We are in an economic crises. Companies are going out of business and people are losing jobs in every industry. It's been shocking to me to see how quickly things have rippled down from the financial industry to every market in the country and in the world. Seems no job is safe anymore. Everyone is saying cash is king. Companies are going under so quickly, did they not have any cash in the bank?
I *demand* high quality. Very high quality. The American mentality of buying cheap stuff at Walmart makes me sad. In this downturn, taking a consumer's money will be harder, and I think it will be even more important to create a high quality product than it was before. People will start shopping smarter.
1. Circuit City. They are closing many (all?) of their stores and declaring bankruptcy. My question is, why didn't this happen 3 years ago? CC is a terrible store. Everything is overpriced, and they never kept up on the technology front. Best Buy has dominated them. I guess the past few years while the economy was good, they survived by overcharging people who don't compare prices.
2. The US car companies. Bankruptcy? Bailout? Personally, I vote for bailout. I think there's a huge economic impact if the american car companies go under, in terms of jobs and exports. Bankruptcy might hurt them as people don't want to buy cars from a company filing chapter 11. Will they be around to honor your warranty, or make replacement parts?
However, I think there must be a clear recovery plan before any bailout money is given here. The US car companies have huge costs due to pensions and such that they can't afford. And more importantly, they make shitty cars. Rolling out a new car takes 5-10 years, so they'll need a serious plan to cut costs and get their act together. I think they should partner with Japanese car companies. Ford owns a third of Mazda, the best Japanese middle class car company out there. I wonder why they don't put some zoom zoom in Ford cars.
3. Radio City Music Hall and Madison Square Garden. Kate and I went to see the Christmas Spectacular last week. Great show, but more on that later. I also went to a Knicks game a couple weeks ago. Both events were less than half full (even after Radio City cancelled many shows). The venues are complete garbage. Overall both RCMH and MSG (owned by the same people) need serious renovations. People will not buy expensive tickets to go to crappy venues.
4. Coach. 10 years ago my six best friends from high school each pitched in $30 and bought me a $180 coach wallet that I loved. It's a unique design that no one else does. That wallet lasted me for 7 years, no joke. It got a little faded and roughed up, but otherwise did the job just as well as it did on day one. Last year I decided to get another one. When i went to buy it, the price had gone down to $120. And it was made in China. I inquired about that and was assured the quality was as good as before.
Just over a year of use, and the wallet is falling apart. Pieces of the leather are literally coming off. I don't think it will make it much longer. I might go back to using the older one which I still have. In an economic boom, people might shell out crazy money for brand name luxury goods. When the economy falls and people start watching what they spend, the Coach name will not be enough to sell crap.
5. My mom came to visit New York and bought knock off purses in Chinatown. Now you have go upstairs to secret rooms to get them, since cops are cracking down on this on the streets. The bags were $30 each and look really, really good. If China can make these items for so little money, how are the luxury brands expecting to be able to charge so much? It's interesting how the quality of the high end stuff has gone down, and the knock offs has gone up; maybe they have converged.
6. Apple. In all this, Apple is still trying to sell computers, ipods and phones at a premium. They are worth it, in my opinion. Sure, I think their sales will be hit by the downturn. People won't be buying as many ipods this christmas. But Apple is still growing 30% year over year, and their products are actually different and high quality. If you can't afford a Mac, you can't afford it. But if you can, even when the economy is down, you know the extra bit of cash it costs is worth it.
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