The grand master of couture comes to London

Chanel showed its first catwalk show in London last week, sprinkling some of its exquisite magic over the city, while, as always, boosting the profile of the brand. Coco Chanel famously declared that "fashion is not an art, it is a business". In her successor Karl Lagerfeld, the two disciplines meet in perfect unison.

The famous faces at Chanel events over the past few days reflect the universality of the brand. Lagerfeld, a celebrity in his own right, mingled with everyone from Charlotte Casiraghi, the daughter of Princess Caroline of Monaco, to Kylie and outspoken pop star Lily Allen. It might seem misleading to apply the word "universal" to a brand whose evening dresses sell for upwards of 2,000, but Lagerfeld enabled the average shopper to buy into the designer dream when he designed a collection for H&M in 2004.

He wasn't the first high-end designer to collaborate with the high street, but his was the range that kicked off the hysteria that now routinely surrounds these ranges. Similarly, most people buy into the Chanel dream through its more affordable make-up, perfume and accessories. These types of products increasingly contribute a large part of Chanel's estimated $4bn revenue, but exclusive events such as this week's Maisons d'Arts show help to maintain the myth.

And what a beautiful illusion it is. Thursday's shows were achingly chic. First there was the sealed-off road, then the armada of monogrammed taxis and chauffeur-driven cars outside. The Chanel staff taking coats and names were using freshly sharpened Chanel pencils. The backs of the chairs were made to look like Chanel coat hangers, and practically everyone was wearing the label in a sea of black and white. There were even women in fingerless driving gloves in homage to Lagerfeld himself.

And that's where another of Lagerfeld's strengths lies: he has become almost as recognisable as the Chanel logo. Isolate any of his trademarks the sunglasses, the ponytail, the armour-like silver rings and they still say Lagerfeld. And the eccentric, slightly Hammer Horror uniform has an eccentric personality to match. The designer has 70 iPods and thousands of white shirts; he reads historic European literature in four languages and is prone to barbed statements, such as: "I take a physical pleasure in revenge, often in a vicious way." He has lashed out at other famous figures, including Stella McCartney and Claudia Schiffer, and even at H&M after they made some of his range in a size 16, saying: "What I designed was fashion for slender and slim people... that was the original idea." Lagerfeld himself had lost around six stone a few years earlier, thanks to a diet featuring a fat-destroying cactus derivative. The implication of an iron will to match his acid tongue only added to his mystique.

Another of Lagerfeld's skills and one that has earned him the status of fashion's king is that of paying homage to the brand's heritage, while making it relevant in the 21st century.

When Lagerfeld revealed his first collection for Chanel in 1983, Nina Hyde, the fashion editor of the Washington Post wrote, "a lot of people have been concerned that Lagerfeld means the end of Chanel, but the house is too smart to throw out the suit. It works, and Karl is likely to continue with it."

Lagerfeld created a collection that was a critical hit, and recovered a lost generation of clients. He still plays on the house's signatures pearls, tweed skirt suits, monochrome, costume jewellery and, of course, the little black dress while updating them to keep them fresh. Lagerfeld's Maisons d'Arts collection, shown on Thursday, was established in 2002 to celebrate the decorative craftsmanship of the couture ateliers. Until Chanel bought the ateliers in that year, these specialist workshops were in financial trouble and their skilled technicians were at risk of being lost for ever. Their intricate embellishment and fine work traditionally appear in couture, but since the ateliers were bought by Chanel they have increasingly been used on ready-to-wear clothes at labels such as Yves St Laurent.

Chanel has helped to preserve a historic tradition, as well as numerous jobs, many of which are held by generations of the same families. The acquisition was a shrewd investment in the brand's future. He has effectively balanced the past and the present, and accordingly, the label now appeals to young and old. Tweed suits cater to couture clients of a certain age, while his red-carpet dresses and bags regularly appear on younger celebrities.

Lagerfeld may have been born in 1938, but he remains a potent force in fashion. The attention to detail before the Maison d'Arts show crystallised the stylish effect, but it was the designer's art that breathed life into the fantasy. The elegant, slightly gothic grandeur of long black dresses with jewelled embellishment was balanced by more romantic pieces such as organza dresses with tulip skirts and ruffled fronts. Light, youthful touches came in the form of pageboy style outfits and chain-handled bags with Union flag stripes that reflected the Paris-Londres theme.

Now that Valentino has retired, Lagerfeld is one of the last grand masters of couture, with experience of working in the industry during its golden age in the mid-Fifties. By combining his traditional expertise with wit and iconoclastic flourishes he recently designed a classic quilted Chanel bag worn on the ankle like Lindsay Lohan's now infamous Remote Alcohol Monitor he has turned himself into a modern icon.

Further browsing: See the collection at www.karllagerfeld.com