On a frisky Friday night in September, Paris's chic and hip flocked to the rooftop restaurant of the Centre Pompidou to celebrate fashion's coolest new collaboration: Karl Lagerfeld and H&M. There Lagerfeld unveiled his new clothes for the Swedish retail chain. Like his work for Chanel, the designs were slick and savvy: skinny black pant-suits, crisp white shirts, mod shifts and chiffonlike cocktail dresses. Unlike Chanel, however, they are all priced under $150--and most under $100. Lagerfeld wants to prove that fabulousness isn't about price. "It's all about taste," he says.

Are couturiers who design throwaway clothes the future of fashion? Looks that way. While some are fighting the trend--led by French fashion's chief lobbyist, Didier Grumbach--many of the big names are joining the movement. Along with Lagerfeld, there is Isaac Mizrahi at Target and guest designers such as Hussein Chalayan and Sophia Kokosalaki at TopShop and Eley Kishimoto for New Look, to name a few. Because these "fast fashion" companies can deliver new lines of clothes to their stores every four to six weeks, they are displacing traditional high-end ready-to-wear designers as the leading trendsetters. It's the end of an era.

For almost half a century, the fashion business followed a simple pyramid mod-el: made-to-measure couture on the top, ready-to-wear (often a distillation of couture) in the middle and knockoffs by mass retailers on the bottom. Since the late 1980s, however, as luxury evolved from privately owned family-run houses to publicly traded global conglomerates, couture has become a crass exercise in branding to sell logo-embossed lipsticks, perfumes and handbags to the masses. With skyrocket-ing prices, the number of women who will shop for made-to-measure suits (starting at $20,000) has dwindled from several thousand in the 1960s to a mere 200 today.

First ready-to-wear took over the design lead from couture, but in the last decade it became increasingly commercial to satisfy stockholders in the $1 billion-a-year high-end trade. And fast fashion started to come up from below.

In the late 1990s, H&M and Zara of Spain opened hundreds of stores across Europe, and sped up the design cycle through computer technology. Zara uses data from its 426 stores to spot new trends, and offers 10,000 new products a year. TopShop, another newcomer, generates up to 300 new designs a week. The shelf life of a garment has fallen from six months to a couple of weeks, creating what Vogue editor Anna Wintour calls "a seasonless cycle" for fashion.

Now luxury brands are adopting fast-fashion tactics to compete. Ferragamo centralized inventory and established computer links to suppliers, cutting the design-to-delivery cycle by 20 percent, to 10 weeks. Other fashion houses like Escada have come up with "hot fill-ins" that are mid-season collections. And Grumbach has proposed holding shows strictly for retailers and magazine editors, with a ban on early press coverage to prevent knockoffs. He says giving the copiers a sneak peek is a form of "collective suicide."

Most big fashion names seem to realize that couture is already commercially dead. Versace and others have shuttered their couture ateliers recently. Most even applaud the move to democratic fashion. "It means more people are going to get better fashion," says Wintour. High-end retailers still tend to insist that, as Neiman Marcus fashion director Joan Kaner puts it, "trends come from the designers down. Look, H&M had tons of little Chanel jackets this season." Maybe so. But it'll soon have its own Lagerfelds as well.