Was pounds 3,000 now pounds 117

Miss Pamela Gridley, ex-Vogue model

In the middle of Knightsbridge, less than a taxi ride from Harrods and Harvey Nichols - purveyors of fashion to the wealthy - Cheval Place is hidden away in an enclave of tiny, village-like streets. Here, within the space of 50 yards, can be found the best second-hand clothes shops in London.

These are not up-market charity shops smelling of dust and mothballs and other people's armpits. This is high fashion, where the clothes are usually only one or two seasons old, on sale at a fraction of the original cost. A couple of weeks ago, for example, I bought an exquisite, multicoloured silk evening jacket by Versace Couture. The original price was pounds 3,000. The price from Pandora, pounds 117.

In spite of having been here for almost 50 years, Pandora remains largely unknown, although it advertises discreetly in Vogue. Discerning women of all ages with a surprising range of bank balances come here for bargains. Six days a week the shop is thronged with customers sifting through the racks of couture and sub-couture for a suit, coat, or ball gown at roughly a fifth of its price when new. The shop has been owned and managed for the past eight years by Bridget Hutchcroft. I asked her why rich women need, or bother, to sell their clothes.

"Women sell for all sorts of reasons. A lot of Arab ladies use clothes as currency. They won't ever buy second-hand clothes, it's against their principles, but they'll sell things, often completely unworn and unused, because, while their husbands will buy them anything they want - maybe three Hermes handbags at pounds 6,000 each and half-a-dozen silk scarves at pounds 150 - they won't give them cash. The women need money to gamble among themselves; or perhaps just money to buy cakes. But their husbands know that ready cash means freedom, and they watch the credit card receipts very carefully, so for these women, selling their clothes is a way of getting round that."

For a brand-new Hermes handbag in ostrich or lizard, the seller is paid about pounds 600. (Bridget can spot a fake a mile off.) The handbag is then sold - usually the same day; mint condition Hermes bags are in great demand - for pounds 1,500. The Arab seller is happy; the buyer is happy; and Pandora has made a profit of just under pounds 1,000. Not everything has such a high profit margin or rapid turnover but status symbol accessories always sell fast: they are the recognisable couture touches that add "class" to any outfit. Garments that fail to sell within a month or two are progressively reduced until the December/January clear- out, when prices are cut by 30 per cent. After that clothes are returned to the original seller or given away to charity.

"In some cases, ladies whose husbands - or lovers - have bought them a gift may sneak it in here, hoping he won't notice, and choose something they prefer. I had a husband last week who recognised his wife's dress in the window and although I denied it, she had to take it home and pretend it had been at the dry-cleaners. Then she brought it back!" Other sellers are young women whose older lovers like them to look good - it adds to their own status - and will therefore give them a dress allowance of as much as three or four thousand pounds a month, but not cash. These women bring unworn clothes in to Pandora so as to get hold of some ready money.

"My regular clients spend about pounds 3,000 a year with me, though a big buyer may go up to pounds 15,000 or even pounds 20,000." For that sort of money you get an awful lot of clothes. A suit - couture or just below: say, Ginocchetti, MaxMara, Cerruti, or Armani ready-to-wear - costs about pounds 230; coats pounds 200- pounds 300; jackets pounds 150 unless they're Chanel or YSL, in which case they are double that; evening dresses between pounds 120 and pounds 300. Some of the best bargains are to be found in shoes and boots. I came away from researching this article with a pair of kitten-soft Gucci loafers for pounds 35 instead of pounds 200- plus.

Bridget says, "I reckon to charge between a quarter and a fifth of the original price for clothes whose condition is as good as you can get. The sellers will get about ten per cent of what they paid." The profit for Pandora lies in the space between the two - and it is, make no mistake, a lucrative business, despite the fact that Ms Hutchcroft has a rota of 20 saleswomen in the shop and a fully computerised list of buyers, sellers, and the garments that pass between them. She concludes, like so many of her customers: "I've always been intrigued by second-hand shops ... I have the hunting instinct. To me, in a shop like Pandora, you've got to use your imagination and make your own style, rather than just being a Chanel clone. Yes, I love my work. It's my life."

A couple of doors down, there are two tiny shops side by side - Stelios and The Dress Box - both owned by Greek-born Stelios and managed by Michael Lynn. Stelios and Michael make an unstoppable double act. They talk without drawing breath, finishing each others' sentences, capping each others' anecdotes.

Like Pandora, The Dress Box has been going for nearly 50 years. Stelios took it over in 1989, looking to expand his own couture business. The sister shop named after him sells only new season's couture: Chanel, YSL, Armani, Versace - big brand names, brand-new frocks, at quite intimidating prices. A Chanel jacket may cost pounds 595 or pounds 695, but in the Paris or Bond Street shop it left only a few weeks earlier it would have been three times as much.

"I never cease to be amazed a) by what some people buy in the first place and b) by what they'll pay for it. I have one client who spends - or rather, her husband spends - pounds 150,000 a year at Chanel alone. Another may buy four Chanel shirts at pounds 750 each and never even wear three of them: but they look good on the hanger and she can't resist them. Another may buy the entire shoe collection every season, just in case she later needs a pair and they've run out of stock. Then she'll bring us the half dozen pairs she's never worn.

"We're just here to sell the clothes; we don't take a moral stand. For some of these women, clothes are their whole life. They spend a lot of time shopping - some of them have nothing else to do. They need 30 or 40 suits a season, and as many evening dresses as they have functions to go to. Three or four times a week they'll go to the hairdresser. Their lifestyle depends on it. Others may have quite normal working and family lives.

"Some women need clothes to make them interesting. Others don't need to wear Chanel: you'd be drawn to them anyway. There's a lot more to attraction than the labels on your back, but spending money does help. Also it gives them confidence. They feel, 'I've spent pounds 20,000 on this so I must look good.'

"The moment any woman comes into the shop we can instantly add up what her clothes cost and where they came from. We do it all the time. But some people can surprise you - so you have to treat everybody the same. A lot of our wealthy customers live in Scottish castles so you can't categorise them just because they come in wearing a dowdy coat and walking shoes.

"Now here's a nice story. One of my customers was at a country house ball in a Chanel evening dress I'd sold her and a man came up to her and said, 'I'm glad to see someone in couture this evening!' Her husband was so pleased, he came in to the shop a day or two later and thanked me."

Glenys Ievens-Brewis from Royal Leamington Spa with her daughter Dinah, who is an air stewardess with British Airways "We shop here as often as we can - whenever we're down in London, which is five or six times a year - and we always go out with something. We time it for when people clear out their wardrobes in the winter and spring. The main attraction is the labels and the quality. Everything's still in style."

Dinah: "It's the excitement of finding something - a bargain..."

Glenys: "The label gives you confidence. Knowing you're wearing something good makes you feel good. When you get home you have the mad feeling that you've got something just right. I like to buy my smart clothes here - something that makes a bit of a statement. I'm actually looking for a white pique skirt to go with a lovely little YSL jacket and blouse I bought in the summer. My daughters sometimes ring me up and say, 'Mum, you've got to come down - there's a perfect dress for you!'"

Dinah, who has been in the fitting room trying on half-a-dozen garments, appears in a cigar-brown Bruce Oldfield evening dress, original price pounds 2,500, now pounds 352. She plucks at it. "It doesn't do much for my bosom ... And it's a bit tight here."

Her mother: "It suits you, Di. You look great!" Dinah continues to look at herself doubtfully.

Mrs Ievens-Brewis goes on, "People often say to me, 'What a gorgeous coat!' but I wouldn't tell them I bought it second hand. I might tell my best friend but I wouldn't tell anyone else.

"It's sometimes easier to shop here than in the big stores and when I find something really nice in a style I want it's like, 'Wow! That really puts the spice in the ginger cake, doesn't it?'

"You can hand things to the staff and they'll keep them for you, so it's like being in a private shop, isn't it? I haven't worked out what I spend but I'm happy because I know I'm getting good quality clothes at a reasonable price.

"My daughter mainly buys suits here, and with so many chain-store garments everyone looks the same, so it's nice to come here and know you'll find something unusual. The last thing I bought was a black dress by Thierry Mugler, for pounds 189 down from over pounds 500.

"I've got a large collection of Thirties, Forties and Fifties vintage evening gowns - I've always collected since the girls were children and dressed up in them. We do like creative clothes and appreciate the workmanship that goes into them."

"I usually sell things here; normally I don't expect to buy but I came in today to pick some money up and noticed this sweater dress. It's nice and warm and comfortable. I can wear it for something I'm going to tomorrow. It's by Iceberg, about a year old. It cost pounds 250 when it was new; the price here is pounds 47.

"Everybody knows about Pandora. I'm quite open about it, I tell a lot of my friends and people from abroad to come here. They don't have second- hand shops in Italy, so the Italians go mad for it.

"I probably wear things for one season, or if I don't like something I get rid of it straightaway. I bring things in at the beginning of each season, twice a year, in September and March and after that I pop in to pick up the money."

"I go mostly to Selfridges because it's my local shop and they know me there. I buy Mondi, Escada, Jaeger."

Are the prices to sellers fair?

"Let's just say, I think it's a good business to be in. It's a service for people in all walks of life - people who want nice clothes and can't afford them."

In Stelios, a tiny shop festooned with heavy, glossy suits in brilliant colours or deep black, and bearing the labels Chanel, Armani and Versace, Barbara Reed, a Canadian group therapist and counsellor, is getting down to serious shopping under the solicitous eye of Stelios himself and two young assistants

Ms Reed happens to be exactly the same size as one of Stelios' big sellers, so whenever he has a new consignment of Chanel garments from her, he calls in Ms Reed to take first pick. She is now cocooned in the tiny back fitting room, trying on a Chanel jacket, unworn, for pounds 850 (from pounds 1,700), a grey Chanel jacket (last season's, therefore pounds 795), and a 100 per cent silk, unworn Valentino suit, original price pounds 1,400, now pounds 550. She is accompanied by her black Pekinese, Daisy.

"I've been coming to Stelios for two years now and I have to say that the first time I came in and bought an amazing Chanel jacket - grey boucle with black velvet buttons and a yellow collar - it was the most flamboyant, unique and elegant thing I'd ever seen. It cost pounds 750 but I tried it on and thought, 'I've got to have it!' I felt very conspicuous the first few times I put it on but now I could wear it with blue jeans.

"My clients are mostly wealthy English people and Europeans and they take me more seriously if I'm dressed in a language they understand.

"I love clothes, but not too much - I never get carried away. I wear the same woman's clothes nearly all the time, and she's out of control - thank God!

"She buys clothes and doesn't even take the price-tag off! Why? Maybe to get cash; or because the set she moves in would recognise last season's Chanel so it's no good any more - and also, because she's sick.

"I wouldn't pay full price for these clothes in a lifetime. When I first started buying here I'd never paid these kind of prices before but I'm afraid that once I had my first Chanel jacket there was no turning back. They're just a pleasure to wear. This is not about status to me - really; really - it's about beautiful quality. I can wear a skirt all day and by evening it's still not creased.

"I pay with my own money, money that I earn, so these clothes are a matter of pride to me, not guilt. I treat myself to them. Yes, my colleagues and friends do notice and comment, constantly. It's no problem telling people they're second hand - it makes other people's envy less. I don't feel I have to wear Chanel from head to foot. I mix them with Marks & Spencer. But my business is so serious most of the time that it keeps me balanced to enjoy wearing something nice.

"These clothes will last me my whole life. I wouldn't dream of re-selling them. I don't ever need to buy any more clothes - but that doesn't mean I'm going to stop buying them! These are beautiful things, pieces of art, that shouldn't just be disposed of."

In the end Ms Reed divides the clothes she has chosen into three piles: essential, probable, possible. The "essential" pile is by far the largest. She ends up by selecting three or four jackets priced between pounds 495-pounds 695; two or three pairs of trousers and a dark grey skirt; three cashmere or silk sweaters; and a dress. Total cost, little change from pounds 5,000. Original cost, three or four times that much.