Everyday Economics
25/1/21 London.
The purchase of the Debenhams brand by Boohoo is the latest in our continued move away from producing or being concerned about ‘things’ toward engaging in the trade of ideas, brands, intellectual property, data. As stated in the FT today, Boohoo will pay £55m for the intellectual property, including customer data, of Debenhams. Boohoo chief executive John Lyttle sees the purchase of the Brand as a key part of its growth strategy. Note there is no purchase of physical assets. Think about it: £55m for an idea.
This development away from “peak stuff” was cemented in Naomi Klien’s ‘No Logo’ published in 1999 where she charted the rise of the Brand and the development of consumer capitalism into the sale of idealised lifestyles. The move away from physical production and toward ideas, speech, data is of course epitomised by the rise of Big Tech and Google, Facebook and Amazon’s dominant position in what could be boiled down to a market for data.
How can I use these ideas in my studies of Economics?
- Application marks for mergers/takeovers. Debenhams was already struggling before the pandemic. One firm’s demise is another’s gain as the young Boohoo can grow stronger with Debenhams demise.
- Sunk Cost? How the successful development of a brand turns advertising spend (which, for most firms, is not recoverable) into an asset which can be resold and can be far more valuable than any physical assets the company has. (See Top Shop). This makes markets more contestable for firms that have well established brands.
- Is the quaternary sector the next phase of the Rostow model? How are economies developing past the service sector and what impact does this have for employment, welfare, incomes? Is this capitalism more environmentally sustainable?
- What will happen to the value of physical assets in this sector?
Want to read more?
FT Today (your school can get you a free online subscription).
Boohoo to buy Debenhams brand as Asos targets Arcadia’s Topshop
No Logo at 20: have we lost the battle against the total branding of our lives?
The original book was part of the anti globalisation movement — but that’s another story.
