I love going to any shop that has yarn. I always feel that you can't really invest in a yarn until you have picked it up, squished and sniffed it, I mean why buy something that you will make into a garment if it's scratchy, the coulours fade or will pill?
There are a few shops here in the greater Perth area. Spotlight is the closest to me and although many people might squirm at all the novelty yarn (think weird colours and feathery stuff) they do have a great basic line of pure Australian Merino in a great line of colours, ideal for mittens, scarves or hats.
Another shop that I really like is Calico & Ivy they have a great line of fabrics and stock more of the 'luxury' yarns like Noro and Rowan. Yesterday I went and bought some Kaffe Fassett scraps and a ball of Supersocke yarn.
There is a yarn shop in Fremantle that is ok, quite overpriced and not very helpful but they stock good notions if I lose a DPN.
Even though I love going to the smaller, independently owned shops I always feel like the people behind the counter watch me while I look through their stock. If I ask them if they have something, they look at me like I shouldn't know what I'm talking about and dismiss me in an offhand manner. Maybe it's beacause I look a bit younger than I am, but surely a customer is a customer and they wouldn't be there if they didn't seriously want to look and maybe buy? I can't imagine how bad it would be if you were just starting out and looking for yarn to make your first scarf with!
Which is why I believe in online shops. The online shops here stock a lot of the more specialty yarns (from the US) you can browse at your leisure, people won't couch if you click on something, and even though you might not be able to touch and sniff the merchandise, in the online world of knitting a yarns' reputation often means that you don't need to (for example Socks that Rock, Cherry Tree Hill, Manos and Malabrigo)
Online shops can often be go to places if you are looking for something really specific and special. One web shop in the UK did just that. Socktopus specialises in sock yarn and accessories, when you order something it arrives in a silver package with logo printed tissue paper and often comes with a gift. The owner is Canadian and certainly knows about customer satisfaction! She has been so successful in fact that she has opened a shop in just a year of being in business.
With the influence of Ravelry I often hope that the snooty yarn shops might learn that they need to think before they snub people and that knitters talk!
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