A Canali suit, for example, isn’t a “luxury” class garment, per se, until you put it into a luxury class storefront. Andrisen-Morten’s private label, on the other hand, is; and, it’s sold right along side the Canali. In other words, the couture and bespoke grade garments – and their top tier manufactured lines – are likely to not be affected by ebbs and flows of the socio-economic situation of the masses.

Production facilities whose market *is* mainstream will find that commodities will be their mainstay when the ebb/flow is severe. Simply put, mainstream buyers tighten belts and economize by avoiding non-pertinent purchases. Niche manufacturers who invest too heavily in the mainstream market segment could be hit hard if their product offering isn’t sufficiently diverse (i.e. a favorable mix of commodity and conceptual products).

But, the great news is that it costs significantly less to ideate a sketch and obtain market feedback than it does to develop a product that won’t be made. This is a luxury the Niche manufacturer holds over the Big Box mfg. In some ways, Niche manufacturers can adopt processes that emulate Luxury/Artisinal makers and be successful.

Speaking of, the recent edition of Apparel News says the most recent show (Majors Mkt) in LA, OCT 8-10, was down appreciably and consumer spending this holiday is expected to be conservative. More here. (free, scroll down for both articles)

I would estimate in my geographical area that 80% of the children’s clothing stores closed. The one’s that survived were the stores carrying the big name brands. The surviving stores were suddenly bombarded with vendors trying to get in the door. Competition for the remaining stores was fierce and tough. If you did not have the right mix of look, price and some kind of customer base/recognition, you were out. (side note: I see high end children clothing as a luxury item. When the ecomony turns, that is the first area to get hit hard.)

Then the short term economy’s saving grace was low interest rates. Soooo many people I know bought and sold houses every two years to increase their equity. Soooo many people I know were and still are buying luxury goods floating the purchases on their property equity. Then there were the low interest credit cards. All this is gone and property values have taken a huge hit in California. The recent news said that 1 out of 2 house sold in Sacramento area this summer was through bankruptcy. We had to move a few years ago and paid somewhat high for our house. I know if we had to sell today, it would be slightly less than what we paid for it.

I think within the next 6 months were are going to see some kind of down turn. And the cycle will start over again. Stores that are barely making it will close and the stores that have been there forever with have plenty of vendors to pick from.

One thing I hope will keep the recession fallout from being big is that the dot com / computer / electronic companies are starting to make a comeback. I believe the iPhone is going to have a huge impact on our economy. There is a huge potential for improvement on how info is delivered to individuals. I read everyday about computer/ electronic companies pouring money into r&d again. Everyone is trying to play catch up with Apple or come up with a service people can use on their iphone.

Sorry if this is rambled writing….

http://www.econbrowser.com/

One of Hamilton’s research areas is in econometrics and forecasting recessions. He keeps a score that he calls the Recession Probability Index, which is currently running at 26.2%. He also started noting the current direction with a smiley face, which he recently changed from a frown to a neutral. Look for it in the sidebar.

Something that has like effect here and in the US is the current inflationary pressure in China. I’ve noted in recent weeks that inflation in China has now exceeded 8%pa and in the case of food, vegetable prices are up 18% and meat prices 42% on this time last year. That’s going to bring about wage pressure and all those cheap imported goods will go up in price. If this co incides with the slowing of the US economy this will help your domestic manufacturers in the tough time.

If it does come, it will probably benefit my business in the short run, since my customers are largely bargain hunters anyway. Less money, more bargain hunters. Not that I want to see a downturn, mind you. More bargain hunters are good only if they have enough money to spend to get the bargains.

Re Question 2, as an online retailer, I have definitely seen more international sales this year. I ship something to Canada or the UK (or Europe or Australia weekly, sometimes more than one.

Thanks for the questions.

What a waste. I bought some fabric instead (most US sewing and knitting web sites have been selling to the world for years).

When it comes to the weakness of the dollar, it’s been great for us as orders from European accounts have increased steadily!

I’m not one to ponder over the “what if’s”, but having maintained job stability through 2 recessions has thaught me to always prepare for the worst case scenario.