Karen Rieschieck said the fashion landscape had changed since she first set up shop and customers now had more options for discovering new labels.

“We’re working harder and spending more money to get the same sales, it can be quite tiring,” she said.

The popularity of online shopping also meant some customers were finding designers they liked at Alice Euphemia, she said, then shopping around for a better price.

"It's not something I resent or have a major issue with, I think it's inevitable, but it means I need to rethink my business," she said.

Ms Rieschieck said Flinders Lane was going through a cycle she had also seen on Greville Street, Prahran, where interesting stores leave because rents become too high - when she first opened the store she was paying $90 a week rent.

Working with labels including Gorman and Romance was Born, Ms Rieschieck said she had loved her time running the shop.

Melburnians had not seen the last of Alice Euphemia although it would not necessarily re-emerge as a store.

“I really want to reinvigorate Alice and the only way I can think to do that is to stop, have some time out, have a bit of long-service leave and come back with a different approach,” she said.

Ms Rieschieck said Alice Euphemia may become a support for local businesses, rather than selling directly to customers.

“For me the sales have always been incidental, it’s the problem-solving and working with designers that’s really inspiring,” she said.