Matthew watches Anne with a bunch of her friends one night and sees that she looks different from them, but he can't figure out why.
After smoking his pipe for a while, he realizes it's because she's dressed differently than them.
He even realizes that their sleeves are somehow different. He decides to get Anne a fashionable dress for Christmas.
In town, Matthew has two stores to choose from. He avoids his usual store because there are female clerks there. Remember how afraid he is of women?
He gets to the other store, but there's a woman at the counter there, too, named Miss Hammond. She's very fashionable. Poor Matthew is already flustered.
He keeps trying to ask for the dress, but chickens out at the last minute. He winds up asking for rakes, hayseed (a spring product in the middle of winter), and twenty pounds of brown sugar, which, when he brings home, really confuses Marilla.
Matthew decides to go to the only other woman he can talk to in Avonlea—Mrs. Lynde.
Mrs. Lynde knows what he's talking about right away and promises to make Anne something in the latest fashion.
She's privately been thinking this whole time that Marilla was dressing Anne ridiculously, so she's happy to get involved.
When Anne sees the dress, she's so happy that she cries. She also gets slippers from Aunt Josephine, which she can wear when she plays a fairy in the concert.
The concert goes well and Matthew and Marilla sit together after Anne goes to bed, talking about how proud they are of her.
Marilla admits that concerts aren't so bad and Matthew points out that Anne may need more schooling after Avonlea.
They start thinking about sending her to Queen's Academy, a school where students can get their teaching certificate, and for some, an education that makes them eligible to get into a university.