After one of the business meetings of my husband we had a vivid discussion about consumer purchasing trends. What we both see is that the mid-segment is fading away: either people go for very qualitative and very expensive stuff or prefer OK and cheap things. Sometimes simultaneously going for both – what I often observe in our own household.
In general, a lot of different consulting reports nowadays are mentioning the same trends in the consumer goods sector, the most prominent one is that: a lot of people are searching for ways to save money (McKinsey claims that “a lot” in the context of the US for example is about 70%). Household incomes generally have decreased. However, at the same time “the wealthy” became wealthier. This widening of the income gap gives birth to two opposite trends: an upmarket segment with its premium offerings is on the rise, but at the same time a lower-market segment and discount stores also see an increased interest from consumers. What is left out? The ones in the middle – good, but not excellent, relatively cheap, but not cheap enough.
What is interesting to note is that these two opposite trends are not only income-related, but can (as a way of choice, if you have one) also be found on a much smaller scale in one and the same household. The underlying reasons might be slightly different, but the polarization effect is the same.
Let me give you a couple of silly “co-existence” examples:
- I have Le Creuset pans (because they are really top class), but I use Ikea cooking utensils (because I didn’t see any difference between the ones from Ikea and the ones from KitchenAid or alike, yet the price difference is at least tenfold)
- I buy meats, fish and a range of other frozen goods at *bofrost, but if I buy frozen vegetables for a soup I buy them at Colruyt, 3x cheaper. I tried both – with respect to vegetables I didn’t see the difference.
- I have an original Swiffer brush, but I use compatible Friss wipes, achieving the same result also about 3x cheaper.
- My t-shirts are the cheapest cotton t-shirts I could find, frequently just bought at supermarkets. At the same time, my favorite pants are Ralph Lauren Golf. For pants you really see the difference, for simple t-shirt you don’t. It could be that the one for 30 eur will endure more washing cycles (which I doubt), but at 3 eur I can buy ten of those for that price.
- Our kids have the simplest wooden cribs (because the crib itself doesn’t affect the sleep of a kid), but they have the best mattresses available each costing at least 5x the price of the crib (because the mattress is what your kid actually sleeps on, and that matters big time).
I could continue with my examples, but I guess you got the point. Talking about households looking for ways to save costs – ours is one of them. But at the very same moment we are also at the opposite side of the spectrum looking for the best quality and willing to pay premium for it, if we see the real difference. What I am not interested in (and consumer trends prove I am not alone) is in “just good enough” but not excellent at a much higher price than cheap “normal”.
As a last thought, even though I mentioned t-shirts in my example, trends with respect to fashion somewhat differ from those of consumer goods. However, also here I see a big polarization happening in my own closet (giggle). But I will talk about it separately.