Last Friday, the day now known as “Black Friday” because so many retailers hit their profit margin in the run-up to Christmas shopping, I did not go shopping. Nor did I write. But plenty of others did. Almost Girl (another Chicagoan, yay!) organized Black Friday blogging, with participants including Virginia Postrel and the inimitable Manolo.
Virginia in particular hit on some of the interesting aspects of the economics of fashion. One recurring tension in many of the posts is expense vs. affordability and craftsmanship/design vs. “fast fashion”. Lots of people argue that these things are mutually exclusive, but they needn’t be. Look, for example, at Fey’s lovely new dancer sculpture, $9.99 at Ikea. It’s not unique, but it’s beautiful and well-enough made that the quality does not interfere with your impression of the beauty. Furthermore, I have been pleasantly surprised to find some of the items I’ve bought at H&M lasting for years, both in style and substance.
This quote from Final Fashion illustrates this argument that I find analytically problematic:
I can’t support H&M, because of the way it undercuts my own design opportunities. I can’t support the high end of the market either, because of financial impossibility. (This reminds me of the lamentable situation of designers who can’t afford the clothes they design… yuck.)
Why can’t she support H&M? Because she thinks that they cheapen design, and that by serving the low end of the market they either reduce her employment opportunities or affect design in some way that diminishes her ability to exercise and benefit from her design skills. I don’t think that’s true at all. The fallacy in the argument is to think that clothes from H&M and more expensive, artisanally-designed clothes are substitutes. They are not. More technically, I would expect the elasticity of substitution between those two to be low; not zero, but low. The argument that they are substitutes also relies on focusing on the substitution effect in the comparison, that is, the relative prices of the two categories. But there’s also an income effect to take into account, and that income effect may affect Ms. First Fashion’s argument considerably.
Take this counterfactual: suppose all things equal, except that H&M does not exist. In that case, would we substitute into buying more expensive, artisanally-designed items? For the most part, no. We’d spend more at the Gap, at Old Navy, at outlet stores, at Target. Notice how those options do not provide perfect substitutes for the clothes at H&M, because they generally are not as “fashion forward”. I think this is the case because most of us face budget constraints. Given our incomes, if H&M did not exist, we wouldn’t substitute Marc Jacobs or Michael Kors or Tocca or Theory, for the most part.
Indeed, I would argue that H&M and artisanally-designed fashion are complements (meaning that the elasticity of substitution is positive, not negative) to some extent. Again, take the budget as given. The H&M option allows you to purchase fashionable items that have some fashion aspiration attributes, even if they aren’t the best-made garments in the world. But by being able to achieve the look, it encourages you to pay attention to fashion, to learn how to mix items to achieve the looks you want. Then as your budget changes, you can apply that learning to your choice of more haute items. This effect implies that the demand for Ms. First Fashion’s design skills will not decrease.
I would also argue that if you take the budget as given, buying fast fashion items from H&M relaxes the budget constraint a bit, so that you have more resources available to buy the craftsmanship when it matters. Like in shoes. What woman doesn’t delight in putting together outfits that mix her Old Navy t-shirt and H&M skirt with a Nanette Lepore jacket and Prada pumps? That is another sense in which the two are complements.
Hmmmm, maybe I’ll go shopping tomorrow …