The disappearing mid-market

The Economist has a thought-provoking article on the "two most noteworthy trends among the swelling ranks of middle-class consumers around the world—trends that appear to be, at first glance, at odds with each other. These are the tendencies for consumers to be more cost-conscious; but simultaneously more willing to splurge money on luxury items." Key takeaways:

  • Sales both at the top and bottom of the consumer market are rapidly growing while sales are being squeezed hard in the middle, though it is still the largest market segment in rich countries.
  • One reason [for trading down] why this change has taken place is that the discount retailers have raised the quality of their products. A second development is the rapid increase in transparency in consumer markets, thanks not least to the internet.
  • Americans, in particular, “have become addicted to the deal, which is leading them to do irrational things” … One consequence is that people buy lots of stuff they do not need … chiefly because it seems to be a bargain.
  • Companies that get stuck in the mid-market may be doomed. But as businesses trading up clash with those trading down, some of them may end up as losers, too.

Recommended reading on this topic:

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