Change in Prices of Clothes

My main hobby is exotic high end audio systems. 

Same thing happened there.  The run up of prices for high end stereo gear in the last 10 years has been kind of unbelievable. 

High end goods are at the end of their leash, though, and I assume that luxury clothing is too.  There's only so much you can raise prices before the majority of people start to say "yeah, I'll stick with what I've got".  I think a lot of Americans have gone into "brace for impact" mode.  Americans are gathering in the tens-of-thousands to protest the polarization of wealth.  That's kind of significant.

Naturally there are people who are so rich they will never have to sweat high prices.  But that group of people is concentrating into a smaller number.  Not really enough to float entire luxury industries. 

It's one of the consequences of the polarization of wealth in the first world.  When you eliminate the middle class, you eliminate a large part of the support for luxury markets.  Which slows development of luxury goods, and ultimately impedes selection.

Right now they're holding it together with bigger margins, but it won't be long until the public just says no thanks.

ccm

I see there being a few interacting effects, some of which have been already touched upon in this thread. I'm not an economist, but this is my intuitive sense of the psychological patterns at play,..

Firstly, yes, the raw materials have gone up in cost, largely because it's increasingly impossible to import deflation from cheap Asian economies. This matters for supermarket clothes and other lower-end outlets. The mid-market should theoretically be able to finesse this problem away by altering the mix of items in the shop (eg. fewer cheap basic Ts, more value-added collared shirts). Upper-end, it only makes an incremental difference to the total cost, so can't really be the reason for the major price inflation in this segment.

More importantly, there is an increasing polarisation of the shopper into either a "bargain" or a "luxury" mentality, which in turn, forces the same polarisation onto shops/brands. You either cater to the lower end, or the higher end. The seeds for this polarisation were sown during the credit boom, when everyone with a little bit of money thought they could live like they had a lot of money, but the impact of it is really being felt now, when those with a little bit of money have become those with no money. Mid-market brands get squeezed from both ends and suffer, leading them to opt to differentiate themselves by moving in one direction or the other. When money was freely available, the mid-market could just about struggle on, but now their model is really suffering. Even in the supermarket world, Tesco in the UK are feeling pressure for the even more low-end places like Lidl (from what I hear about the US, the same dynamic is happening between WalMart and Dollar General). Finally, if you want to attract the luxury shopper, you need to brand yourself as a luxury destination, which in turn leads to an upwards price pressure as many of these shoppers will have a "you get what you pay for" mentality.