Got some emails yesterday about the “Consumer Hourglass Theory,” which suggests that all the growth is in the low end and high end of the shopper spectrum, with the middle slowly vanishing as they chasm grows between the haves and the have-nots.
MNB user Ben Ball wrote:
Re: “middle market erosion” – I think there may be an analogy here to the science of global warming. “Huh?” you ask…
Well, here goes.
The science certainly confirms that the earth is in a warming stage – not much to argue with there. The only open question (to some at least) is the degree to which the current cycle is either a) caused by, or b) accelerated by manmade causes. I would argue that most folk’s conclusion about that second question is driven as much by their ingoing paradigms and ideology as it is by “science”.
There is also a clear move to lower cost alternatives in the marketplace for consumer products. But is it “driven by the growing income disparity in America” as you state? Or is it possible that middle-class America is simply in “recession protection mode” and looking to spend their dollars more wisely --- maybe even (gasp) SAVING some of them? My point is not to argue the wealth gap – but rather how and why it has grown and the direct relationship between that statistic (“cause and effect”) and the choices consumers are making at the grocery store.
Seems to me that these things feed on themselves. Sure, maybe middle class people are saving more, which leads to a greater emphasis on lower priced items. Which leads to big companies offering more low-priced items, which cater to these shifting consumers. Which may make it more palatable for those shoppers to buy more low priced items. And so on.
Doesn’t change the income gap.
I’m also not sure I buy your analogy, especially because I reject the suggestion that people who think that there has been some human contribution to the global warming problem is as much a reflection of their own biases as it is an acceptance of science.
For me, I just think that rejecting the possibility that all the crap we’ve spewed into the atmosphere has had any impact on the environment is the height of arrogance and denial. For me, the scientists saying that there is no cause and effect are the same people who said tobacco doesn’t cause cancer.
But put that aside for a moment. Let’s work on the premise that such a cause and effect is not scientifically certain. It seems to me that the responsible thing is to develop policies that allow for the possibility, as opposed to rejecting it out of hand.
Another MNB user wrote:
I can’t help but make the observation or maybe I should say ask the question…..Has the consumer been “ripped” off in the past by paying too much for their food? I’ve been on both sides of the desk, and as Retailers continue to drop their retails making the spread between regular priced and sale priced too large we are left open to the choice of only buying some things when it’s on AD.
If the AD price still brings a fair margin to the retailer why not leave it there?
Unfortunately the AD price is often below cost, and the consumer would not know this. To them it just looks like the regular price is overcharging them. And the spread between the “haves and have not’s” continues to grow as the middle class buys whatever is on AD this week and waits for next week to see what is on AD then, saving pennies for what? Maybe gasoline? How to fix it? I don’t know, but the theory that by dropping retails consumers will automatically buy more is not working. They are only buying what they need and if that is “1 unit” instead of “5 units”, that is what they do.
At a lower or below cost price, the sales at the Retailer continue to drop off. Vicious circle and our consumer choices get smaller and smaller as well. I guess that principal of selling a great product at a fair price will continue to suffer.
On the subject of what needs to be done for effective loyalty marketing, MNB user Gary Loehr wrote:
The challenge here is finding something that provides real value to the consumer, that is not a discount. For most people the e-mail content sent out by most marketers just isn't all that relevant or compelling. Who wants to have a relationship with someone who wants to talk, but not listen, doesn't have a lot to say, and talks endlessly about a subject you just don't care that much about?
I can't tell you how many e-mail campaigns I have "unsubscribed" to, because they just weren't providing anything interesting or of value.
MNB user Ben Ball wrote:
Re: “middle market erosion” – I think there may be an analogy here to the science of global warming. “Huh?” you ask…
Well, here goes.
The science certainly confirms that the earth is in a warming stage – not much to argue with there. The only open question (to some at least) is the degree to which the current cycle is either a) caused by, or b) accelerated by manmade causes. I would argue that most folk’s conclusion about that second question is driven as much by their ingoing paradigms and ideology as it is by “science”.
There is also a clear move to lower cost alternatives in the marketplace for consumer products. But is it “driven by the growing income disparity in America” as you state? Or is it possible that middle-class America is simply in “recession protection mode” and looking to spend their dollars more wisely --- maybe even (gasp) SAVING some of them? My point is not to argue the wealth gap – but rather how and why it has grown and the direct relationship between that statistic (“cause and effect”) and the choices consumers are making at the grocery store.
Seems to me that these things feed on themselves. Sure, maybe middle class people are saving more, which leads to a greater emphasis on lower priced items. Which leads to big companies offering more low-priced items, which cater to these shifting consumers. Which may make it more palatable for those shoppers to buy more low priced items. And so on.
Doesn’t change the income gap.
I’m also not sure I buy your analogy, especially because I reject the suggestion that people who think that there has been some human contribution to the global warming problem is as much a reflection of their own biases as it is an acceptance of science.
For me, I just think that rejecting the possibility that all the crap we’ve spewed into the atmosphere has had any impact on the environment is the height of arrogance and denial. For me, the scientists saying that there is no cause and effect are the same people who said tobacco doesn’t cause cancer.
But put that aside for a moment. Let’s work on the premise that such a cause and effect is not scientifically certain. It seems to me that the responsible thing is to develop policies that allow for the possibility, as opposed to rejecting it out of hand.
Another MNB user wrote:
I can’t help but make the observation or maybe I should say ask the question…..Has the consumer been “ripped” off in the past by paying too much for their food? I’ve been on both sides of the desk, and as Retailers continue to drop their retails making the spread between regular priced and sale priced too large we are left open to the choice of only buying some things when it’s on AD.
If the AD price still brings a fair margin to the retailer why not leave it there?
Unfortunately the AD price is often below cost, and the consumer would not know this. To them it just looks like the regular price is overcharging them. And the spread between the “haves and have not’s” continues to grow as the middle class buys whatever is on AD this week and waits for next week to see what is on AD then, saving pennies for what? Maybe gasoline? How to fix it? I don’t know, but the theory that by dropping retails consumers will automatically buy more is not working. They are only buying what they need and if that is “1 unit” instead of “5 units”, that is what they do.
At a lower or below cost price, the sales at the Retailer continue to drop off. Vicious circle and our consumer choices get smaller and smaller as well. I guess that principal of selling a great product at a fair price will continue to suffer.
On the subject of what needs to be done for effective loyalty marketing, MNB user Gary Loehr wrote:
The challenge here is finding something that provides real value to the consumer, that is not a discount. For most people the e-mail content sent out by most marketers just isn't all that relevant or compelling. Who wants to have a relationship with someone who wants to talk, but not listen, doesn't have a lot to say, and talks endlessly about a subject you just don't care that much about?
I can't tell you how many e-mail campaigns I have "unsubscribed" to, because they just weren't providing anything interesting or of value.
- KC's View:
