The Italians have found an ideal working formula for this year's fall fashion shows, placing them all in the five theaters of the Milan Fair. It not only functions well for getting from show to show -- with plenty of bars en route -- but it leaves ample room for the thousand or so buyers to stroll from place to place for this season's favorite sport: ogling at each other. (The hands-down winners are the Italians, clad head to toe in leather, many of them wearing culottes or shorts.) Says Elaine Flowers, a textile worker from New York: "I felt so together when I left New York. I got here and saw all the Italian women and I feel like a schlump."

What the best-dressed Italian women are wearing on the Via Montenapoleone confirms what is happening on the runways for fall.

Fabric. Leather will be the hot item for fall -- in jackets, jodhpurs, shorts and culottes. "It feels good and even better the more you wear it," says Kal Ruttenstein of Bloomingdale's. "It hasn't been around in a while so I'm sure it will come now. It's in the air." If there is one shape, it will be the extended blouson jacket, to be worn with everything.

Pants. A year ago culottes were curiosities on the runway. Today, they look marvelous on the streets, with the chicoquest women wearing the Armani variations, often with banded bottom. Soft pants are part of the mix for next fall. At the Vogue party Sunday night, where designers and retailers met over dinner, at leat 15 of the true believers were in knickers. Others showed up in culottes, jodhputs, harem pants, sarrouseles -- any possible variation of the soft, tailored pant.

Shoes. Low heels and flats are everywhere, and the low-heeled boot is obviously returning. It solves all the problems of what to wear when jodhpurs or knickers cut off at the knee. Sexy high heels are back for evening.

Color. Black and gray are dominating so far, with camel and brown tones becoming a typical alternative. On the streets, red is the shock accent.

At some of the shows, it was hard to tell the designers without a scorecard.

The fact the Karl Lagerfeld designs for Fendi is a poorly kept secret, but the news is he is also designing for Alma. Claude Montana is the creator of the new Complice line, and the inventive Giorgio Armani does all the designing and selecting of fabrics for Erreuno and Mario Valentino (though no one in the house will state it for the record).

The first real blockbuster show of the season with the Missoni Collection, which has never been better. The colors, patterns, ingenious stitches that make knit look like fur or ribbing or quilting, all are a one-family effort. They're integrated more wovens with the knits than ever before; including a wool coat that reverses into knit.

With the spring weather now in Milan, many American retailers simply escaped the early shows to check the stores for new ideas in display and merchandise. Said Kay Shortway of Bergdorf Goodman: "It's not only that the prices are so good with the new strengthened dollar. But now that the numbers are evened out -- 1,000 lire to the dollar -- the prices are so easy to figure out."