Regional designer breaks out at the Oscars

Wedding dresses comprise more than 50% of Falk's sales.

Each of Falk's dresses is unique and custom-designed for her client.

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(FORTUNE Small Business) -- Move over, Valentino and Oscar de La Renta: At this Sunday's Academy Awards ceremony, the couture giants best known for dressing celebrities for their walk down the year's most-watched red carpet have some competition from a small-business owner and designer in Santa Fe.

Fashion design is in Lily Falk's blood: she learned the tricks of the trade by watching her mother and grandmother, who sewed clothes for the entire family. Later, Falk worked at a couture shop in Aspen before heading south to open her own shop, where she designs and constructs custom gowns by hand - with the help only three employees, and no factory in sight.

Pricey, custom couture dresses are a niche market, but Falk has found her home in the Southwest.

"A lot of Santa Fe residents understand couture," she says. "We have a very sophisticated population here, and it is acceptable to dress outside of the norm." Texas socialites seeking unique, over-the-top glamour also provide a steady stream of clients for Falk.

The opportunity to design a dress for Suzanne Arkin, wife of Oscar-winning actor Alan Arkin, came serendipitously. On a shopping trip last year in Santa Fe, Mrs. Arkin was looking for a new pair of earrings and stopped in Lily of the West - a small store measuring barely more than 500 square feet.

"I told her that I would like a chance to design a dress for her to wear to the Oscars," Falk says. "I saw it as an amazing opportunity."

Arkin agreed, and Falk donated a custom creation. As Alan won his Oscar for Little Miss Sunshine, the cameras showed Suzanne in an intricately beaded, floor-length black gown unlike anything else on the red carpet.

A loyal customer, Mrs. Arkin plans to wear a new one-of-a-kind Lily Falk design to the ceremony this Sunday. This year's peach-silk creation features French bronze lace in an art-nouveau style. Gloves made of the same material are attached to the dress, to keep Suzanne warm during the ceremony.

As Falk predicted, reflected Oscar glory benefited her business's bottom line: calls for orders picked up soon after the awards telecast. Rather than significantly expanding Falk's pool of new buyers, though, the glamorous showcase energized Falk's existing customer base. Old clients who hadn't bought recently came rushing back, and inquisitive shoppers in the Santa Fe area made it a point to stop by the shop, she says.

Falk's handcrafted gowns carry price tags reflecting their craftsmanship: Prices run from $1,200 to $12,000. Commissions for wedding dresses - the one time women who don't normally buy couture might set aside a budget for high-end design - make up the majority of her sales.

While focusing on custom work keeps her business small, Falk wouldn't have it any other way.

"I don't cut fabric for a gown until I have met the client," she says. "My clients are my inspiration, and I know what will work on each woman's body."