"Knowledge at Wharton" has a great interview with Michael J. Silverstein, author of Treasure Hunt: Inside the Mind of the New Consumer. Silverstein sees people spending more money on some favorite luxury goods, but they also go down-market for many items, shopping at Costco or Walmart. As a result, the middle is shrinking. Not the middle class of people, but the middle class of goods and services. Your average department store is hurting, though both high-end boutiques and discount stores are thriving. Silverstein finds that we like to talk about finding great bargains, we like to save money when we can–but we also like to splurge. The interview slides into a discussion of market segmentation that’s interesting.
Business Strategy Implication: There are two growth strategies: lowest cost stuff, or stuff that’s worth paying extra for. If you’re neither value nor luxury, expect a shrinking market. OK, that generalization probably won’t work everywhere, but it will be a great conversation starter at your business planning retreat.