The summer sale season is drawing to a quick end. As we’ve been racing to the back of stores and sorting through scattered sales racks, department stores and boutiques have been carefully laying out the new collection like fragile souffle. For many designers, this new collection will truly determine the state of the retail economy.

One trend we quickly noticed is the “re-adjustment” in pricing. In mid-June, an eager Gucci sales associate commented that pricing was going to start off much more aggressive. She pointed out a fine mohair coat, which she said would likely be priced at $6,000 during brighter economic days. This season, the coat is hitting store shelves at $4,000 or about 33% less than a similar coat in 2008.

Gucci isn’t the only brand trying to hold down prices. We recently got our hands the Prada winter price list. Classic styles that are almost never seen on sale have had their prices re-adjusted. A buttery, gathered, nappa leather tote was $2055 but is $1495. That’s 25% less! A similar bag made of nylon was reduced about 9% from $1155 to $1055.

Burberry has also reduced the price of some coats. The weather proof iconic trenches are $750, or $150 less expensive than the start of the prior season. We also hear the Chloe has made their prices a bit more agreeable to consumers wallets

Will these lower prices help lure customers? Huici Lin, an avid shopper who works in research at a major university says, lower prices will help lure shoppers but prior seasons have trained customers to wait for sales. “No matter how pretty those shoes look in the glass display cabinet, they will still go on markdown.”

If Huici is correct, this season may turn out to be great for shoppers like you and me but a bad sign for designers who have had to slash their margins to accommodate lower pricing.

The retail environment is about to get a lot worse as CIT Group, the leading financing company to the apparel industry, looms on the brink of bankruptcy. In a last ditch effort to remain solvent, the bank applied for a second round of government bailout money. Their application, however, is expected to be denied.

What does this mean to a company that creates more than $60 billion in finance and leasing to small and middle market businesses and is the largest factor to the garment industry?

One mid-sized clothing manufacturer we spoke to said that if things don’t clear up, and clear up fast, they might as well just hang a gone-out-of-business sign on the door because, “If they go bankrupt we go bankrupt.” The sentiment is the same all over town.

It’s going to cost Seventh Avenue a lot of money to weather this storm. First, apparel companies will have to overcome the fact that they may never receive the money CIT Group collected on their behalf for the previous season. Then if they can get past that– which many companies can’t– they will have to borrow money at a higher percentage from smaller banks. These higher operating costs are occurring at the same time as retailers are asking brands to lower prices.

Higher costs and less profits mean that many of out favorite brands will not exist when we start our Christmas shopping this year. For this reason lets hope CIT Group doesn’t go down the same path as Lehman Brothers.