I keep reading mixed reports about how the economy is doing. Some experts see strong signs of recovery and growth; others see a long, bumpy road ahead and a middle class that might never really recover.
It’s interesting to see, three years after the initial collapse, how companies are adjusting to this new reality. While there still is, and will remain to be, a market for high-end consumers, many companies who relied on the disposable income of the middle class are having to adjust how they do business. The fact is that income disparity between the wealthy and the poor is the highest it’s been since the Great Depression. The U.S.’s Gini coefficient, an index that measures income equality, puts us at the same levels as the Philippines and Mexico. People who used to find themselves comfortably in the middle are now squarely in the bottom. If they will ever work their way back up, it won’t be for a while. In the meantime, they represent a new market that can’t afford what they used to, but who are still buying products and are not (yet) relying on charitable donations for basic necessities.
Procter & Gamble, producers of, uh, just about everything in your house, have begun to cater to this class of economic ‘tweens, offering an “hourglass” range of products. There are the more expensive brands for people who can afford it, discount brands for those who can’t, and not much, if anything, in the middle. For example, you can still buy Dawn if you’re a baller, or you can buy their new Gain dish soap for much cheaper.
Another interesting development is Goodwill Industries’ approach to this new market. Recognizing that many of their new customers may be people who are used to shopping for clothes for fun but can no longer afford to, Goodwill’s new advertising campaign presents the secondhand stores as a pleasant shopping experience for the recreational consumer. I can’t find a video of the commercial online, but it features women with dedicated shopping strategies for finding the best steals in the store. It looks almost identical to one for a large department store chain and seems to be intended to appeal to women who used to shop at, say, Macy’s or even JC Penney (for all of their “My daughter is stupid LOL!” apparel) but can’t anymore.
It makes sense from a business perspective. Why market to people who just aren’t there, you know? And I would hope that we would all learn from the past few years not to spend so haphazardly. But it doesn’t make me feel much better about our financial future. How about you?