Problem Focused Exercise: high fashion at low prices – too good a chance?
1
The Scenario
On 10 November 2005 a limited number of clothes designed by Stella
McCartney went on sale at 25 H&M fashion stores across the UK. Her clothes
normally retail for hundreds and even thousands of pounds, but the maximum
price for these garments was £100. This exercise examines the economic
consequences of such actions and asks if this is in the interests of consumers.
Task 1
Read the following extract and then answer the questions below.
Write your answer either hard copy or in your own word
processing file in order to compare to our feedback.
(a) What were the outcomes of the decision to sell these clothes in this
way?
(b) Explain how economics could have predicted the important outcomes
you have considered in (a).
As part of your explanation:
 use the concepts of equilibrium and disequilibrium,
 draw an appropriate diagram.
(c) Is this a good way of determining who gets these clothes?
(Economists call this the method of allocation.) Compare this to using
the market (price) mechanism.
Extract follows on the next page
Copyright: Embedding Threshold Concepts Project
21/08/07
This project is funded by the Higher Education Funding Council for England (HEFCE) and the Department for
Employment and Learning (DEL) under the Fund for the Development of Teaching and Learning.
Problem Focused Exercise: high fashion at low prices – too good a chance?
2
McCartney creations lead to mayhem
Based on: McCartney designs fly off shelf and onto eBay
The Guardian, Saturday 12 November 2005 by Audrey Gillan
It started with Stella McCartney
selling designer clothes for sale
through H&M in November 2005.
Nothing in McCartney's one-off
autumn collection was priced at
more than £100 and thousands
flocked to the high street chain to
buy panelled dresses at £60 and
skinny jeans at £40, by a designer
whose creations can cost
thousands. There was a limited
number of each item on offer and
they were sold out within hours of
going on sale.
Shoppers queued and elbowed
each other out of the way as they
strove to buy. However, many of
those shoppers didn't actually want
to wear the highly coveted
creations themselves; instead, they
intended to sell them on internet
auction sites at a massive profit.
The Guardian quoted shopper
Davina Joseph, who had queued
at the London Oxford Circus store
for three and half hours before
getting sight of the McCartney
designs. She said: "It was mayhem.
People were scooping up handfuls
of clothes, paying no attention to
the size, manically grabbing things,
fighting, pushing and shoving.
When I asked a girl if she needed
all the items she said she would be
selling the ones that didn't fit on
eBay.”
She went on to say “I was really
irritated by that. It was like a oneoff offer where normal people can
get a little piece of luxury. And
instead these people are trying to
profit at the expense of ordinary
shoppers. I felt really sorry for the
shop assistants because they were
being mauled and were surprisingly
good natured when people pulled
stuff right out of their hands."
A second shopper, this time at
H&M's West London store in
Kensington, was quoted as saying:
"Someone had plonked a toddler
on a bench and was filling up her
pram with clothes. People were
pulling stuff off the rails and then
looking at them frantically to see if
they were the right size.”
She went on to say: "I came
straight from the start of the sale
and looked on eBay, and within an
hour people were selling. It just
made me laugh because it's what
you expect nowadays. I'd rather
be passing any stuff I don't want on
to friends rather than making a
quick buck out of it."
By Friday there were indeed a
large number of the creations up
for auction on Ebay. Stella
emblazoned T-shirts were selling at
£59 on the site – the original price
tag was £15). Other items included
a black tuxedo jacket which was
posted with a mark up of £15
above the H&M price, while a
trench coat was selling with a mark
up of £42.
Since several designers have
followed suit – but is this really in the
interests of consumers?
Copyright: Embedding Threshold Concepts Project
 Feedback
21/08/07
This project is funded by the Higher Education Funding Council for England (HEFCE) and the Department for
Employment and Learning (DEL) under the Fund for the Development of Teaching and Learning.