Brands, Retailers: Not surprisingly, even in a recession the middle is death!


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Its been years since BCG wrote Trading Up followed by the emergence of the corrolary: trading down – a pair of trends where consumers were essentially willing to sacrifice in one category that they purchase in to splurge in another. For example, when my wife and I were setting up our deck, we bought a farly inexpensive  set of patio furniture but a near top of the line barbecue. Our thinking? As long as the furniture is comfortable enough to sit on, and doesn’t look like they belong on a frat house front yard during frosh week, we’re ok – but we want our barbecue to last a long time, have all the latest toys and fit lots of delicious steaks, burgers, chicken breasts and crab legs on it at one time. yumm.

This morning @mikegelfond tweeted this:

From BrandweekDotCom Luxe Brands Glisten Again

The gist of the article is that luxury retailers did very well over the holiday season and even though the article also cautions that we shouldn’t take this as a sign that the luxury category is back since shoppers tend to splurge at the holidays and then pull back sharply in the new year when they see their bills, I couldn’t help but wonder: If the luxury category did well, how did discounters and middle of the road brands do over the holidays?

So lets take a look at some retailer same store sales results for December, 2009:


Wal-Mart 0.5% decrease

Target 1.8% increase

Family dollar 2.4% increase

TJ Maxx / Marshall’s 14% increase

K-Mart 5% increase

Kohls 4.7% increase


Sears 4% decrease

American Eagle up 9%

Limited brands down 2%

JC Penny down 3.8%

Gap 2% decrease


Saks 5th Avenue up 9.9%

Nordstrom up 7.4%

Macy’s / Bloomingdales 1% increase

Tiffany up 8%

source: Marketwatch

Is this complete? no. but does a clear trend emerge? yes. Even in a recession the trend of consumers trading up in categories they are passionate about and down in categories they don’t really care about continues.

The clear implication for business model design is don’t create products or experiences that land you in the middle of the discount – premium landscape.

Later this week, I’m going to write about what I think this means for digital marketers.

Republished with author's permission from original post.

Michael Nurse
Michael Nurse is a business strategist focused on digital business model innovation and managing customer relationships in the digital space. He leads the customer strategy and planning function for the Atlanta office LBi - a digital marketing agency. Views expressed in his blog posts do not necessarily reflect the views of LBi.


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