The $400 Dress & Fashion Design - 8 points

The Wall Street Journal has an article on women's fashion, and notes -

With prices ranging from about $200 to $500, many contemporary labels share a sweet spot—the $400 dress. It's beautifully made, stylish and sexy, a piece a woman feels great wearing to the office or to a special occasion. It also attracts young fashion enthusiasts who might buy one and cherish it, eventually repeating that pattern up the designer price ladder as she earns and spends more.

A couple of points,

1. "woman feels great..."  There it is.  Fashion is about aspirations actualized, and clothes are the expression.  John Molloy said dress for the status you want.

2. Note the price point.  Every industry has these.  So you not only compete on design, you design to the price point.  A $400 retail means you have about $50 at cost to make the dress.  you need to find out what these are for your industry.

3. The article goes on to talk about designers who follow their market over the years, "up the ladder."  A dear friend of mine has spent forty years with several companies designing for the exact same customers, as their tastes, sizes and incomes all enlarged.

4. People often ask me, if one is competing on design, how do you research what the next thing will be?  How to pretest an idea if the customers cannot see your fashion item?  That part is easy, because the competition is intense.  Look at any women's fashion catalog at any time, shop in any store you like at any time.  What do you see?  Don't do that.  What don't you see that you want?  Try to buy that.  Yes, they will try to cross-sell you something else.  But get to "it's a good idea and does not exist."  Then you have your opening when you come back with the answer.

5. Regarding number four, if you do not feel physical pain and mental anguish in regards to fashion then it is not your field. Everyone wants to be in fashion, but only those who experience passion (to suffer - get that straight - to SUFFER - passio (genitive passionis); f, third declension - suffering, enduring) over getting the design right have a chance, and only those who find joy in getting it right succeed.  If you simply like clothes and think it would be neat to play at it, then keep looking for something else to do (discover where you do experience passion and joy - you are needed there).    If you often experience morning-sickness like symptoms regarding fashion, then this may be for you.

6. Sound hard?  Not at all.  The buyers first question is what is new, 2nd question is what is your minimum? Have "new" and low minimum (for buyers to test) and then you have something to offer.  But see number 5.  Repeat after me: the customer is he most important thing, the design is the hardest thing.

7. In 30 years of teaching nearly one billion times I have heard "this will be successful because my friends all like it.  People stop me on the street and ask me where I got it."    Problem is never in the history of mankind has this led to a viable business.  There is a difference between buyers and friends.  But let's run down this series:

Six friends say they love it.  Six buyers say no.

Six friends say hate it.  Six buyers say yes...

Whose opinion matters?  Never listen to anything anyone says who is not a buyer.  Be polite, but ignore them.  And never, ever, believe your own PR.

8.  Read the comments after the WSJ article cited above, see many negative comments.  The fact is the article is about sales taking place of a certain style and price point.  The fact some are incredulous does not change the fact that sales are taking place of a certain style and price point.  Yet people object!  To what?  To their own ignorance.

I sat next to a sales rep/womens fashion on a flight from SEA to LAX last night.  She was visiting Seattle for the SWAG show.   In the course of our conversation, she pretty much confirmed all of this.

Embrace the flu-like symptoms!

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Deflation is Our Friend

Falling prices is always a good thing, as in deflation...  here is an excellent article on the topic...

Contrary to the popular view, price deflation as a rule is always good news for the economy. When prices are falling in response to the expansion of real wealth, this means that people’s living standards are rising. When prices are falling as a result of the burst of the financial bubble, it is also good news for the economy, for it indicates that the impoverishment of wealth producers was arrested. The latest proposed Japanese policy to raise the pace of the monetary pumping in order to counter deflation amounts to furthering the economic impoverishment of wealth producers, thereby delaying any meaningful economic recovery from taking place.

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Balance of Power in the USA Economy

Here we go again to the "fiscal cliff!"  Last time the worst possible thing happened, and that is we stopped short of it.  Notice anything curious?

Defense programs would be cut by 7.3 percent, or $42.7 billion, during the last seven months of fiscal 2013. Non- defense budgets would be trimmed by $42.7 billion.
Read more at http://globaleconomicanalysis.blogspot.com/#f7RqdclWIGevQeMs.99 

Gee whiz, reductions (in the rate of growth) between welfare and warfare of exactly the same amount.  Even Steven.  When the left says "scholarships, not battleships" the fact is they know they are voting for both.

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San Francisco Import Export Seminar

If you can not make the Los Angeles seminar this weekend, then I'll be teaching a live all-day seminar in the San Francisco Bay Area all day Saturday, Feb 23.  Full info here.

Class Description Come learn the strategies those thriving in small business international trade use to grow and build their business. You will be guided through selecting products, finding customers, working with governments, licensing, bankers, brokers, carriers, financing, costing, pricing and gaining orders for your products, all from a practicing professional. Highly rated by students for content, pace and humor. Recommended textHow Small Business Trades Worldwide by Instructor is available at on Amazon.com.   Class ID: 2416 Saturday, 9:00 am - 5:00 pm; 1 session starting February 23, 2013, ending February 23, 2013 Course Fee: $89.00 Instructor: Spiers Location: De Anza College, L Quad , Rm. L-72       Map

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Sally Jewell, Outsider

Apropos to the post below on cooperatives, Pres. Obama has nominated Sally Jewell, head of REI as Sec of the Interior.

REI is the once-upon-a-time cooperative dedicated to outdoor recreation.  It was formed about the time of Mondragon.  It has millions of members, and is now international with Japan operations.  It is member-owned, with some 12 million members now.  When I joined in my youth, we had only some tens of thousands.

Sally Jewell certainly contributed to that growth, and good on her, and congrats on a position she no doubt never imagined she'd assume.  And no doubt she is astonished as anyone to hear she is an outsider, according to Pres. Obama.

An outsider?  Sally Jewell is a banker, of the WaMU-associated version, and got her start with oil companies. In USA one cannot get more status as an insider than that of a banker AND oil exec.  Yet, there we are, being told we are getting bold new directions because we voted for Obama.  Nothing of the sort.

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Apres Deluge: Mondragon

Let's jump ahead a decade, and say the civil war in USA has ended, and USA looks like Spain after their civil war, circa May 1939.  The economy in shambles, fascism firmly victorious, people exhausted by war, want and disease.

The new government is not organized enough to either help nor hinder, there is only the terror of being disappeared.  What emerges is what some people call autarky, but I would call anarchy (in the good sense.)

Autarky is the quality of being self-sufficient. Usually the term is applied to political states or their economic systems. The latter are called closed economies.^[1] Autarky exists whenever an entity can survive or continue its activities without external assistance orinternational trade. Autarky is not necessarily economic. For example, a military autarky would be a state that could defend itself without help from another country. Autarky can be said to be the policy of a state or other entity when it seeks to be self-sufficient as a whole, but also can be limited to a narrow field such as possession of a key raw material.

To my mind, autarky is a subset of anarchy.

In any event, conditions were most dire in the Basque region, an area populated by peoples the progressives would deem subject to extermination, like Scottish highlanders or the Irish.  Where sin abounds, grace abounds all the more.  In these terrible circumstances, with the decks cleared, a remarkable economic system emerged, Mondragon:

The determining factor in the creation of the Mondragon system was the arrival in 1941 of a young Catholic priest José María Arizmendiarrieta in Mondragón, a town with a population of 7,000 that had not yet recovered from the Spanish Civil War: poverty, hunger, exile and tension.^[4] In 1943 Arizmendiarrieta established a technical college that became a training ground for generations of managers, engineers and skilled labour for local companies, and primarily for the co-operatives.^[5]

This hugely successful enterprise is based on the co-operative model.  I've addressed this before here. The Mondragon entry is an interesting article, and I want to highlight same points:

This entire framework of business culture has been structured on the basis of a common culture derived from the 10 Basic Co-operative Principles, in which MONDRAGON is deeply rooted: Open Admission, Democratic Organisation, the Sovereignty of Labour, Instrumental and Subordinate Nature of Capital, Participatory Management, Payment Solidarity, Inter-cooperation, Social Transformation, Universality and Education.[15]

Note the comprehensive nature of the mission.  In USA corporate culture, laser sharp mission focus is stressed.  This cooperative would have a hard time saying "I am not responsible" since it is considerate of all it touches, USA corporations seemed to be designed to escape responsibility.  But particularly interesting is the idea of sovereignty of labor, an idea I suspect is defunct in practice, but redeployed as "employees acting as consultants, treating employers as clients."  This I'd like to investigate.

The next point -

This inspirational philosophy is complemented by the establishment of four Corporate Values: Co-operation, acting as owners and protagonists; Participation, which takes shape as a commitment to management; Social Responsibility, by means of the distribution of wealth based on solidarity; and Innovation, focusing on constant renewal in all areas.[16]

That sharing seems problematical, but I do like the implicit rejection of intellectual property rights.  And Then, looky here, customer focus is number one.

This business culture translates into compliance with a number of Basic Objectives (Customer Focus, Development, Innovation, Profitability, People in Co-operation and Involvement in the Community) and General Policies approved by the Co-operative Congress, which are taken on board at all the Corporation’s organisational levels and incorporated into the four-year strategic plans and the annual business plans of the individual co-operatives, the Divisions, and the Corporation as a whole.[17]

The article mentions that Mondragon is heavy in loans and finance, so I'd like to find out if they work on a usury model, contrary to the teaching of the Catholic Church.  

Lessons?  Any group in USA targeted for extermination ought to consider this system.  In fact, this is not unlike what the Nation of Islam under Muhammed Elijah and Minister Farrakhan has devised.  American Indians may be better off with this than with a Casino based economy.  And small businesses may consider this.

For my part, I see yet another book.

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Ladies & Gentlemen, The Flight Attendants Will Now Put Out the Fire

Have a look-see at what all of the hubbub is about regarding the battery fires on the Boeing Dreamliner, all of which are grounded.



Fires are so scary on an airplane commercial pilots are trained to identify what kind of fire, and where it is, by the scent of the smoke from the fire.  No doubt they all know well what a Li-ion battery fire smells like, since the battery is popular in carry on electronics and is tightly regulated for checked baggage.

IATA estimates that over a billion lithium cells are flown each year.^[108] In January 2008, the United States Department of Transportation ruled that passengers on commercial aircraft could carry lithium batteries in their checked baggage if the batteries were installed in a device. Types of batteries covered by this rule are those containing small amounts of lithium, including Li-ion, lithium polymer, and lithium cobalt oxide chemistries. Lithium-ion batteries containing more than 25 grams (0.88 oz) equivalent lithium content (ELC) are forbidden in air travel.^[115] This restriction is due to the possibility of batteries short-circuiting and causing a fire.

Serious business.  The battery is so unstable that the cell-phones etc, that carry thse batteries have software to control it.  That is why "installed" is safer.  Uninstalled is dangerous. Now, given the problems of that battery, guess which kind Boeing uses on the new jets?  Ones that run the risk of catching fire. And do. Even if installed.  

Fortunately no one yet has died.  And no doubt in ten years there will be a tell-all book about how close we came to disaster after corners were cut, management was lax and who knows what, on the China Syndrome theme.

(Update:  Well, people have died, pilots:

Cargo airline pilots long have complained about the dangers of transporting lithium batteries. The batteries are suspected of causing or contributing to the severity of an onboard fire that led to the September 2010 crash of a United Parcel Service plane near Dubai, killing both pilots. The two pilots of another UPS plane barely managed to escape the aircraft before it was consumed by fire moments after landing in Philadelphia in 2006.)

No doubt they will beat this technological problem with technological breakthroughs.  But how did we get to this point?  We got to this point because USA has only one major airline maker.  And it has its own bank, so it can extend, compliments of the taxpayers, vendor financing.  When you can pay people to buy your heavily subsidized product (these batteries were developed in Universities, at taxpayers expense) you really do not have to listen too closely to your customers, especially when you competitors overseas are doing the same thing.

Now people argue gigantism, you really cannot have more than one airplane maker in a country, but this is nonsense.  Boeing is 3000 subcontractors, small private companies that make the parts.  Boeing merely manages the assembly, and that more and more they farm out.

Anyone inn USA trying to compete with Boeing will find they cannot get the same breaks from the FAA or the same vendor financing, for whatever reason.  So start-up is unlikely, and if anyone wants an object lesson in trying to provide a better product in the big business/big govt marketplace (fascism), just review the stories of Tucker automobile and DeLorean.  The strangest things happen.

World trade competition is not about labor rates, it is about management cost.  If we continue this game we are playing, China will get the edge in management, and Boeing will continue to sink slowly.

The way to beat China is to deregulate airline manufacture.  Eliminate all Boeing subsidies and the EXIM bank, which was created to make Boeing #1.  There are plenty of Americans who would begin making planes, like Bill Boeing once did, and they will not only crush Boeing, but Airbus and anything China will put out.

We are playing a game unworthy of our capabilities.  Let's strip down, oil up and kick some ass.

Update: this just in... although the batteries cannot be connected to a jet, the safety regulators have just said they can be carried as cargo.    I am not making this up.  Why, to transport the batteries to airplanes now grounded for using those batteries.  Is there a thinking person in charge anywhere?

Chesley “Sully” Sullenberger, a former US Airways pilot famed for his precision flying that enabled passengers and crew to survive an emergency landing on the Hudson River in New York, said in an interview that he wouldn’t be comfortable flying an airliner that carried lithium ion aircraft batteries in its cargo hold.

Well, there is no way for you to know, now.  It's permitted by safety regulators, so the "flame-on" prone batteries are now allowed in the holds.  No wonder Sully isn't comfortable.  He knows what an on board emergency is like.

 When I say deregulation, I mean unregulation.  Only a free market can keep us safe.  Fascism is no replacement for freedom.

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Spanish Prime Minister Financial Scandal

Ahead of schedule, the Spanish Prime Minister is being brought down by a financial scandal.  Mish is covering it well, but Mish has been fooled by a subtle tactic.

Do the numbers match? If not, why not? Instead we have a pair of sideshows regarding a font and whether or not the money was declared. 
Read more at http://globaleconomicanalysis.blogspot.com/#SqBteTHjORhs8GSM.99 

Wait, Mish, there is another alternative.  The documents "leaked" are bad copies of the originals, and purposely so.  When they are sent to forensics for authentication, forensics will discover the ink is the wrong era (did you know they make micro changes to ink so they can compare the date it was made to a date on a document?) and a few other "problems" which will prove the documents in hand are not authentic.  The authentic documents, proving scandal true, are buried or destroyed.

The People cannot follow a complex trail, denials won't work, so confusion is sown instead.  Those who tell the truth are made to look like fools or knaves when the "evidence" has been doctored to appear false.

The powers that be tripped up Dan Rather with precisely this technique when he found smoking gun documents that Pres. Geo Bush junior dodged the draft.  Plenty of people had seen and knew about the documents, too many to control the narrative.  So re-write the evidence word for word, signature for signature, using technology not available in 1968, destroy the originals.  Feed the fakes to Dan Rather, and then what many swear to recall seeing over the years turns out to be only a forgery.  Memories right,  proof "forged," problem goes away in fog of confusion.

It's too early to have a Prime Minister go down in Scandal.  I bet Rajoy beats this.  Watch for a cloud of confusion.

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Anarchy and State Safety

Back in the early 70s there was a yogi making the rounds (it may have been Satyananda) in USA who in an interview was asked if the lack of The State he envisioned would lead to chaos.  He replied "You have chaos now."

I had think that over way back when.

I recently listened to an interview of Hans Herman Hoppe. When the interviewer posited "The State protects us and leaves a space in which we can meet our potential", aka the social contract, Hoppe defended private law.  Very good. He might have examined the putative safe space.  The interviewer expressed the common delusion that The State makes life safe for us.

And it is in that very space where regardless of The State or no state, when we engage in business, that we meet our fullest potential by serving others, naturally, since business is inherently personal transformation ordered to the good of the other.  We do good things for other people, where what we offer is more important to them than their money.

As Hoppe would say, the spontaneous cooperation we find in business is private law, and anarchy brings order wherever we find it.

If we examine the continuum from anarchy (no+king) to totalitarianism (say like Stalinism) we find the more towards anarchy we go the better things get in that public place, the more towards stalinism the worse it gets.

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Los Angeles Import Export Seminar

If you are in the Los Angeles area, Orange Coast College is hosting me for an all day Seminar on small business international trade start-up, this Saturday 9 Feb, 2013 from 9am to 5pm.  Contact the school to register if you'd like to attend.  The students rate this course highly for pace, content and humor.  I hope to meet you there.

Orange Coast College Community Education
2701 Fairview Road
Costa Mesa, CA 92626
714-432-5154
jwood@occ.cccd.edu
Class Information:
Course/Class Number: 2010005/11174	Date of Class: 02/09/2013
Class Title: Importing as a Small Business
Saturday, 9:00 am - 5:00 pm; 1 session starting February 9, 2013, ending February 9, 2013

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Stock Market Head Fake

Laissez les bon temps rouler!  The stock market is roaring up on the new industry of....  of what?

It may not feel like it for many Americans. But with the Dow breaching 14,000, shareholders and investors have recovered the more than $8 trillion in wealth lost during the recession and attained levels of paper wealth they haven't seen since the Roaring Oughts.

Which of those stocks is based on newly deregulated industry growing organically in freedom like telecommunications and trucking and airlines and beer in the 80's and 90's?   Nothing.  It is based on war and health care.  The war industry is about as productive as kids making pipe-bombs in the garage.  And "health care" is about shake down, not medicine.

And what is the nature of this "wealth?"  How does one define that?  Is it more better cheapre faster?  More options of better goods at lower cost available quicker?  That is what we get in a free market, but can you name anything (except Apple products) that fits that description today?

This "wealth" is denominated in fiat currency and in the form of debt.  Since when is being in debt "wealthy?"  Think of yourself starting up a business.  You borrow a million to start up, and your first years sales are $100,000.  You hit your first year target. Are you successful?  Are you wealthier than before?

Now think of taking $10,000 in savings and putting it into starting up a business and you have $100,000 in sales your first year.   Are you successful?  Are you wealthier than before?  You certainly are not in debt, and you certainly are making money on your investment. Which scenario would you prefer?  The latter is easier and more likely.  But the stock market "wealth" is based on the former.

But John, the new jobs, that proves this is real!

Jed Graham has a nice post on Investor's Business Daily that describes what I have been saying for months: Obamacare has accelerated the trend towards part-time jobs. There are more jobs, but fewer hours in them.
Read more at http://globaleconomicanalysis.blogspot.com/search?updated-max=2013-02-03T10:44:00-08:00&max-results=3#yybrMe4CGbFwwysL.99 

Nice try.  If you are unemployed, there is a depression going on, but it is hidden by EBT cards and section eight housing.  It is hard to see.

This "good news" just tells us the can was successfully kicked down the road.

When it goes bad, and it will, it will be that much worse and that much faster and take that much longer to get out.  In the meantime we slowly grind down, the frog sits quietly as the water heats up. How do they get away with it?  Because people believe the press, the powers that be etc.

For your own business, whatever it is, study your customers.  Is your customer base dependent on people who have ersatz wealth?  Watch out, adjust while you can...  for example, people who sell services, is a critical per cent of your sales expense account driven?  Stop marketing to those customers and start marketing to people who organically earn their income.

The three groups being hammered are those who have paychecks, pensions and property, and only in the middle class.  USA has a middle class of 200 million people, among which are productive citizens who will avoid by industry these deprecations.  They will be good customers for you in the future.  Small Biz people selling to small biz people.  An alternative economy within the economy.

But China and India also each have middle classes of 200 million.  If your product or service sells in USA, then it is now a likely candidate for export as well.  If you took my classes you know what to do. Overseas you'll find a middle class that is not under the degree of control that the USA middle class is bound.  Foreign middle class citizens are much freer than we are, in the sense it is more difficult for their Governments to abuse them.

And as to "cheap imports" coming in, you need not let them hurt your business, get ahead of the game. If you have distribution for your organic blueberries grown in USA, then you import the alter-season Chilean blueberries and distribute them to your on-season customers.  Whoever is responsible for the blueberries coming in from Chile right now is doing a terrible job.  Someone domestically who knows and cares about blueberries could crush the present importers.  Multiply that by all industries and opportunity abounds...

If we can believe some rumors, there is a plan afoot by the powers that be to "kill the dollar."  What does that mean?  In essence to make the dollar cheaper vis a vis other currencies so USA products are cheaper for importers overseas, and we get a sales increase in exports from USA.



This is controversial, and Mish summarizes it well. First challenge is "can it be done?"  Just because a policy is set does not mean it can be implemented.  Other countries may decide they do not want to have their economies flooded with cheap currency-manipulated USA goods and defend themselves accordingly.  But I'd reply, as the world's central banker, USA can play harder longer than the teams it has to beat.

But attempting any policy does have some effects, often unintended.  There are side effects to every policy decision, a set of winners and a set of losers.  One really cannot know what those will be.  And policies such as these would not be announced.

And as a side note, Bass's comment about how do you "expand exports without wage deflation" betrays, for all his brilliance, a fundamental error.  Low wages has nothing to do with int'l trade, never has, never will.  Those countries who grow int'l trade also grow their wage rates at the same time.

Yes, we will not have economic recovery without falling prices and falling wages, which would be a reflection of economic expansion through more better cheaper faster.  But USA workers who are putting out more goods per man hour is in effect "wage deflation" in the sense it costs less per man hour to put out a given unit.

But that is profoundly different than paying people less to do the same work, which is that to which Bass refers (and in his defense, he couches it as an impossible scenario - as in "if not the impossible, then what?)

What we are doing right now is putting less of everything, at lower quality, in everything we produce, and charging the same price.  Industry is arbitraging the spread between the speed with which quantity, quality and service degeneration can out pace consumer awareness of getting screwed.  The Dow at 14,000 shows our collective economic consciousness is roughly at the level of Down's Syndrome, God bless us.  The market is doing very well!

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Apple Proves Online Is No Place to Start a Business

Something like 6% of retail sales take place on the internet, which means 94% does not.  Yes there is still this implacable army of people who believe there is money to be made starting up a business selling on the internet.  The idea is overhead cost is nothing, you can undercut the competition, and win on quality of service.  Pure delusion.

Here is the insurmountable problem:  online, customer acquisition is more than any possible mark-up you can add on.  The higher-ticket the item, the more it costs to acquire a customer.  Right there, end of story.  But when you add on the attempt to undercut everyone else, then it is just sad.

If online sales where the way to build business, how come Apple computer is building stores all over the world, and is the most successful retailer in the history of planet earth, in terms of profit, sales per square foot, etc?

Not only does Apple sell its own products, it wholesales them to ATT, the MacStore and other retailers too.  And there is no product line so narrow and so well known and so easy to buy online as Apple.  yet the stores thrive!

It is important to ask oneself in business, with all assumptions or received wisdom, "what if that is not true?"  Well how can you tell if true or not true, or as the Chinese say, 对不对

Write down your assumptions, and then test them.  Form them as hypotheses, and test them.

As Chinese carpenters say, 测量两次，切割一次

don't build a business on assumptions, when you can know.

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