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 http://bit.ly/7ZWFPl
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:
Discounters
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
Middle
Sears 4% decrease
American Eagle up 9%
Limited brands down 2%
JC Penny down 3.8%
Gap 2% decrease
Luxury
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.
