Dress down at the cheap end of town: Forget Bloomingdale's: if you are looking for fashion in New York, hit the bargain basements downtown, advises Roger Tredre

I went into Manhattan to shop. By the end of the week, I had been no more than half an hour in each of the upmarket department stores of Bloomingdale's and Bergdorf Goodman. But I had spent entire mornings wandering around the second-hand fashion shops of downtown Manhattan.

On New York's catwalks, the young American designers had been showing their new collections, inspired by grunge and the hippie revival. Grunge fashion is about mix-and-match: putting together colours and shapes that deliberately clash. It is also about second-hand clothing, about dressing down, doing your own thing and raising two fingers to designer fashion.

So it was with a strong sense of irony that I viewed Marc Jacobs' chic grunge for the Perry Ellis label, at hefty designer prices - then headed downtown to find much the same kind of clothing on sale in bargain basement stores.

Even if you have no desire to dress like a reborn hippie, the downtown stores of New York are the best places to fill up on wardrobe basics. They sell plenty of low-priced new stock, including jeans at under dollars 30 ( pounds 20), T-shirts (three for dollars 9) and Calvin Klein underwear (a lot cheaper than they are at Bloomingdale's).

The place everyone directs you to first is the 50,000-square-foot Canal Jean Co at 504 Broadway, between Broome and Spring streets. On a Saturday morning it seems as though half New York is buying jeans there, not to mention all the out- of-towners from Long Island and New Jersey.

It gets so busy that the store now has a rule: no more than five pairs of jeans per person (someone once bought every pair of Levi's in stock, presumably to resell out west at inflated prices).

Canal Jean Co comprises four floors of bargains. You start in the basement with acres of vintage jeans, and end up on the top floor with the new jeans stock. In between you'll have found just about any item of clothing you could hope for, from leather jackets to US military-issue coats and Indian bedspreads. I thought the best buys were the tweed overcoats for dollars 10, the worn-in jeans, also for dollars 10 (or three for dollars 25), and the plaid shirts (three for dollars 12, no kidding).

Danielle Frederick, the store's laid- back PR woman who took me round the premises, said the plaid shirts and layered looks were going down particularly well this winter.

She believes everyone in New York is inspired by Northern Exposure, the hit television series about small-town life in Sicily, Alaska (the second series started again on Channel 4 at 10pm last Monday). Another strong influence is the film Singles, starring Matt Dillon and Bridget Fonda, which will be released in the UK next week. It is about six young twentysomethings in Seattle sorting out their careers and relationships. The clothes they wear are Canal-Jean-Co chic writ large.

This outfit picks up its stock from dozens of different sources. Much is bought direct from laundrettes and dry cleaners fed up with holding on to unclaimed clothes.

Ira Russack, founder of Canal Jean Co, is credited as the instigator of the overdyed fashion craze, starting with jeans and T-shirts before Levi's and others realised there was money to be made. He opened his first store on the Lower East Side in 1973, selling army surplus stock, then opened the Broadway store in 1978.

Mr Russack's team reworks vintage clothes, renaming them 'new vintage' (this winter, they have simply lopped the sleeves off plaid shirts because everyone prefers the sleeveless look). Many of the hippie clothes that are back in fashion - from long, floaty print dresses to tight-fit knitwear - can also be found chez Russack.

Canal Jean Co is an institution, but other places are also worth exploring. The Antique Boutique, which has two outlets in Manhattan, puts a much stronger emphasis on up-to-the-minute fashion, including bell-bottomed trousers and afghan coats. Like Canal Jean Co, the range of clothes on offer is vast. Also of interest is Andy's Chee-Pees, which offers an impressive mix of second-hand jackets and jeans.

For amusement, visit the maze of tiny shops along Canal Street, which sell rip- off 'designer' accessories, including watches, scarves, handbags and ties. Be careful about buying here: prices are ridiculously cheap, but the quality is invariably dreadful. If you are tempted, it is worth bargaining: the people on Canal Street will usually knock off a few more dollars.

Canal Jean Co, 504 Broadway, between Broome St and Spring St; the Antique Boutique, 712-714 Broadway and 227 East 59th St; Andy's Chee-Pees, 16 West 8th St and 691 Broadway, near East 4th St.

(Photograph omitted)