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Dimitria Papafotiou opened her DIIDA boutique on Chapel Street after spending time researching several retail strips. Photo: Simon Schluter The site of the new Deciem store on Chapel Street. Photo: Supplied
苏州美甲美睫培训学校

An artist’s impression of the Capitol Grand development at the corner of Chapel Street and Toorak Road. Photo: Supplied

No highrises … an aerial view of South Yarra from 1950 showing the Yarra River, Melbourne High School and a skyline devoid of buildings. Photo: Fairfax Photographic

The Jam Factory was recently sold for $165 million. Photo: Supplied

Tired and dirty, or revitalised and iconic?

It seems everyone has a view on the current state of Chapel Street: what’s gone right, what’s gone wrong, and whether it can restore its place as Melbourne’s number one retail hot spot.

While most agree the Windsor end is pumping – vacancy rates are well below average and there seems to be a new cafe opening each week – it’s the South Yarra end that has been the “problem child” of the strip.

“There has been a lull and there are still a few vacancies [but] it’s turned the corner,” said John Lotton, president of the Chapel Street Precinct organisation.

“After a few years of high vacancy and looking a bit tired, after a hell of a lot of effort … the look and feel of the street is turning and it’s improving and it’s cleaner.”

With a couple of retail centres, namely Jam Factory and Como, lacking street appeal, there are hopes the multibillion-dollar Capitol Grand development on the Toorak Road intersection, set to open in three years, will deliver a major boost in luxury brands and foot traffic.

In the meantime, a small number of new retailers are moving in to capitalise on reduced rents and a resurgence in interest from the mushrooming population of apartment dwellers.

Canadian beauty and healthcare brand Deciem is set to open its first Australian store on Chapel Street in August. Joint CEO Nicola Kilner said the company, which is also opening stores in Toronto, Seoul and Sydney, has avoided the central CBD for its flagships.

“We want diversity. Chapel Street has a huge mix of brands but the charm of the independents,” she said.

Dimitria Papafotiou, whose first boutique DIIDA has been open a month, has bet the early success of her label on the resurgence of Chapel Street, specifically the “Paris end” near Toorak Road.

“I know it’s been quieter but every time I have had to shop for an outfit, Chapel Street has been the place to go,” she said.

But DIIDA was not a roll-of-the-dice decision. Papafotiou sent hours sitting in cafes on High Street, Armadale, and Malvern Road, Hawksburn, before settling on the site.

She nominated more eateries and better marketing as ways to help revitalise the strip.

“There’s so much going on now [on Chapel Street]. Luxury living is coming up here. If you just turn around the corner on to Toorak Road, there is lots of growth happening. It’s coming back and … I want to be part of Chapel Street coming back to its former glory.”

While some major brands exited Chapel Street for Emporium or High Street, Armadale, denim label Diesel has firmly dug in its heels, opening a flagship in late 2014. And Witchery’s new flagship opened this weekend.

Diesel brand manager Antony Hampson acknowledges the strip has had issues but is confident it will “reinvent itself”.

“I don’t think it’s anything the precinct has done, more it’s just a general trend of people shopping in centres,” he says.

Hampson said the weather, parking, opening of fast-fashion megastores like H&M in the CBD all contributed to the mixed fortunes of Chapel Street but maintains it will “always be considered a premium fashion destination”.   The rumours are true. #DECIEM stores are opening in #Toronto (this picture), #Melbourne, #Sydney and #Seoul. Apparently they are all still on track to open in May 2015 according to our Founder. #TheAbnormalBeautyCompanyA photo posted by DECIEM IS ABNORMAL (@10deciem) on Jun 6, 2016 at 2:10pm PDT

Some observers are less convinced of a fashion resurgence along Chapel Street.

Retail industry specialist Martin Ginnane, who did some work on the Capitol Grand development in its early stages, said Chapel Street had “suffered from its own success” over the past decade.

He said a strategy to attract “more organic” and independent retailers had largely failed because they couldn’t afford the rent.   Well if you must Chap lap… @fraxnces_A photo posted by Chapel Street Precinct (@chapelprecinct) on Jun 27, 2016 at 10:04pm PDT

Mr Ginnane, who lives in the area, said at last count there were about 25 empty shops between Toorak and Malvern roads.

“The thing that will save Chapel Street from really bleeding is the vacancy rates on Toorak Road [South Yarra] … have dropped to around 7 per cent,” he said.

However, he doubts it will ever again be the fashion destination it was, with food and convenience retailers having dominance.   Thanks for sharing this progressive photo of the Capitol Grand site @laurendibartolo #CapitolGrand #LKPropertyGroup #Demolition #SouthYarra #Melbourne #ProgressA photo posted by Capitol Grand South Yarra (@capitolgrand_) on Jun 15, 2016 at 4:44pm PDT

“Chapel Street just doesn’t have an identity at the moment … it’s up to Stonnington [council] to really clean it up,” he said.

Stonnington mayor Claude Ullin has a plan, which includes $20 million to be spent on the precinct over the next four years, including more open space and better footpaths.

He said a future Chapel Street could see a more egalitarian approach to retail mix where the tenants decide who moves in, a system that works well in some cities in the US, Canada and Europe.   SOUTH YARRA REPRESENTIt’s lunchtime, get down for our surprise muffin flavour and freshly made salads! A photo posted by Tom dick & harry cafe (@tomdickharrycafe) on Jan 14, 2016 at 5:13pm PST

Approaches have been made to the state government along these lines but it will take changes to legislation, he said.

He is also hopeful of launching a ferry service along the Yarra between the city and Chapel Street. Other ideas include the installation of scramble crossings to improve pedestrian movement.

He said it was a misconception that Chapel Street competes most with the mega malls such as Chadstone.   This time last week we were hosting our Media Launch Party! We still can’t get over how amazing it was – what a way to demand attention! Thank you to everyone who helped make it such a success xxx #diidadesigns #blessedA photo posted by DIIDA (@diida.designs) on Jun 29, 2016 at 12:34am PDT

“It’s nowhere near as competitive as with the city,” he said. “We want to bring people out of the city and into Stonnington.”

Ginnane said the council should look to how the City of Yarra has defined Church Street, Richmond, as a home furnishings hub, and encourage more pop-ups to conceal empty shops.

“Retail moves so quickly and you have to be working with retailers constantly. Councils don’t have a really good understanding of what makes retail work. You have to look at a place and say, ‘What do we want to make this?'”

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