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It's Tuesday morning and we're having breakfast at Tiffany's. The glittery champagne-and-orange-juice cocktail affair, replete with a flugelhorn salute, is being thrown to celebrate this week's grand opening of the legendary New York jeweller's expansive new store in Vancouver.

"We've wanted to be in Vancouver for a long time," says Andrea Hopson, vice-president of Tiffany & Co., Canada, as a bevy of models in signature-blue gowns and dripping with diamonds mingle with well-heeled guests.

The city was an obvious choice, she continues, pointing to its "unique mix of business activities, tourist attractions that rival any in the world and spectacular environment for living the good life.

"It was just a matter of finding the right location."

If luxury loves company, Tiffany has certainly found an ideal perch at the corner of Burrard and Alberni streets. What with Louis Vuitton, Gucci, St. John, Lacoste, Wolford and Betsey Johnson as neighbours -- not to mention the new Hermès store, directly across the street -- this elite shopping district is beginning to feel a lot like a mini Fifth Avenue.

Vancouver's new look of luxe might come as a surprise to those still stuck on the idea of the city as the laid-back epicentre of stretchy yoga wear and functional fleece.

That casual stereotype still holds true on the street, where jeans tucked into rubber boots is the height of fashion this season.

Yet slowly but surely, the wild lotus bud is blooming into an elegant young lady. And the growing luxury retail market, which will include a massive Holt Renfrew expansion in the spring, is playing a big part in the sartorial evolution.

Why, if Holly Golightly were a modern-day Vancouverite, the restless glamour girl might finally have found enough compelling shopping reasons to stay home. The local socialites certainly seemed thrilled, as they chit-chatted about the local luxe revolution at Overture, a swishy fundraiser forthe Vancouver Opera held at the Queen Elizabeth Theatre two weeks ago.

"We've come a long way," says Manjy Sidoo, a part owner of Lumière and Feenie's restaurants, who made an elegant splash in her body-hugging Dolce & Gabbana floor-length gown and Marni fur cape.

Sidoo, who often travels to Montreal, New York and Paris to shop for clothing, is particularly thrilled about the new Holt Renfrew, which will include a spa, roof-top restaurant, valet service, five personal shopping suites, a world design lab for new brands and a bigger range of exclusive labels.

"They're going to start carrying lines that aren't available here -- Lanvin, Balenciaga and more Chanel," Sidoo says excitedly.

"If you had asked me 10 years ago, I would have said 'no way,' " she says of Vancouver's overall growth in luxury retail. "We're definitely ready now."

The sales figures concur. Gary Balaski, general manager for Holt Renfrew Vancouver, says his Pacific Centre store has had the highest sales per square footage of any Holt Renfrew store in Canada for the past three years.

"We're bulging at the seams," he says. "We don't have room to stock all the fashions our clients want. We're investing here because there's a definite need."

The timing is perfect, Balaski adds. "With the economy growing and the Olympics coming, Vancouver is a company priority for a lot of reasons."

"Vancouver is growing up," agrees retail consultant David Gray, who notes that sales across the province have also been growing and are predicted to climb to a record $53.4-billion this year.

"Calgary is growing faster," he adds. "But as hot as Calgary is right now, I don't know if the market is quite sophisticated enough, or big enough in sheer numbers, to support the expansion of luxury retail we're seeing here."

For Gray, the Holt Renfrew expansion is the one to watch.

"Tiffany's could probably develop a market here without much risk. But the Holt's move, that's a big signal that there's an untapped market for luxury goods. This isn't an incremental leap -- it's a quantum leap, just in terms of square footage."

Indeed, at 135,000 square feet, the new location under way in the Pacific Centre will be double the size of the existing store.

"It's going to be quite a destination, for sure."

Hopson says the 2010 Olympics, although exciting, are not Tiffany's primary reason for being here. "Vancouver is absolutely a world-class city with a healthy appetite for luxury products and has been for many years," she says.

Tiffany & Co. has had a boutique in Holt Renfrew since 1995, and will continue to have a presence in the new location. But by building a stand-alone store, the company now has the room to expand on its traditional offerings (primarily silver jewellery and fine china) with its engagement diamonds and the Gehry Collection, created by its newest designer, celebrated architect Frank Gehry.

With its new prime downtown location, across from the Fairmont Hotel Vancouver, Tiffany will also probably see an increase in its tourist traffic, as has Hermès across the street.

"We've definitely noticed an increase in our international visitors," says Jennifer Carter, president of Hermès Canada, which moved out of its 900-square-foot Holt Renfrew boutique last spring into a 2,500-square-foot stand-alone store with plenty of windows and corner exposure.

At the time, Christian Blanckaert, executive vice-president of Hermès International, said the influx of Asian money and tourists into Vancouver was an important factor in the expansion.

"Vancouver has become a starting point for any company that wants to grow internationally," he says over a leisurely lunch before the store's grand opening June 1.

"Asia has become a key market for Hermès, especially with the emergence of China. Vancouver is a very strategic place to be, and will become even more important in years to come."

Carter, however, says the local market is just as important. "Our Vancouver clientele is very loyal. And, how do I put it? They spend!"

If they can find what they're looking for, that is.

Sarah Bancroft, the Western editor for Fashion magazine, agrees that the city is ready for more luxury goods. But what we really need, she says, is more fashion-forward confidence from retail buyers.

"I've spent two years looking for over-the-knee boots," the frustrated shopper says. "Even this year, Holt Renfrew didn't bring any in. I had to go to Montreal to get them.

"Today, I went in there looking for short dresses. The sales woman showed me some fusty, Edwardian thing that scraped the knee. That's the shortest they had."

Bancroft says buyers need to be more adventurous to catch up with the tastes of their clientele. "I hate to say it, but whenever I see someone wearing something great, they always tell me they got it off the Internet."

Although it's hard to say whether Vancouver's luxury market is having a trickle-down effect on street fashions, local designers are certainly noticing a demand for more glam.

"People are dressing up again," says RozeMerie Cuevas, designer of the women's label Jacqueline Conoir. After years of being the go-to designer for tailored business suits, Cuevas has recently changed her focus to evening wear.

"Vancouver has become much more cosmopolitan," says Cuevas, who has sold out her entire collection of flowing, Grecian-inspired silk gowns the past three seasons.

Of course, Vancouverites still have their regional peculiarities.

"It's very different from Toronto," says Sebastian Le Goff, general manager of Lumière, who worked at Biff's in Toronto.

"In Toronto, you can see people with money coming from a mile away. In Vancouver, the people with money are younger."

He says they eat out more often, usually pay with cash (as opposed to corporate credit cards) and often wear designer jeans, T-shirts and Puma runners.

"They're still spending $500 on a bottle of wine. But they're not dressing up.

"That's Vancouver," he laughs. "You can't judge a book by its cover."

Or by its diamonds.