There have been lots of designer-mass market collaborations, most notably for Target. (Memories of their Missoni line selling out in 45 minutes are still fresh in my mind...)
Now, it looks like GAP is getting into the act with a DVF (Diane von Furstenburg) line for kids. There's even the item the designer is most known for; her iconic wrap dress, included in the collection. Even though my kids have long outgrown kids sizes, I still remember how limited the choices were in shopping for them. Designer collaborations are certainly an improvement from the logo t-shirts I was limited to!