Monday, October 01, 2007

Consumption or Investment?

Am visiting London once again and continue to be astounded. Astounded not just by the top-sliver of the St. Chelseaberg real estate market, not just by the confidence in future prices despite the most obvious signs supply running headlong to meet demand, not just by foul $6-dollar cup of motorway "coffee", but by the ability of the median to live and consume amidst breathtaking prices-relative-incomes. But more to the point, my spouse, too was aghast at the prices upon picking the latest catalogue from design-doyen Sir Terence Conran. With both sterling and Euro at records vs. Asian mercantilst currencies, why aren't prices for such offerings falling? After my spouse finished, I started leafing through it and raised an eyebrow or two at their audacity and sheer cheekiness to vaulting current prices outside the tether of all prior price sensibilities. Be it the Russians, insensitive as they seemingly are to the effects marginal price rendering a completely horizontal demand curve in relation to price, or City chaps aspiring to emulate good taste, the Shoppe is seemingly not for want of custom.

But what Cassandra found most interesting was the "Thank You" letter from Sir Terence to his customers where amongst other things he tersely recounted some of the firm's history and the joy (and fortune it brought him). He went on to say, attempting to justify the near-ludicrous numbers of digits in his current catalogue (and I apoligize for not quoteing him verbatim) something resembling:
...prices paid for modern furniture designs have been increasing at an incredible pace. There is a strong possibility that this ocurance is a result of changing perceptions of design in the eye of consumers, and perhaps their justified belief that such designs represent not just an increasing appreciation of design, but an excellent investment for future.
I must admit that I was somewhat surprised when I read this. Having multiple offspring, I know that the half-life of an GBP8000 sofa is almost certainly less than immortal, no matter how well-behaved one's brats are. And while I do not wholly dismiss the possibility of such an occurance (being the beneiciary of a smattering of objects d'art handed-down from prior generations), I tend to believe that the real reason is the most obvious one: high Common Inflation in anything other than Asian Mercantilist-sourced goods or services undertaken by low-wage immigrant labour, and that attempts to attribute it otherwise are the embodiment of mere behavioural finance flaws not to mention wishful thinking.

4 comments:

Macro Man said...

It's amazing how often an apparent cost savings fails to get passed on. I'm sure you'll agreee the juxtaposition of that fact with record levels of corporate profitability is a remarkable coincidence.

Frankly, anyone who believes Sir Tel's piffle deserves to spend $16k on a sofa of average quality...

RJH Adams said...

C'mon guys. Obviously the BBC's Antiques Road Show will be featuring Tel's super sofas some time soon.

Certainly DFS, Land of Leather and SCS Upholstery will be there too....

Macro Man said...

Is it even possible to spend more than £500 for 2 sofas at DFS? I am not terribly familiar with that particular retailer, other than the fact that there is ALWAYS a 2-fer-1 sale going on....

Anonymous said...

Perhaps it has to do with the cache of hallucinatory and stimulatory substances that can be expected to retrieved when one years later fumbles desperately for some change, or is it the cachet of desperate fumbling that one might expect following hallucinatory and stimulatory substances? Priceless....as they say..

Does the design mention "generous seams"?

One also hears rumours that the designs make excellent biofuel when chopped into pieces and placed on an open fire, that the covers are actually edible and that both fuel and meals are expensible!

Does the design mention "natural materials"?

Maybe too the future time and expense of a voyage outside of S. Ken. in the Brent snorter, the pleasant memories of battling with Cynthia for control and of staring oneself down in so many pairs of mirror lenses will serve to increase the terminal value.

"Not just an increasing appreciation of design" indeed.