Thursday, May 14, 2009

Recesiion Depression or Champagne Taste on a Beer Budget

The above referenced article is a must read for anyone who is remotely interested in fashion, trends, creativity, business, merchandising, and the Recession.

I am part of a boutique advertising agency. My primary role is Controller, thus I eat, sleep, breathe and dream about revenue and expenses; accruals and reversals.

Our product is creativity. Much like the fashion industry. It takes time, brain power, and a certain je ne sais quoi to produce something unique and fabulous.

The question - now more than ever is the valuation of quality creativity. I'll venture to say that this Recession has brought into question the value of everything. I do mean EVERYTHING.

To paraphrase a portion of the above referenced article, 'we can't have sales like this again, ever'.

I concur.

The fashion/retail industry may have been an early victim of "this" (what exactly happened anyway?) but they are by no means alone. Sales have fallen off a cliff.

The consumer, whether it be a business or a household seems to have pinched their noses and dove right off a cliff into a water-filled quarry/abyss. I can't even begin to understand the macro-economic magic that created "this" situation. Let's be honest - does anyone really understand? If they do, they're not telling. I have a feeling it's all but sinister.

So then, valuation. As a consumer of fashion and many other things, the recession has provided me with the rare opportunity to exercise my champagne taste on a beer budget. Thankfully no one in my household of two has been laid off yet.

To paraphrase a retailer in the article: 'you do the math. Yeah, I just sold your 800.00 shoes for 50.00'. So what is the REAL value of the shoes? Assuming they are handmade of fine materials - they're intrinsically "worth" more than a pair of pleather pumps from Payless. I think. This brings us back to the previous blog post: You Can Ask Whatever You Want. That doesn't mean I'm paying it. The 800.00 shoes DID cost a fixed amount to produce and the 800.00 shoes HAVE to have a profit margin or business wouldn't be business.

So what immediately comes to mind is my deserted fascination with owning a pair of Manolo Blahniks. I'm a woman of means by no means. I wasn't walking into a Nieman Marcus for a brand new pair. I was shopping on Ebay for my Manolos. The sole criteria was that they be "gently worn".

Let's face it. The shoes are beautiful. A shoe that beautiful has got to be "worth" more than Anne Kleins or Steve Maddens. Right?

It took me months to find a suitable pair in my size. OH how I impatiently awaited their arrival - making sure I had clothing to match the shoe color.

They were awful. They looked very lovely. If they had been intended as a shelf or coffee table accent piece, I would have been well pleased. As things stood (the puns are just understood from now on!) I could barely walk in them and they looked terrible on my feet. I re-sold them on Ebay.

I own beautiful shoes that compliment the foot and leg and are "worth it" for that fact. Some of them are not inexpensive. None of them are cheap. None of them originally retailed for 800.00.

So what is the "value" of a pair of Manolo's? There are materials, labor, and an overhead factor. I don't know if they are "worth" 800.00 intrinsically. They aren't worth 800.00 to me.

Monetary value, then, is logically subjective. Which finally brings me to my point.

'Sales like this can never happen again'. That goes for this business too. However, I must admit, I have picked up a few stellar bargains due to the Recession. Referencing Shad Fest a few posts back, I saw a gorgeous wooden bench/chaise longue at

I loved it. I needed it. It was 150.00. My husband said, "no". HMMPHH. I looked it up online, prepared to have the thing shipped to me. I was having that bench. I was not prepared to nearly have a coronary. The bench is listed on the web site for more than 750.00. I was on the phone to the store before you could say, "holy bargains Batman". By the way... my husband drove there to pick it up. Don't tell me no!

Then I felt bad. Really bad. The shop is a small business, just like we are. They have to pay for materials, labor and and an overhead factor. The business climate is less than healthy. Every business except Wal Mart is fighting for survival. What reasoning could there be for my bench to be 80% off? Quite possibly there is a good reason. It was very dirty and the finish was rough on the seat. Was it the floor model? Was it in a forgotten corner of the warehouse? I don't WANT to know. I'm happy to have it. I would not have it at full price. 'Sales like this cannot continue'. Or can they? And HOW?

The Recession has not changed my buying habits. I've always been a bargain shopper by necessity. It is true that I have one or two pieces that I would not otherwise have if not for the Magical Recession. I believe the Magical Recession has changed buying habits for a great number of people for a very long time.

I think Intrinsic Value has become a factor - and not just an overhead factor, but a force to be reckoned with. Honestly. I loves me a Barefoot Dreams hoodie like almost nothing else. I bought ONE (my first) of three at full price. They cannot be worth 80.00. Maybe they can. If 80.00 is going to keep a company in business with full employment - it's worth 80.00.

But, then, as with the "gently worn" Manolo's - they were truly "gently worn".... and "worth" less than ¼ of the original price. Depreciation on the wearables is worse than that of a new car!

The business climate is frightening. After reading the article at the top of the page... well, what am I supposed to do? Offer to pay more? Maybe.

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