Originally Posted by
Cybrarian
I'm not an Economics expert but I do know this about a free enterprise system: the price for sale by the vendor must reflect the cost of requiring the goods from their suppliers. What is in the stores now was made with higher priced cotton; so to recoup their costs the retailer must keep their prices at a level that allows for that. Hopefully going forward when new lines debut made with the lower priced cotton the consumer will benefit. Retailers are you listening? Whatever you may think of Walmart their sale strategy of "rollback prices" translates into higher volume of sales. (tap tap) Is this mic on?
The Wal-mart strategy of rolling back prices is in fact based on their ability to force manufacturers and wholesalers to sell to them at lower prices. Many of these suppliers will sell to WM at a loss to get their foot in the door, but soon they either have lower their cost of production by cheapening their quality and/or outsourcing manufacturing to lower priced labor markets, quit selling to WM, or go out of business. This "WM effect" is one of the reasons that so many products are now manufactured in China. It's also the reason you don't find many if any high-quality goods at WM. It's also the reason that you see a lot of products show up at WM for a short time and then disappear.
The price of raw cotton has very little effect on the final cost of fabric. Greater influences on the prices of finished fabric are the rising costs of fuel and labor in developing (and in the case of high-quality fabric made in So Korea and Japan, developed) countries where the fabrics are made. So as long as the wholesale price of fabric continues to rise, as it has and will in the foreseeable future, the price at the retail level will continue to rise for quality goods. For cheaper goods, like those sold in large chains, the goods may continue to get more poorly made to keep the prices down.
When you see deep discounting of quality goods, the main reason is that retailers are trying to generate cash flow to pay for new goods coming in -- so they're often selling at a net loss. That really can't be sustained for long, which is why you see so many LQS's going out of business.