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Monday, 26 January 2009

The Age of Conspicuous Thrift


When the ladies of West London first "discovered" TK Maxx some years ago, it was almost a guilty secret. And while the odd bargain might have come from there, the latest designer dress or accessory was still purchased at more or less the full retail price in the West End, Knightsbridge or Kensington.

Since Christmas, however, I've heard outright declarations that such-and-such an item was found at TKM or on Asos - where sales over the 42 weeks to 16 January '09 rose by 108%. For those who don't know, both these businesses provide "designer" labels at significantly lower prices than the primary fashion boutiques or department store concessions. And it's worth noting that Amazon.co.uk, which "endeavours to offer its customers the lowest possible prices" has opened its own clothing store featuring various fashion labels.

While the shift of clothing sales online is a remarkable enough trend in itself, that's not why I've called it out. What's especially noteworthy is the open declaration of thrift by people who used not to wear it like a badge. Thrift has become conspicuous. A lifestyle choice, not an economic one.

In December, I mentioned the "counter-Veblen effect", partly tongue-in-cheek, in the context of the Madoff affair. Economists have suggested that the effect would occur when "preferences for goods increase as their price falls, over and above the traditional supply and demand effect, due to a conspicuous thrift amongst some consumers." I mentioned it in the context of the Madoff affair, because Madoff's investors appeared to be investing as a lifestyle choice - climbing on the super-rich bandwagon - in defiance of rational economic analysis. Having been burned on that front, I speculated that they will react in the opposite direction and sport a well-worn look, partly because that would also sensibly protect the remainder of their wealth.

But you don't have to be super-rich, or even rich, to see money in lifestyle terms. Surely most of us relate to money in terms of lifestyle - what it will buy you and whether you can genuinely keep company with your friends/peers - rather than interest rates, assets/liabilities, diversification, pounds and pence. It is possible to flaunt bling, thrift or neither in all walks of life.

Nor do I consider the counter-Veblen effect to be a creature of the credit crunch itself, although that has given everyone on the planet 'permission' to be seen to focus on value at the same time.

And, I'm not talking about the sort of conspicuous consumption passed off as thrift, that might lead you to "Tear the roof off your home and replace it with solar panelling for $75,000 (£42,000), then boast about the cents you save on electricity."

Rather, conspicuous thrift reflects various established trends towards greater authenticity and individual control which have surfaced in the Web 2.0 phenomenon, for example.

Ultimately, of course, conspicuous thrift reflects pragmatism.
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