Festival event.

The festival was founded 15 years ago by Mariella Harvey-Hanrahan as a platform for Western Australian designers to meet upmarket consumers. In the intervening years, it has helped to turn many local labels into viable businesses thanks to its relationships with national retailers and the media.

"Perth has its own identity and I don’t feel it can be compared to Sydney and Melbourne. Our city has grown both in stature and sophistication. It's growing rapidly as a fashion destination as well as producing world class labels," says Harvey-Hanrahan, fashion director of Perth Fashion Festival, the latest edition of which saw hometown heroes like Aurelio Costarella, Ae'lkemi and Zhivago take to the runway alongside Australasian labels including Camilla, Morrison and Zambesi.

"International fashion houses now have Perth on their radar too. Since Gucci opened in 2006, we've continued to attract the world's leading brands to Western Australia. King Street's latest Miu Miu opening is evidence of this continued growth. I think there's no looking back now," Harvey-Hanrahan adds, referring to the likes of Louis Vuitton, Canali and Chanel, which have also opened up monobrand boutiques in the central business district here.

Perth’s Petrol Power

In the early years of Harvey-Hanrahan's festival, Tony Sage, like others on the Perth social scene, appears to have been drawn to the glamour of it all. The mining and petroleum mogul is, after all, the man who tried to lure David Beckham to the Perth football club that he owns. But he later took his interest to the next level, buying a 49 percent stake in the fashion event. Although he likes to characterise his punt as "an emotional investment" that he made after catching the fashion bug, his foray into the fashion business is far more pragmatic than he lets on. Strange investment bedfellows though they may seem, fashion and oil are two sectors that have long held a mutual infatuation for one another.

"You know, because we're traditionally into mining here, the more recent discoveries of oil mean we haven't got all the local expertise we need for oil yet. So imagine what happens when you suddenly have to import 3000 petroleum engineers and geologists to your town. These guys earn hundreds of thousands of dollars each year and they each have wives and families who are used to buying designer clothes and luxury goods."

Although Western Australia is experiencing a slight cooling of its red-hot economy due to falling demand from China for minerals and other resources, analysts expect that its economy will continue to outpace other Australian states in the coming years because it still has the lion's share of the country's existing gas reserves and exciting new oil finds. What this means for Perth's fashion market is that the next chapter of development could happen much faster than the progress made during past mining booms.

"The oil and gas sector has substantially longer project lifespans when compared to more traditional mining. The stakes are higher and the returns significant. Like all resource sectors, each phase has a different impact on the local economy," says Kate O'Hara, the director of Hawaiian, a property group with a portfolio that includes nine shopping centres with fashion retail tenants like those at Claremont Quarter and 235 St Georges Terrace.

"Most oil and gas projects are in their exploration phases and when they reach build phase, the impact should be substantial. So for Perth, you could assume there will be even more growth in luxury fashion ahead," she adds.

Historically, Perth-based oil and gas giants operating in the state such as Woodside Petroleum have done a roaring trade. Last month, the firm reported a 27 percent increase in first-half profit of $1.1 billion. But the big news came last month when a new field with reserves of 300 million barrels of crude oil was discovered in the Canning Basin off the coast of Western Australia, making it the biggest Australian petroleum discovery in several decades.

"You need only to look at cities like Dallas and Dubai to see that oil rich communities attract the fashion sector," says Vogue Australia's editor-in-chief, Edwina McCann, who, in future plans on flying into the remote city of Perth more and more to attend events. "I think we'll see significant investment and expansion of the luxury goods market in Perth to cater for the city's increasingly wealthy residents."

McCann says that due to the growing importance of the Perth market, one of the first things she did when she joined Vogue Australia was to appoint a Perth-based contributing editor. She also noted that whenever Vogue features an especially expensive one-off or bespoke item such as an AUD $20,000 (about $17,500) handbag, the queries from prospective buyers are often from Perth.

Indeed, wherever oil and gas have been discovered in great quantities, a local luxury fashion market seems to sprout up and evolve much more quickly than it does in other affluent areas. The early Texan oil barons of the Gilded Age based themselves around Houston, which soon saw an influx of fashion retailers descend on the area, keen to cash in on big spenders of jewellery, gowns and fine suiting for the city’s many balls and charity functions.

Later in the 20th century, when Arab sheikhs developed the cities of Kuwait City, Riyadh, Doha and Abu Dhabi, these hydrocarbon hubs, too, became lucrative fashion markets. In more recent years, the focus has turned to cities like Almaty, Kazakhstan and Baku, Azerbaijan, as well as African cities like Lagos, Nigeria and Luanda, Angola.

Perth, alongside Doha, Houston and 19 other 'world energy cities,' is a founding member of the World Energy Cities Partnership. "I was chair of this prestigious organisation in 2009 to 2010 and enjoyed the involvement with mayors of the other world cities," says Perth's Lord Mayor Lisa Scaffidi. "We meet annually [and] given the fact Perth will soon be producing LNG (liquid natural gas) at levels that will see us as rank as the number two provider globally, we are highly regarded in this sector and city partnership."

It is no coincidence that some of the more voracious consumers of luxury are found in such cities around the world. But there is perhaps no better measure of a city's appetite for high-end fashion than whether buyers of couture can be found among its wealthy women. With this in mind, market observers were watching one segment of the recent Telstra Perth Fashion Festival very closely. For the first time, the festival invited the Asian Couture Federation to bring three of its couture designers to Perth: The Dubai-based Filipino couturier Michael Cinco, Indonesia's Sebastian Gunawan and Singapore's Frederick Lee.

"We've been inundated with requests from around the world to present our member couture designers [but] we're very selective in accepting invitations. I always consider the [realistic] potential for a market to consume our couture designers before we agree to take part," says Frank Cintamani, the founding president of the Asian Couture Federation and chairman of Singapore-based FIDé Fashion Weeks. "The response to the Asian couturiers has been overwhelmingly positive in Perth. All of the couturiers we presented received numerous enquiries, undertook fittings and confirmed orders worth tens of thousands of dollars. I think this proves the point that Perth is more than able to be provide substantial business support for fashion — and couture in particular."

"Wendy Marshall from Elle boutique was a trailblazer selling brands like Comme des Garçons, Vivienne Westwood and Martin Margiela for decades. She really educated the women of Perth who craved cutting-edge fashion. We've also had Mineko Carlini of Jonetsu who for 20 years offered her exquisite edit of designers like Yohji Yamamoto. And currently Dilettante is bringing inspiration to us here too," says Liza Blakiston, a Perth gallerist and discreet investor in international fashion ventures.

"The reality is that most people in Perth prefer to dazzle with what they wear, but there is a small but strong group who are on the absolute knife-edge of all that is creative, artistic and international in terms of fashion and art. Truly avant-garde and underground. For the most part, these people travel and are exposed to the best the world has to offer. Their personal style is incredible in a very effortless way and they don't look for accolades. We have the tyranny of distance to contend with in Perth, so people search for inspiration worldwide. They want it bad," Blakiston adds.

Canada's Klondike in Calgary

Like Australia, another country that is making waves with its hydrocarbon economy is Canada, which saw its oil production hit record levels last year. The majority of the country's oil and gas is found in just one province in Western Canada, Alberta, which is home to the controversial Athabasca oil sands in its extreme north.

Despite the fact that extraction from such "tar sands" generates even more carbon emissions than conventional oil and that climate change protestors around the world are amping up the fight against them, the Alberta Energy Regulator recently reported that it would double its output in less than ten years. Much of this wealth will benefit Alberta's largest city, Calgary, and, to a lesser extent, its capital Edmonton.

"Calgary has always been an oil and gas city but with the world's thirst for oil increasing every day and northern Alberta's massive oil reserves, the city will continue to boom. There's more foreign investment coming all the time — and we're already seeing a serious problem with human resources to keep up. This means high wages for those in the industry and more disposable income for things like fashion," says Jason Krell, a partner at Calgary-based PR firm At Large Communications, who has represented clients in both the fashion and oil industries.

According to Krell, in the last five years, Calgarians have seen almost every major mall in the city being expanded, renovated or upgraded to make room for more luxury clients. Just last week, upmarket US department store chain Nordstrom opened in Calgary, choosing that city as the first in its Canadian roll-out. A few years ago, Chinook Centre did a major expansion to make room for new stores, including Tiffany, Burberry and others, and the mega outlet mall CrossIron Mills is now introducing luxury brands.

Someone better placed than most to comment on Calgary's fashion retail evolution is Mark Derbyshire, president of Canada's leading department store, Holt Renfrew. The group's Calgary flagship has been earmarked as a priority in the firm's national expansion plans. According to Derbyshire, the store will see innovative new retail concepts, the addition of 20 percent more retail space and a luxury 'Apartment' private shopping area.

"Calgary is absolutely one of the engines of our growth in Canada, taking its place along with Vancouver, the Toronto area and Montreal. Calgary has been experiencing a boom, as has our business there, since the 1970s," says Derbyshire. "[But] prior to 2009, our store in Calgary was less than half the size it is now, so we’ve really been on this journey along with our Calgary customers, growing our footprint and fashion offering."

In addition to directional fashion brands like Givenchy, Lanvin and Peter Pilotto, Holt Renfrew's Calgary store boasts top tier labels like Hermès, Loro Piana and Chanel. Karen Ashbee, the city editor for Western Living magazine, suggests that the ultra-luxury segment is growing elsewhere in Calgary, too, thanks to oil money.

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